How Can I Pay Off My Debt Quickly?
It's a new year and a common goal is to get healthy. For some getting healthy means losing weight, getting more exercise or more sleep, but the focus of this post is going to be getting financially healthy (I am the Maryland Mortgage Mama after all!)
I bet you will be surprised that once you start getting financially healthy, some of the other health goals will start to fall into place. Debt can be a big cause of stress, which can lead to lots of other problems!
First things first. Let's determine where you are right now.
1. Gather your credit card bills and other monthly bills/expenses, paystubs and bank statements.
2. Grab a new notebook or open an excel/google doc and list out
a. your total debt balances and payments
b. static payments (rent or mortgage, car payment, credit card minimums, donations) insurance, phone, subscriptions)
c. variable payments -go through your bank statement to pull out variable payments and determine the average spent monthly - including gas and electric, food shopping, gas etc. by taking the total paid monthly for the year and then divide by 12. Have a quarterly or annual bill ? Be sure to include that, budgeting monthly for it.
d. Make a column for "extras" to include restaurants/bars, entertainment, door dash, ubers, vacations, etc.
Add up each section so that you know how much you are currently spending each month. Don't forget about ATM or cash withdrawals-where does that money go?
Surprised? One of my clients found that their family of 6 was spending almost $800 PER WEEK on fast food and carry out! Another realized that door dash was costing almost 20% of her paycheck!
3. Stop. Really, just stop, take a breath and know that you can get out from under this debt!
4. Add your take home pay and subtract out the required payments, credit card minimums and average variable payments. How much is left over? This is what you are going to use to create your budget.
5. Look for ways to save on those regular monthly bills and variable expenses. Be realistic and don't try to cut out all fun, entertainment and food out. You will probably quit before you get started!
Look at where you can cut down some expenses. If you eat out for lunch 5 days a week, how about cutting back to 1 or 2 times a week and bring your lunch the other days? Meet friends at the bar every weekend? How about hosting a game night instead with a BYOB and snacks? Do you need 3 streaming accounts or 4 cloud storage accounts? Can you cut back on your cable subscription? Have you called them to review your plan, maybe there is a better/cheaper option for you or maybe it pays to check around. Little changes can add up to BIG savings!! Make a game out of it, if you are doing this with a partner, challenge each other to find ways to save!
I found that when I started to pick up my favorite soda when it was on sale by the 6-pack, I wasn't tempted to buy them at the convenience store when I gassed up my car. I found that I was usually adding in a snack and a few lottery tickets to boot. It's amazing how much just that small change saved!
I think this is enough for today! Don't get discouraged by what you have in front of you. Knowledge is power. Come back tomorrow and learn some more ideas to begin to get out from under that debt!
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