If you are among the few that have never being in debt before, count yourself blessed, because if you are any close to being like me, that debt will give you sleepless nights and take the joy out of whatever it was that you financed the debt with, long after the initial rush from the purchase.
If you want to grow your wealth, become financially independent and get a good night's sleep, you need to get out of debt as quickly as possible and do all you can never to get back in debt again.
Here are a couple of great videos to get you started.
Video 1 - 2 Methods to Use to Pay Down Your Debt
The first video describes two methods that you can adopt to paydown existing debt quickly.
- Snowball method - pay smaller balances off first. The quick wins from the fully paid off balances gives you an additional boost to keep you on track
- High Rate/Debt Avalanche Method - payoff the debts with the highest interest rate off first. This will save you money in the long run from cutting off that high interest payments you would have paid for that longer period.
In both cases, the starting point is to make the minimum required payments all all outstanding balances first and then use any available cash to pay down based on the method selected.
The method you choose to pay down your debtdepends on your preference and there are other methods too that others may swear by. Check out the video below for more about the two methods.
Video 2 - 5 Steps to Get Out of Debt and Stay Out of It
In this video, Dave Ramsey outlines 5 strategies to get you out of debt and lights additional fire in your belly with his deep insights about the bondage of debt to keep you motivated to stay out of it.
Although this video is about 30 minutes long, it is well worth your time.
Also, regardless of your religious leanings, the principles will serve you well. Here are the 5 strategies he discusses in the video:
- First, save some money - Before you start attacking and paying down your debt, first save some money. This money you save ahead will keep you from running back into debt because of an unexpected event;
- Next, quit borrowing more money - cut up that credit card, do what ever it takes not to add on additional debt;
- Next up, sell something - this one really resonated with me as it describes exactly how I got through some of my dry patches in my undergrad years. What is the use of an item that you don't need that much if at all, but which you can sell to generate some cash to get you out of a bind? In my case, I would rather sell something and use that cash, than borrow for the same use.
- Take a Part time job - think of how you can generate alternative sources of income and use that extra income to aggressively pay down your debt
- Pray - The essence of this part is to seek for strength to stay the course. If you've ever tried to change something or form a habit, you will understand the importance of some form of external support. For some, it may be prayer, for others, an accountability partner or coach or a little of both. Whatever your preference, get the support you need so you don't slip into old habits and erode all the gains.
Do watch this video to the end though, the imagery really lights some fire under you to get moving.
Which of the two methods have you tried? Which other ones have worked for you? Do you plan on adopting Dave Ramsey's strategies? What other startegies for getting out of debt have worked for you? Comment below to share your experience, which may inspire and propel others into action.