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I remember exactly when I realized that I needed to get out of debt fast.
It was a weekday evening. I had just been laid off from my job for the winter and I was looking over my income and expenses. $450 truck payment, $300 for student loans, $120 minimum on credit card and on and on it went. . .
The reality was, I was in trouble. For years I had accepted that debt was just a way of life for us—and all millennials. Everybody does it right? I could name on one hand the friends I had that owned their vehicle outright and didn’t have any credit card debt.
10 Ways To Get Out of Debt Fast
I knew that this wasn’t how I wanted to live my life. Being slave to creditors is no fun, and I wanted out. My wife and I put together a plan for how we were going to start attacking our debt using the strategies outlined below.
1. Start With A Plan
When it comes to debt repayment, if you want to have the best possible chance of success, you’re going to need a plan. Whether you want to use the debt snowball, the debt avalanche, or some other method doesn’t matter as much as that you have a plan of some sort. Write it out along with your goals and you’ll be starting in the best possible position.
When do you want to have your debt paid off by? Work backwards from there to determine how much you will need to pay each and every month to make it happen. For example, if you owe 12k, and you want to pay it off in 6 months, you’re going to have to find an extra $2,000 every month in order to meet your goal.
I recommend attacking the problem from both ends. Cut your spending as much as you possibly can. Be ruthless, and don’t let any bill go unevaluated. All of the little things add up. Just Netflix, Google Play Music and my monthly Audible credit add up to nearly $50/month. That’s $600/year that I could cut right now to put towards debt.
2. Stop using your credit cards
The first step to getting yourself out of a hole is to stop digging. If you want to succeed with and get out of debt fast, you need to stop using your cards.
Cutting them up is a permanent way of ensuring that you don’t use them. Alternatively (and I prefer this method), you can freeze them in a tupperware container in the freezer. This won’t stop you from using it in the case of an emergency, but it can help stop impulse decisions.
If Amazon has played a role in getting you to where you need to pay off your debt right away, consider deleting your credit card info from the site so you can’t make impulse purchasing decisions through their app.
3. Identify your triggers
Some of us prefer to blow money on Amazon (I’m guilty here); for others it might be food, clothes or something entirely different. You need to get control of whatever causes you to spend by identifying your trigger—the first thing that sends you down the path of overspending.
If you spend a lot of money on food because you’re tired around dinner time a good solution might be to start meal prepping on weekends.
If your vice is spending money on clothes, try to figure out why you do it—and what triggers your spending. It’s really important to get down to the root of your behavior.
You can pay off debt like crazy but you won’t get anywhere if you don’t address the problem that got you there in the first place.
4. Get on a budget
Everybody should be on a budget. When I say ‘budget’ I’m not talking about some something super complicated. Budgeting can (and should be) simple, and not take up too much time. The key to getting spending under control is being able to track where your money is actually going.
5. Get a raise
Unless you have received a raise in the last couple of months, you should definitely consider asking for one. A raise as small as $1/hour can net you an extra $2,000/year. That’s a lot of extra money that you can use to pay down your debts.
It can be uncomfortable asking for a raise, especially if you’re a person who avoids confrontation. Consider it though, as it’s really the easiest way that you can increase your income with the least amount of effort. There is also a lot you can do to improve your chances of getting the raise you want.
6. Sell everything that’s not bolted down
This is where you can get some quick momentum on paying off your debt. Look around your home, your shop and your driveway. Do you have any valuable items that you just don’t use?
Some great ideas for things to sell are:
Take some time to look into the value of things that you want to sell to make sure that you’re getting the most that you possibly can. Last year, I had a set of Snap-On wrenches that I put on Craigslist for $50. After doing a quick search of sold items on Ebay I saw that the wrench set would sell for over $120USD. I quickly pulled the ad down and sold them on EBay instead!
7. Become a hustler
To have the best chance of success meeting your debt payoff goals, you’re going to need to make some extra cash. In addition to getting a raise, the best way to do this is by starting a side hustle.
I won’t go into detail about your options—you can find them here instead. That said, the best side hustle is usually some combination of something that you enjoy, can make a viable second income from and works around your current work schedule.
8. Negotiate with lenders
This is especially valuable if you are behind on payments. Lenders want to get paid, and they want to get paid quickly. Contrary to what you might think, you have some negotiating power with companies that you owe money.
A few examples of things you might be able to negotiate are:
- Lower payments so you can focus on paying down higher interest debt
- Skip one or more payments
- Lower interest rate
You might not be able to get exactly what you want here, but there’s absolutely no harm in asking. In my experience, lenders appreciate when debtors are proactive about contacting them to explain their situation.
9. Use windfalls to make extra payments
I know how tempting it is to buy a new laptop or car when you come into extra money, believe me. Extra lump sums of cash can go a long way toward paying off your debt though. Some sources of lump sum cash might be:
- Tax refunds
- Proceeds from a big sale (car, RV etc.)
10. Allow yourself a treat
Perhaps this isn’t true for everybody, but I have found extreme frugality difficult to stick with in the long term. This is especially true when I don’t allow myself some treats or extras. For me, including a little extra money in my budget to buy a morning coffee is important. I know how much it costs and it’s worth it to me.
What you value will be different but the point is, make sure to treat yourself. Maybe include a dinner out in your budget or leave yourself $50/month for Amazon purchases. Budgeting a little bit for something that is important to you can help prevent impulse purchases.
Whatever it is, treating yourself a little bit can be an important part of your success and actually help you stay on track.
You CAN Get Out of Debt Fast
Good for you for looking for ways to get out of debt fast. It can be easy to just keep living with your debt and making the minimum payments. Once you’ve experienced debt free living as an adult, I’m confident that you won’t want to go back to living under the crushing weight of monthly payments.
There is a way out. You probably won’t feel like you’ve made much progress in a week or perhaps even a month. As the months pass though, you’ll see those balances steadily fall. That will help you stay encouraged that a debt-free life is within your reach.
Stick with it for the long haul and make sure to celebrate milestones in a way that’s meaningful to you. It’s worth it in the end, I promise!
This post was contributed by Mike at NinjaBudgeter. A husband and father to 3 awesome kids, Mike teaches others how to get out of debt, live on a budget, save money, and make money.