How to achieve your debt-free goal - Jessi Fearon (2024)

Starting.

It truly is the hardest step – that first one on a brand new journey. The fear of the unknown, the uncertainty of what your end destination even looks like. Starting any new chapter in our lives is equally exciting as it is terrifying.

But I’m sure you already know that. I mean, after all, you never would have learned to drive a car; cook your family a meal; graduate high school or college, and you most certainly never would have gotten a job if you didn’t take that scary first step and actually apply for that job.

We’re tempted to chalk these things up to “life stages” but they’re really new chapters of life. Chapters that won’t happen if we just stay put. They’re journeys and sometimes, we don’t know the ending to those chapters. And the truth is, the unknown frightens us.

For some of us, we plan and prepare and then we plan and prepare some more only to never actually put our plans into action. And some of us never have a plan – we just do.

The truth is, that even with the best made plans we won’t always know how the journey ends. Even if we don’t make any plans at all, we can’t avoid the ending. Fear will do nothing but hold us back.

One of the fastest ways to overcome fear, is to call the fear out.

Let’s say for example, that you really want to pay off debt this year, but you haven’t started. What’s stopping you? What is the fear? Is it a fear of not having the cash on hand to pay for an emergency? Or is it a fear of how long it will take you to pay off the debt?

Call the fear out.

Once you’ve actually said aloud the fear, it loses its power over you. When you hold the fear inside, it taunts you and haunts you. It keeps you from going after the things you want most in life. It keeps you in the dark.

Don’t let fear do that to you this year.

Whatever resolutions or goals you made at the start of this year, don’t let fear stop you from achieving them this year. If 2018 is the year you’re going to become debt free, don’t allow the fear of not understanding what the debt-free life looks like to stop you. Instead focus on why you want to become debt-free or achieve that big lofty goal.

The why is in fact everything. Yes, I know you’ve heard it before, but it’s true. Knowing your why will change everything. Write it down. Whatever your goal is, write down WHY you want to achieve that goal.

Achieving a debt-free goal

Because I know that many of my readers love my practical stuff, I thought I’d write out an example of a debt payoff goal and how to achieve it.

Let’s say that your consumer debt total is $126,255 with it broken down as follows: *please note, that I made all these numbers up.

$75,000 student loans

$10,750 truck loan

$14,335 suv loan

$10,000 personal loan

$5,000 credit card 1

$2,337 credit card 2

$6,846 credit card 3

$1,987 credit card 4

Yes, I know this looks overwhelming, but this is a reality for many Americans. So, let’s say that this is your debt load and you want to pay it off. How do you do it?

Well, I’m a huge fan of the debt snowball method and so for this example, this is the method we’re going to use to develop our debt pay off plan of attack.

You’re going to want to order the debts from smallest balance to highest balance so something like this:

$1,987 credit card 4

$2,337 credit card 2

$5,000 credit card 1

$6,846 credit card 3

$10,000 personal loan

$10,750 car loan

$14,335 suv loan

$75,000 student loans

Okay, so now we know which order we’re going to attack our debt in but this isn’t the last stop with our plan. The next step is to go through your monthly budget and determine how much extra you can apply to your debt every single month (or week depending on how you budget your money). For more on developing a budget, head here.

Once you’ve determined how much extra money you have to apply towards paying off your debt every month, you’re now ready to move on to the next step in making your debt payoff goals a reality.

Alongside your list of debts from above, you’ll need to write down the minimum payments of all the debts and then write down what the new payment will be with the extra money you can apply every month.

So something like this:

Okay, now before you freak out seeing those huge numbers in the New Payment Amt column, let me explain. This is the “snowball” so you’re not going to be paying those new amounts all at once. What you’re going to do is start with the first debt on the list – the $1,987 balance on credit card 4 with a new payment amount of $75 every month.

Then once you’ve paid that balance completely off, you’ll roll that $75 into the $45 minimum payment of the next debt and then once that debt is paid off, you’ll snowball the New Payment into the next debt’s Min. Payment and so on and so on.

Keep going

Now, if all you ever pay extra every month is the $75, it will take you just over 2 years to pay off just that balance. Yes, I know that can be discouraging, but let’s focus on how you can make paying that balance off quickly a reality.

There are a dozen ways to find extra money, from using Swagbucks (a personal favorite of mine) and taking the SBs you’ve earned, turning them into cash and then using that cash to apply towards the balance. You can even find a part-time job or side hustle and throw that additional money towards the debt. You can adopt a more frugal lifestyleortake every bonus check, tax refund, or other refund check and apply the money towards the balance.

Again, I know this can be overwhelming, but this why you must know WHY you want to start this journey. It’s tough and it doesn’t start just because you want it to, you must take action. Creating a plan is definitely the first step, but it’s far from being the only step.

You must then decide how you’re going to attack your debt – can you lower your grocery bill and apply the extra money saved towards your debt, or do you want to work a side hustle to increase your debt payoff power?

The answers are yours to determine, and there isn’t a right or wrong one, just the one that works for you and your family. If you want to make this happen, then you’ll have to start TODAY.

So you tell me, is becoming debt-free a goal of yours this year? If so, how much debt do you plan to pay off this year?

P.S. Have you grabbed your 2018 Real Life on a Budget Planner yet? If not, head here.

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