How to Get Out of Debt (and Stay Out)
Getting out of debt and staying out of debt requires commitment and planning. It’s not just about having a powerful debt payoff strategy, but also about working on your mindset and understanding the reasons why you went into debt in the first place. Most people are familiar with the snowball method, which involves listing out all your credit cards and paying off the smallest one first. However, there are a few things missing from the way it’s commonly taught.
In today’s video, I discuss how to implement the snowball method correctly, as well as strategies for debt repayment and making peace with debt. I will also touch on the problem with debt dumping and the importance of refinancing high-interest debt. By following these steps and having a solid plan in place, you can gradually work towards becoming debt-free and staying that way.
Commitment and Planning
To get out of debt and stay out of debt, having a strong commitment and a sustainable plan is crucial. It is also essential to work on your money mindset and the reasons that led you into debt in the first place. The most common debt payoff strategy that people teach is the snowball method, where you list out all your credit cards from smallest to largest and pay them off in that order.
However, I believe that some crucial elements are missing from the way the snowball method is taught. Before starting to pay off debt, it is crucial to forgive yourself and stop beating yourself up for being in debt. It is also essential to realize that getting out of debt will take time and effort. Without a solid plan for paying off debt, you will be constantly treading water, paying off some debt and getting back into debt.
One common mistake people make is debt dumping, which involves paying off all their extra cash onto their credit cards without having a plan. This approach is not sustainable and can lead to a financial roller coaster of having money and then not having money. To avoid this, it is crucial to have a strategy in place and some steps to prevent you from going back into debt.
When using the snowball method, it is essential to make sure that you have money to spend on your needs and a little to enjoy your life. You did not get into debt overnight, and you will not get out of debt overnight. Therefore, getting out of debt can be a gradual process, and using the snowball method strategically can be a more sustainable way to live.
My approach to the snowball method involves dividing what you owe by the minimum payment for each credit card and putting them in order from the lowest divided amount to the highest. This way, you pay off the first card with the lowest divided amount first, as it has the least number of payments left before it’s paid off.
Before implementing the snowball method, it is also essential to refinance any high-interest debt to lower interest debt. This will help you get out of debt faster, and then you can use the snowball method.
Debt Eliminator Course
While it does take a lot of work to pay off debt, it is equally important to work on your mindset and the reasons that led you into debt in the first place. In my Debt Eliminator course, I provide a deeper dive into these topics, which can be super helpful in getting on your way and staying on your way to getting out of debt.
It’s important to realize that getting into debt doesn’t happen overnight, and it won’t go away overnight either. It’s a gradual process that requires a solid plan and a commitment to follow through. Without a plan, you’ll be constantly treading water, paying off some debt only to fall back into it.
The Debt Eliminator course can provide a deeper dive into topics such as mindset, sustainable plans, and strategies to prevent going back into debt. The snowball method can be an effective way to pay off debt, but it’s important to have money to spend first and to use a divided amount approach to get out of debt faster. Refinancing high-interest debt to lower interest debt is another way to accelerate the process of becoming debt-free.
The Problem with Debt Dumping
I have seen firsthand the negative effects of debt dumping. Debt dumping is when individuals take all their extra money and try to pay off multiple credit cards at once, often paying more than the minimum payment. While this may seem like a good strategy to quickly pay off debt, it can actually be counterproductive and unsustainable in the long run.
One common issue with debt dumping is that it often leaves individuals feeling broke and unable to enjoy their lives. By putting all their extra money towards debt, they may neglect other important expenses like groceries, bills, and even leisure activities. This can lead to a constant financial roller coaster, where individuals feel like they never have enough money.
Another problem with debt dumping is that it often lacks a solid plan or strategy. Without a clear plan for paying off debt, individuals may find themselves constantly treading water, paying off some debt only to fall back into it again. This can lead to feelings of frustration and hopelessness.
By implementing a strategic approach like the debt snowball method and having a sustainable budget in place, individuals can successfully pay off debt and improve their financial well-being without debt dumping.
Conclusion
Getting out of debt can seem daunting at first but if you treat yourself with forgiveness and compassion, you’ll be able to get out and stay out of debt. Today I talked about the snowball method and my tips to improve this method to create sustainable change in your financial story. I also mentioned my Debt Eliminator course- my in depth guide where I help YOU learn your money mindset and how to work with it rather than against it in your debt journey. Take the first step today.