Written by: Penny Anthem staff
For real this time. I know you’ve been wanting to. I know it bugs you. It’s like that little nagging voice that takes an emotional toll on you that you try reeeeeally hard to ignore.
Make the choice and then make that choice a priority:
I know this sounds cheesy, but you have to seriously commit to paying down your debt. So much of this is process is being mindful and practicing willpower. You’re determined and capable- so act like it. You can do it. Paying off debt isn’t convenient, but it’s a lot more convenient that living with the stress of debt.
Build your savings:
You will not be able to end the cycle of debt unless you build up your savings. The second you need something that you haven’t budgeted for- you’re going to reach right for your credit cards. Do yourself a favor and create a pile of cash for emergencies. Rule of thumb is 3-6 months of living expenses. If you want to pay off debt before you can save this amount- save AT LEAST $500-$1000.
Break bad habits by building safeguards into your day:
It’s easy to continue to use your credit card when you haven’t gotten paid yet, and you get points on your credit card. We have all used that excuse before. Say you just want to grab a bite to eat real quick? What’s the harm in only charging $20? The harm is you’re reinforcing that bad habit. Here are a couple of tips that I find useful-
- Put a banner on your phone that will motive you and stay focused. Something like
“Save for Europe” or “Don’t spend money you don’t have” “Necessities only”. Whatever works for you to remind yourself you have a goal and you need to stick with it.
- Put a sticky note in your wallet that says “$1000 worth of debt”. That way every time you go to spend money, you are reminded of what priority you have set for yourself.
- Take your credit cards OUT OF YOUR WALLET. If you find it easy to use them because they are literally an arm’s reach away- move them! That being said- make sure you have your $500-$1000 in your savings account in case an emergency!
Once you start breaking your bad habits & motivating yourself to tackle your debt the rest is just a numbers issue. You’ll need to be honest with yourself- how much debt do you have and how much can you realistically pay monthly? From there the process is just about sticking to your plan.
Consolidate debt into a 0% interest card:
Do NOT pay interest on the money you owe if you can avoid it. Interest rates on your debt are typically going to be 12-30%. Why would you give your credit card company all that extra money? I’ll tell you what, they certainly would never give it to you. The day I find an investment paying me 12-30% is the day I will buy a bikini and retire in Thailand.
You work hard for your money and you deserve to save it/spend it how you want. Don’t give it away to credit card companies!
Hurl everything you can (within reason) into this process:
Don’t just pay the minimum amount on what you owe. Pay the most you can without jeopardizing your savings, emergency fund, or simple joys. I’ve read a lot of advice pieces that recommend selling your belongings and basically stay inside for 6 months until you have no debt.
If you have extra shoes laying around… sure sell them for some cash, but I am not going to suggest you dramatically alter your life. Just like I would never suggest a crash diet to lose weight. This process is really about transforming your habits and getting yourself out of a hole in a healthy way.
Don’t sacrifice what’s important to you- but be realistic and don’t use that as an excuse to spend carelessly.
It behooves you to surround yourself with people who give a support about you. People who want you to be stressfree, debt free, and financially stable.
If ever my credit card is more than I am comfortable with- I just honestly tell my friends, “hey I am not in a financial position to go out to eat tonight”, “I’m trying to save”, or “I don’t have the money”.
Surrounding yourself with awesome people is going to allow you to stay focused. You don’t need to spend money to have fun, and people more often than not will recognize that and respect you for it.
Celebrate your success (in ways that don’t involve more debt)
Set mini goals for yourself and celebrate yourself when you accomplish them! Your celebration can be as simple as inviting friends over for drinks. Just DO NOT use your credit card if your celebration involves spending money. That obviously defeats the purpose.
As I mentioned- this process is long. There will be bumps in the roads. It’s frustrating when you’re spending most of your extra income to pay off old purchases, but there is a light at the end of the tunnel and you need to keep that in mind.