Debt can postpone your goals (like retirement!) and keep you from living the life you want. Here are 3 strategies to destroy your debt and take control of your finances.
- 1. What would your life look like if you were 100% debt free?
“Whether you think you can, or you think you can’t—you’re right.” –Henry Ford
Take a moment and jot down your thoughts. How would being debt free impact your stress levels? Your relationship with your spouse or children? How would your lifestyle be different if you weren’t making monthly debt payments?
The purpose here is to understand your WHY. Staying focused on why you want to destroy your debt and the positive benefits it will bring will help you to stay committed to changing the actions and attitudes that originally created the debt burden.
- 2. Ask your creditors for help.
Make a list of your creditors and then systematically reach out to them. Many creditors will be willing to work towards a mutually beneficial solution. Perhaps you or a spouse lost a job, are earning lower wages, or had to deal with an unexpected medical emergency.
The best time to reach out is before things get really bad, payments are missed, or your creditors turn your account over to a collection agency.
- 3. Use the snowball payment method.
Create a list of all your debts. Then, sort them from lowest balance to highest. Start by putting extra money towards the account with the lowest balance. Once that is paid off, roll all of the payments to the next account on your list. As each account is paid off, it will create a snowball allowing you to pay more and more towards each respective account until all of your debt is finally destroyed.