I’m not a mind reader but my guess is that you’re tired of making credit card payments.
You carry so much debt that you’ve lost hope of ever being debt free–at least within the next few years. Maybe you haven’t even thought about the next few years. All you know is that having revolving debt is sucking the happiness out of your life.
Do you continue buying things you can’t afford and hope that you won’t outlive your debt? Of course not. If you’re reading this blog you’re an action taker who doesn’t settle for mediocracy.
So what’s the solution?
First, to stop digging yourself further into debt and to adopt better money habits. Although I still carry debt, I’ve managed to pay off all my credit card debt. At my current pace, I’m on track to be debt free within 2–3 years.
But, I’m not telling you this to feel good about myself. After paying off all my credit card debt I’ve picked up some habits that are now helping me pay off the rest of my debt. My hope is that you apply some of these habits so that you too can be debt free.
Let’s get started.
If you’ve ever played video games you know the importance of having goals.
Think about it–would you play a video game without a purpose?
Your incentive for engaging is to be #1. Like video games, you need a purpose for paying down your debt.
Will you sleep better?
Will you be able to retire faster?
By having a clear goal you’ll not only stay focused but be less likely to quit along the way. The moment you experience a setback you’ll have the motivation to continue. But, having the burning desire to be debt free isn’t enough.
You need to set clear goals. All this means is that you need SMART goals that you can track along the way. By tracking your progress you’ll be able to motivate yourself to continue.
Be different and do the opposite of what everyone’s doing when it comes to spending.
Most people want nice cars, nice clothes, and nice electronics. The reality is you can’t have it all–at least in the beginning. If you’re in debt you need to cut your spending as much as possible.
Does this mean being frugal? Yes, to an extent.
Frugality doesn’t have to be your permanent lifestyle. But, when you carry serious debt being frugal is necessary if you want to pay off debt faster.
This means eating out less often and buying only necessary clothes and electronics. Create a list of “needs” and “wants” and focus on spending money only on the items you need. As you make progress in your journey, reward yourself with something from your “wants” list.
Discipline is one of the most important traits you can have for managing your finances.
Because without it you’ll continue to make irrational purchases wherever you go. The problem is that building a discipline is hard. It’s challenging to delay buying a brand new electronic when you have the money to do so.
A great way to build discipline is to rely on a strong purpose. Having a purpose will help you stay committed and delay short-term gratification. People who are able to delay short-term gratification have more successful lives.
“Follow your passion, be prepared to work hard and sacrifice, and, above all, don’t let anyone limit your dreams.” –Donovan Bailey
The reality is that having no good role models and bad habits have led you to accumulate a lot of debt.
This was something you couldn’t control when you were younger but can now change as an adult. The problem is that most people aren’t willing to pay the price. This the like walking to a store and wanting an expensive item for free.
When I was paying down thousands of dollars in debt I used most of my paycheck towards debt. This meant not being able to buy most of the things I’d wanted. Others have downgraded their homes, cars, and much more.
Know that to become debt-free there’s a price to pay.
How bad do you want to pay off your debt?
Will, you continue after losing your job?
Losing your job is extreme, but these are the questions you should answer to know where you stand. Most people know how to reach financial success but don’t have the persistence to reach it.
What will separate you from the rest in being debt free is having the tenacity to keep going no matter what. Facing setbacks is inevitable, so you’ll need to find a way to keep going.
Here are some ideas: 1. Join a group with like-minded people 2. Read books 3. Stop watching the news and listen to Podcasts instead
Filling your mind with positive stories will help you build persistence.
The best way to pay off debt is to stop digging yourself further into it.
Telling yourself you won’t buy unnecessary things isn’t enough. It’s like having junk food in your fridge when you’re wanting to lose weight–it won’t work. Avoid making irrational purchases is by distracting yourself.
And what better way to distract yourself than to learn new things?
The benefits are two-fold, you’d grow as a person and make less irrational purchases. Plus, learning should be a lifelong journey for you if you hope to reach financial success. Before you make the excuse that you don’t have time to review your schedule.
Manage your time better-using tools like Atracker and Google Calendar. Spend less time watching Netflix and use this time to read instead. On your way to work listen to Podcasts.
As you can tell there’s no excuse to not learn.
If you carry your credit card with you, you’re at risk of making irrational purchases.
How do I know?
After having a $0 credit card balance I ended up accumulating hundreds of dollars in credit card debt. Some people have the discipline to only use their credit cards for points, but most people can’t. Focus on paying everything in cash and you’ll have less debt to worry about.
Leave your credit card at home and make all your purchases via your debit card. Schedule payments to be automatically deducted each month using your online bill-pay feature.
It’s hard to be debt free when everyone around you isn’t.
You don’t need to cut ties with everyone you know who’s in debt, but surround your mind with positive thoughts. Listen to finance Podcasts and focus on debt pay off stories. Also, listen to business Podcasts and focus on how others are able to generate a higher income.
As you expose your mind to positive thoughts you’ll begin to picture yourself being debt free. Avoid going often to places where you know you’ll spend a lot of money. For example, malls, high-end restaurants, and events.
But, if you’re used to this lifestyle it’ll be hard to change. Gradually transition to different environments by starting small. If you’re accustomed to going to the mall 3 days per week, go 2 days per week.
Creating positive environments will help you practice good money habits without much effort.
Take time to review your outstanding debt. Set a recurring reminder each week and month to review your progress. This shouldn’t feel like a surprise to you since you’ve already set SMART goals.
A key benefit of reviewing your finances catching mistakes quicker. You’ll also make more mindful choices since you’re investing more time into improving.
The best way to review your progress is by using Personal Capital. After inputting your information you can view all your accounts in one dashboard. You can also view your spending patterns and if you’re on track to hitting your financial goals. Install Personal Capital on your phone to easily know where you stand with your finances.
You can follow the best tactics in the world but without patience, you’ll never succeed.
I get it, you want to pay off all your debt and you want to do it now. But, it pays off to have patience because paying off debt is a long journey. To avoid being impatient focus only on your daily or weekly goals.
For example, if you have $50K of debt, break this down into yearly, monthly and weekly goals. Track your progress in a spreadsheet or use Personal Capital’s net worth feature.
Another way to build patience and stay present is through meditation. It’s easy for your mind to have hundreds of thoughts that become overwhelming. Meditating helps clear your mind and to worry less.
No one loves debt.
Yet, somehow thousands of Americans dig themselves further into debt making irrational decisions. You don’t have to fall prey to this outcome.
But, it will take sacrifice, discipline, and persistence. As you embark your journey to being debt free, remember to have patience.
Regardless of how hard you try, you’ll still experience setbacks. Although I’ve managed to pay off my entire credit card balances I still carry some debt.
Picture not owing anything to anyone. All the money that comes is yours, except what you pay for taxes. What would you?
Odds are you’d make smarter financial decisions because of the person you’d become. View your journey to becoming debt free as a life-long one full of bumps along the way. But, one where you’ll adopt better habits and grow as a person.
You now know some tactics on how to crush your debt. Are you going to settle with paying debt forever or live a debt-free life?
Chris writes personal finance and productivity articles for software companies. He gets fresh ideas through continuously investing in himself and interviewing successful entrepreneurs.