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If you’re ready to take control of your finances and get out of debt, this post is for you! The journey can be overwhelming at first, because you may be discouraged by the numbers and the time it will require. However, it’s one of the best things you can do to simplify your life and stop letting money control you!
1. Find out EXACTLY how much debt you have
Many people don’t even realize how bad their financial situation is. Why? Because being in debt is the norm. About 80% of Americans are in debt; home mortgages, car loans, student loans, consumerism, etc. Now while we can consider some things “good debt” such as a home mortgage and student loans, it’s still debt. You still have to pay hundreds a month to a lender. If you became debt free imagine what you could do with that money instead!
I think because our society has normalized it so much, many people just think that’s how life is. Basically meaning they’ll be in debt forever. It doesn’t need to be that way! Write down every single penny you owe to each company, the interest rate, the minimum payment, and how long it would take to pay off each if you only paid the minimum payment.
Once you’ve added up your debt, figure out which debt payment plan you want to start…debt snowball, debt avalanche, lowest minimum payments first, etc. By choosing a plan you should be able to figure out how quickly you can pay off your debt (it shouldn’t take 10 years btw!).
2. Get obsessed
After my financial situation hit an all time low my life changed. First of all, I started documenting my journey which has been really motivating and helps to keep me accountable. My eyes are open to the reality of consumerism here in America and I don’t want to keep falling for it.
Once you get obsessed and start figuring out how much you can pay to your debt and how soon you can get out of debt you start to want less. You just want to make more, buy less crap, and reach your goals! Literally every single penny will count to you, spending money will make you feel guilty, watching your credit increase will be addicting, going out to eat will be a huge no-no, and side hustles will take up your free time. Get passionate about it!!
3. Educate yourself/Re-evaluate
I’ve learned quite a bit during my journey so far. I like to listen to podcasts (Dave Ramsey) and read up on financial tips/news regularly. I haven’t read many finance books but I did read Jen Sincero’s You Are A BadAss at Making Money which was great and of course Napoleon Hill’s classic, Think and Grow Rich. I’ve also re-evaluated a lot of things in my life. I used to spend quite regularly (because to be honest I enjoy shopping/getting new things sometimes), but I won’t even buy a cup of coffee anymore.
I’ve realized how much less I want in my life, it just makes a mess anyway. Whenever I move I literally just want to sell almost everything I own and start fresh with a more minimalist approach to material things.
4. Create a budget/Track Spending
Budgeting will help you stay within your means a ton. It’s such a simple technique that so many people fail to execute. If you want to live by your budget, you’re going to probably need to make some changes. You’ll need to prioritize necessity from luxury.
For example, should you really be paying for cable when you’re over drafting every month?
Did you really need to go to Starbucks everyday even though you have $0 in savings? Contribute $100 each month to a Roth IRA instead.
You really just bought 12 candles from Bath & Body Works because they were having a sale?!
I also highly suggest you track your spending every single month AND go back the last 6 months and track every single thing you spent money on. Break it down into categories and see what your problem areas are. That way you know your spending triggers and which areas you need to really budget for. You can read my monthly spending and debt updates here.
Knowledge of how much money you spend/require for all areas helps you to create a budget. Once you budget you’ll also be able to figure out how much you can start putting toward debt.
A lot of things will need to change in your life. Which leads me to my next point…
5. Increase your income and cut spending
For some people this may mean getting a second job or picking up extra shifts at work, others may start a side hustle. For myself, I spend majority of my free time blogging and creating YouTube videos, both which generate a small income for me that will eventually evolve into a business. I work full time and do not want to pick up a second job.
Start with something as simple as selling the crap in your house that is just collecting dust! With the resources available these days it’s almost too easy to make an extra couple hundred each month. Drive for Uber/Lyft, rent out a room in your home, check out care.com or sittercity.com to assist people with cleaning, shopping, personal assistance, etc., donate plasma, flip garage sale/thrift finds, participate in research studies, the list goes on and on!
6. Stay motivated
Money is SO easy to spend and it’s not the easiest to make. Temptation is everywhere and it’s up to you to resist it. A lot of us are influenced by media, we see these social media influencers living seemingly perfect lives with fresh hair, fancy outfits, and fast cars. Remember that a lot of people put on a facade, or sure they may have a lot of things/money but everyone’s journey is different and that shouldn’t stop you.
I like to remind myself of what I really want (my own home, financial freedom, traveling, saving animals, self-employment, etc.) and/or visualizing how I want my future to be. I often look at my monthly debt analysis and see how much I’ve paid off and where I’ll be in the next couple months. I use podcasts and books as a source of inspiration/motivation to keep going and I use other people’s lives as an example of how I DON’T want my life to end up. Just keep going!
Other financial tips
-Call your credit card companies to see if they can lower your interest rate…you literally just ask and there is usually an offer if you’ve been responsible with your cards (paying on time). This has worked for ALL my credit cards.
-Call your home service companies (cable, cell phone, internet, etc.) to see if they have promotional offers available.
-If you have the option to consolidate your debt for a lower interest rate, do it!
-Use finance apps to save and make even more money!
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The key to starting any journey? Just starting! Take any action steps that you can to save money, spend less, and increase your income. As Dave Ramsey always says, “You’ve got to live like no one else, to eventually live like no one else.”
Where are you on your financial freedom journey?
