Let's be honest, debt stinks regardless of the type (loans, bills, credit card, etc.). Luckily, there are ways to remove this odor from your life. Because everyone's circumstances are different, this could take months, years, or maybe decades, but it is possible. My debt will not be paid off for several years, but I have a goal to pay it off much faster than the term of my loan. I always laugh when I read those articles about someone who paid off their $100,000 debt in two years or something crazy like that. I have to remind myself sometimes that everyone's situation is different; we all have different debt amounts, salaries, time, etc. I think it is just important to focus on my own situation, and what I can do to beat this thing. To get started, there are a few things that one must know/do regarding his/her financial situation:
Know-it-all list
1. Know what you owe, and who you owe it to
This seems easy enough,but many people have no clue what they actually owe. Get out the paperwork, look at your account online, or make a phone call or two to find out. How much are you in the hole exactly? How much interest are you paying? What is the term of your loan (how long you'll you be paying it for? Note that not every debt has a term.)? Who do you owe it to? These things are important to know for setting goals. When I finally realized how much I actually owed and how much I was paying in interest, I felt sick and wanted to cry (okay a few tears may actually have fallen), BUT I became so determined!
2. Know how much money is coming in and going out
You need to know how much you make and spend. Jot it all down. I started with just pen and paper and moved to an Excel spreadsheet, but there are many useful tools online to help you do this too. Get out your pay checks, bills, etc. and keep track of where that precious money is going. What are you left with at the end of the month after all is said and done? Don't forget to include small purchases like your daily cup o joe. This stuff adds up too. You may be surprised at what you find. When I did this, I felt comforted. This wasn't because I discovered that I was actually loaded (quite the opposite actually), but because I had a better handle on my life. I became more in control...a good place to be!
3. Know that you can beat your debt
As big and cumbersome as your loan may be, know that you can defeat it. Again, it may take a long time, but you will do it. Look that debt in the eyes and kiss it goodbye. You need to be strong and determined to do this so get ready for the fight.
4. Know your plan
Make a plan to be debt- free. If the term of your loan is 20 years, maybe you want to do it in 15. If you owe $10,000 in credit card bills, plan to pay it off in 5 years. These are only examples of course, but the fact of the matter is that you need to visualize an end to this thing and know how you will get there. Just imagine how nice life will be without that huge monkey on your back. Think of all that you could do with that extra money! Vacations? New car? Savings? It's nice to think about huh?!
5. Know how you will get er done
What will you do to achieve your goal? You need to be willing to sacrifice time and stuff so prepare yourself! Something important is that you find ways that work for you! Things that I do may not work for you. Find things that you can do consistently because if you hate the things that you do, you won't continue doing them. Sometimes this requires a little trial an error. Nothing wrong with that. For example, I can not stop going out to dinner forever, but I am able to cut back to only once or twice a month. That works for me! Debt is torture enough, you don't need more torture in your life! Stay tuned for a lot of tips to choose from!
6. Let your partner know your situation and goals
It is really important that your partner (if you have one) knows the situation that you are in. He/she should be aware of the debt that you have and your goals to eliminate it. You want to make sure that you have support and that your plan to get rid of that stinky debt works for the both of you. My fiancé knew about my debt way before we were engaged, and although it is not thrilling to him, he stands by me and my efforts to get rid of it...love him for that!
Okay, know-it-all, go get 'em!
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