Starting your debt-free journey can be overwhelming.
Even when you know it’s the right thing to do, it’s still not necessarily easy — especially living at a time when having debt is considered the norm.
So what do you do? How do you move from wanting to pay off your debt to actually making it happen?
Unfortunately, as with most things in life, there isn’t one set of hard and fast rules for getting debt-free. What works for one person might not work for another.
But there are a few things that tend to be helpful for most people starting the debt-free journey.
Here are a few of those tips.
Nine tips for starting your debt-free journey
Starting your debt-free journey? That’s awesome! Whether you are starting with a couple credit cards or six-figure debt, here are nine tips to get you started.
Commit to starting
And, in doing so, commit to stop borrowing money. After all, what’s the point of spending your time, energy and money getting out of debt if you’re just going to spend yourself into a hole again?
Sounds easy, but considering we live in a time where having debt is seen as normal, this can be tough.
TIP: Worried about staying on track? Look for accountability partners! This could mean telling your friends and family about your debt-free journey — or it could mean looking for community online. Instagram is great for that — check out the #debtfreecommunity hashtag (you can follow me on Instagram at @ourbillpickle)
Make a budget
I know I have said this before, but it bears repeating: if you want to get out of debt, you need a budget.
What that looks like will vary from person to person, but there are two things you absolutely need to include: how much you make and an honest list of your expenses.
The honest part is important. Your budget is not a place to be aspirational or present best case scenarios; it should reflect your actual spending.
Having a budget will help you paint a clear picture of your finances, which is so important when it comes to starting your debt-free journey.
TIP: When creating a budget, make sure you use a format that works for you. Some people swear by software (like You Need a Budget), while others (like me) prefer a simple spreadsheet. Ultimately, it comes down to your individual preferences.
Save an emergency fund!
Much like the budget, having an emergency fund is necessary for the debt-free journey.
Life is going to happen when you’re paying off your debt. Your emergency fund is what makes it possible to deal with situations as they come up without erasing all the progress you’ve made.
If you’re starting your debt-free journey, you need an emergency fund.
TIP: How big should your emergency fund be? There are different opinions about this. One popular figure is $1K, but I’m not convinced. When deciding how big yours should be, consider how much you think you would need in the event of an emergency. If $1K only covers your rent for one month and nothing else, it might be worth saving a bigger emergency fund.
Get current
It doesn’t make a lot of sense to focus on aggressively paying off a student loan if you’re several months behind on your power bill. If you’re starting your debt-free journey behind on bills, it’s important to get current.
How you do this (and how long it will take) will depend on your financial situation. The starting point needs to be making a list of all the bills you’re behind on. From there, you can determine the best way to move ahead. The important thing is knowing what you’re dealing with and making a plan to change.
TIP: Cutting items from your budget and/or boosting your income are good steps to take at this stage, but it also might be worth your while to pick up the phone. Depending on the bill, your creditors may be willing to work with you to establish a repayment plan. It can’t hurt to ask!
Choose a strategy
You’ve committed to starting, you’ve made a budget, you have an emergency fund and you’re current on all your bills — now’s the time to make your plan for tackling your debt.
The first step is to make a list of all your debts. Once you have that, there are a few different strategies you can use. Two common ones are the debt snowball and the debt avalanche.
The debt snowball involves paying off your debts from smallest to largest, regardless of interest. The idea is that you make minimum payments on all your debts then throw anything extra at the smallest one. Once that is paid, you roll the minimum payment and all that extra money to the next debt in the line. The idea is seeing quick results helps you gain momentum.
The debt avalanche focuses on the interest rate. You order your debts from the one with the largest interest rate to the smallest and pay them off in that order. This is a good idea if you are carrying a lot of high-interest debt (like multiple credit cards). The idea is by focusing on those debts first, you free up money that would otherwise be going toward interest.
TIP: As you pay off debts, it can be tempting to add that freed up money to your every day budget instead. Avoiding lifestyle creep is hard, especially if you have a lot of debt, but you’ll get to debt-free faster if you keep rolling those payments.
Embrace imperfection
You’re going to have times where things won’t go as planned. Life happens! When these situations come up, it’s important to remember that the debt-free journey is exactly that: a journey. There will be highs and lows — and there will be things that happen that are beyond your control. That’s why it’s important to embrace imperfection.
TIP: Why do you want to get debt-free? Having an answer to this question is super helpful, especially when things aren’t going as planned. Knowing your why gives you something to focus on when something throws you off-track.
Don’t compare
Everyone’s debt-free journey looks different. By the same token, everyone comes into their journey with a different set of circumstances — which makes it pointless to compare yourself with others.
Comparison is the thief of joy and supporting another persons success won’t dampen yours.
TIP: Track your progress — and do it in a way you can refer to when you find yourself falling into comparison. Reminding yourself of how far you’ve come can make a big difference.
Celebrate the wins
Paying back debt is hard. So when you reach milestones, celebrate that!
It is so important to acknowledge the progress you’re making, especially if it will take some time to pay off your debt. Celebrating the wins along the way can give you the motivation you need to keep going.
TIP: Don’t celebrate paying off your credit card by…using your credit card. Look for cheap (or free!) ways to celebrate the milestones!
Keep going
What can you do with your money if you don’t have debt? Whatever you want.
Don’t give up. Let the idea of a life without payments motivate you during the tough times. Like I said, paying back debt is hard but know it will be worth it.
TIP: Think about what life will be like when you’re debt-free. Revisit you’re why. Do what you need to do to keep moving forward.
Final Thoughts
Getting debt-free isn’t always easy.
Depending on the type and amount of debt you have, it can be a long process and what works for one person might not work for you.
But there are things you can do along the way to make the journey easier. And while it can be difficult to see when you’re in the middle of the journey, the destination will be worth it in the end.
What piece of advice would you give someone starting their debt-free journey?
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