Consumer debt is a killer when it comes to savings goals and overall financial well being! Whether we’re saving for emergency funds or investing funds or whatever fund we’re trying to set goals for, consumer debt will hold us down and must be greatly reduced if not completely eliminated in order to achieve financial freedom. The first step in reducing or even eliminating debt is to STOP accumulating it! If we don’t have the cash to purchase something we don’t (truly) need, then we shouldn’t be buying it. We have to get control over our spending habits. Analyze what we truly need and what we don’t need. This is going to be the time we will need to make some sacrifices, even if only temporary, to get the ball rolling! Once we come to grips with that and commit to it, we can then…and only then, begin to tackle it.
How to Eliminate Your Debt
A very common and effective strategy to help you to pay off debt is the known as the debt snowball. It’s a fairly simple strategy to apply as long as you’re committed to squashing your debt! Picture a snowball that starts off little as it rolls down a hill, but gets bigger as it continues rolling and turns into to a snow boulder as it builds momentum! That’s how the debt snowball method works. It’s a strategy that allows you to gain momentum as you pay your debt off. As the momentum gains, the quicker you’ll see your debt disappear.
Start by listing of all your debts in order from the lowest balance to the highest balance. Now, any extra cash you have needs to go toward the lowest balance first, until that lowest balance is paid off. Once the lowest balance is paid off, whatever payment was being made toward that balance, along with any extra cash, would now go toward the next lowest balance on your list. For example, if you were paying $125 monthly on the lowest balance and $57 on the second lowest, whenever you repay the smallest, take that $125 and the $57 so that now you can pay $182 monthly on that next balance. Continue to repeat those steps and keep applying payments to debts until you have everything paid off! Obviously, keep in mind that during the time of applying this strategy and paying off the debt, it’s absolutely crucial that you don’t continue to accumulate any more debt. Accumulating more debt during this process will completely defeat the purpose.
“There are no shortcuts when it comes to getting out of debt.” – Dave Ramsey
The burden of debt can take its toll in so many ways. That’s why it’s so important to get control of your debt situation. There is nothing better than seeing debt get removed from your balance sheet. There will be no more worrying about that debt, no more bills or calls from lenders and creditors…it’ll just be gone! Getting rid of it is not something that will happen overnight, but your health and financial well-being will thank you for it.
Just remember, once it’s gone it’s important for it to stay gone! What sense would it make to get yourself in over your head with debt again once you get rid of it? You’ll never reach financial freedom that way. With determination, discipline and the right mind set, you will reach your financial goals and eventually achieve financial freedom. By paying off those debts, you can stop paying those lenders and creditors and start paying yourself, by putting that new found money toward your savings and investing goals. The sooner you get control over your debt, the sooner you’ll be on the road to financial freedom. There’s no better time to start than now!
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