In our culture debt has become an accepted way of life. But this use of debt comes at a cost of lost freedom and huge amounts of stress. Thankfully, many are becoming more aware and frustrated with this lifestyle and ready to make changes to bring more freedom into their lives.
Here’s my story.
I graduated college with just over $55,000 in student loan debt. Coming out of college ready to tackle the world is an exciting feeling but I felt an incredible weight of no job and a “small mortgage” already attached to my name. Unfortunately, many are in a similar boat.
Two and a half years in and we still had most of that left to pay off. Then I read Dave Ramsey’s book “Total Money Makeover” and got inspired to actually take steps to start paying off my debt. I then helped my wife Leah catch the vision for the future and join me in our efforts.
After 2 1/2 years of focused effort and 5 years on the dot from when I graduated college we were able to pay it all off and become debt-free.
Regardless of your situation, whether you have more debt or less, you can unlock your payoff of debt and experience more freedom in life with these 5 keys to become debt free.
1. Play Great Offense
In order to accelerate paying off your debt you need to have extra income beyond your bare expenses. Getting overtime at work, working a side job, or starting a side business can help you bring in that extra money to put toward your debt.
Check out what Dave Ramsey has to say about the power of the ‘debt snowball’.
2. Play Amazing Defense
In order to really accelerate your debt payoff playing crazy defense on your finances is essential. This means focusing on redirecting the flood of money currently going toward your wants to paying off your debt. This might be the hardest but most important part.
Some ideas to get you started:
- Make a budget of categories you currently spend money on. Keep the needs and stop spending on the wants. Cable, car payment, lessons, expensive hobbies, subscriptions, and other wants can all go.
- Make a list of things you can sell like that expensive car, money hogging hobby, jewelry, and even your house.
The closer you manage the money going out the quicker you can be done with this phase and live in freedom.
As Dave Ramsey regularly says:
“Live like no one else now so later you can live like no one else.”
3. Set Goals and a Plan to Achieve
If we had not set a goal of a month and year when we planned to pay off our debt I firmly believe we would still be paying it slowly but surely. Putting that ‘line in the sand’ helps you keep the action flowing.
Here’s a rough idea to get you started.
Goal: Pay off all debt by May 2018.
Plan: Sell extra stuff like the car, espresso maker, and watch collection. Get a side job or start side business for $500 extra / month. Trim fluff expenses like cable, car payments, etc… Any windfalls will go toward debt.
4. Find Ways to Stay Focused and Accountable
Paying off debt can be a lonely road. It can be discouraging at times and feel like no one else understands. Find ways to stay focused on your goal to become debt free throughout the journey. Some ideas:
- Tell all of your friends about your plan to become debt free. They might get sick of hearing it but they will keep you accountable.
- Seek out someone you know that wants to become debt-free and go out for coffee regularly to dream about being debt free and share tips with each other.
- Post your plan on the refrigerator or bathroom mirror so you see it every day.
- Talk about your plans for after you become debt free with those you love. Perhaps it is a trip or starting a new business or job you are more passionate about, or the ability to give more to help others.
By surrounding yourself with people and reminders you will naturally achieve your goal faster.
“Stay focused on digging out of debt and you will enjoy the rewards of the debt-free lifestyle so much more quickly”
5. Get On the Same Page as Your Spouse
An important key to our success was the team work and commitment from both Leah and myself from the first moment to the last. Because she was on board with the vision for being debt free we achieved it much faster and more smoothly than we could have if I was just doing it myself. Think about a clear vision on WHY you want to be debt free and the benefits your spouse will enjoy when that happens and you will be off to a good start.
None of these keys are rocket science but they require discipline and focus to achieve. Let me tell you though. It is totally worth it! Being debt free will allow you to find a much lower stress in your daily life and live with the purpose that your heart desires.
What would you add to this list?
If you’re just getting started or thinking about it, let us know your goals and fears. We’ll be happy to provide encouragement and help on your journey.