Hello, beautiful people from across the lands! Debt is something that is not only paining our lives but the many that will come after us. Holding on to debt with the idea that it will always be is not something you have to subscribe to. In this post, we talked about what to ask before you get started on your debt-free journey. If you have not done so I suggest walking through that exercise and coming back here to continue the work. After answering some key questions it’s now time to put the rubber to the road. In today’s post, I am sharing some practical simple strategies to begin your debt freedom journey.
Pick A Strategy
There are two common strategies you will hear in the debt-free community when looking to get rid of your debt. Choosing one is completely up to you and what makes sense for your finances. Some have argued mathematically one is better than the other. However, this journey is an emotional one whether you realize it or not. Pick a strategy that not only makes sense with your finances but sparks a sense of hope that this thang is achievable!
Snowball Method
The snowball method consists of listing your debts from smallest to least. You will maintain the minimum payment on your debts but focus on throwing extra money on the smallest one first. Once that debt is gone you will roll over that minimum payment on top of the next debt minimum and throw extra cash on that as well so on and so forth. The idea is for the “snowball” to grow so when you get to your large debts you’re matching it with large payments as well.
Avalanche Method
The avalanche method is similar but instead, you are listing your debt from highest to lowest interest. The idea with this method is to get rid of debts that are accumulating more debt at a higher rate. Mathematically this makes sense but often the high-interest debt is coming from your larger loan balances.
List Debt Owed
Depending on which method you chose above will determine how you will list your debt. Regardless of the method, you want to have this written out in some form to track your efforts. That can be through a debt pay off app, paper, google doc, etc. It is vital to get this written out so you can see your progress and know what you are working on next.
Set A Pay Off Date
Yes, give yourself a deadline. Do not shy away from this, it will help in providing a guideline for your efforts. When there is a date to aim for you are able to work backgrounds and breakdown how much you will need to pay each month or year to get to that goal. Knowing those numbers will help you strategize your efforts.
Action Steps to Take NOW
1st Step: Gather all the information for your debt and list them down
2nd Step: Add the total amount of your debt (you need to see this number, no more running from it)
3rd Step: Identify what strategy you plan to use to pay it down and pick a pay-off date
Conclusion
Beginning a debt freedom journey may be overwhelming at first. But taking these three simple steps will ease some of the stress along the way. Picking a strategy helps with identifying a method of action. Listing your debt helps in seeing your debt pay off plan in real time. Last but not least picking a debt pay off date provides guidelines and strategy that allows you to work backward setting specific measures to reach the ultimate goal. The hardest part is getting started. Do no let that debt number bully your life and hold your dreams captive any longer.
Until next time dream, believe, and achieve.
