Learn simple lifestyle changes to get out of debt plus a plan of attack that will help you become debt-free faster.
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Becoming debt-free is a goal for many – and for good reason: a lot of debt that you have difficulty repaying can feel like a noose tightening around your neck. In this post, Patti Henry will show you that you can make some simple lifestyle changes to get out of debt quickly.
Patti Henry is an Occupational Therapist, wife, mother of two, and blogger. Along with her husband, Jason, she created Our Life On FIRE, which focuses on their family’s journey to financial independence.
She is dedicated to educating and inspiring others on how to live a meaningful life full of purpose and intention. When any free time presents itself, she can usually be found cooking, reading, hiking, and traveling. You can connect with her on Pinterest and Facebook.
Achieving a debt-free life can be difficult but it is not impossible.
When tackling a financial obstacle such as debt, you need to change your mindset. Many times we know the problem exists but we don’t do anything about it because it is too overwhelming. By doing nothing, you feel stuck and helpless.
But hey, guess what? You are in control of your life. You can make the choice to do something about it. And making the decision to get out of debt will change your life for the better.
The dreaded “D” word comes in many forms. With student loans, car loans, mortgages, and credit card debt being the top culprits.
Americans are drowning in debt. Here are the scary statistics:
- Student loan debt in 2020 is now at $1.56 trillion with the average debt per borrower at $32,731.
- Credit card debt in the U.S. is at $930 billion with $8701 being the average debt per household.
- Mortgage borrowing has risen to $9.56 trillion.
- The total U.S. household debt balances have surpassed $14 trillion.
I want to become debt-free – where do I start?
Step One: The first step to getting out of debt is acknowledgement. You need to look your debt in the face and recognize it as a problem that you want to fix. If you no longer want to be the statistic, then make the decision to change that.
Step Two: Look at the facts. Sit down and take the time to organize your finances. Come up with a list that includes the type of debt you have, the amount that you owe, the interest that you are paying, and the minimum payment.
Step Three: Once you have all of the data, you need to make a plan. This is a great time to set some goals for yourself. Goal setting is a great way to hold yourself accountable and to give you a clear path to crushing your debt.
Also, don’t forget to involve your spouse or significant other in your goals and your plan. Having someone supportive by your side during this challenging time will make it easier. And you will have someone to share and celebrate your wins with!
Plan of attack
There are many ways to tackle your debt. The method that you choose is completely up to you.
The important thing to remember is to be consistent. If you are consistently paying down your debt, the end result will be the same, regardless of which debt you pay off first.
Smallest Balance First: In this method, you choose to put all of your extra money towards the debt with the smallest balance. In doing so, you will knock that debt off of your list. By quickly paying off that one debt you get the motivation that you need to stay on track and continue to meet your goals.
Highest Interest Rate First: In this method, you choose to put your extra money towards the debt with the highest interest rate. By lowering the total amount owed you will lower the amount of interest that you pay overall.
Remember that when you make payments towards a loan, the money that you pay goes towards the interest first then the principal. If you are able to make extra payments then that money will lower your principal allowing you to pay your debt off faster with less interest.
A great, eye-opening, resource is this Debt Calculator, which can be found on NerdWallet.
After plugging in all of your debt information it calculates your “debt-free date.” It also lets you play with the numbers to see how you can pay off your debt within your goal time frame.
Lastly, the results show you exactly how much interest you will be paying in the given scenario which, to me, is a huge motivating factor. Knowing how much extra you are paying in interest is sometimes the driving force to pay your debt off faster.
Simple lifestyle changes to get out of debt faster
Life for most of us is busy. You may have a full-time job, kids, or other obligations that take up a lot of time and energy. Paying off your debt may seem like a daunting task but there are a lot of simple changes that you can make in your life to help you get out of debt faster.
The two simplest but most effective changes that you can make that will not only help you to be debt-free but will also open up many other opportunities in your life are to Make More Money and Live Below Your Means.
Make More Money
There are so many ways to make a little bit of extra money. And every penny adds up.
Side Hustles: Turn a hobby into a moneymaker, pick up some freelance work, walk your neighbor’s dog, become an Uber driver, work as a virtual assistant…..the options are endless!
Sell Stuff: Selling your unwanted items is an easy way to make money AND declutter your home. List your items on eBay or Facebook Marketplace. This is something that takes little time and effort but can make you some extra cash.
Live Below Your Means
Living below your means is defined as not spending more money than you earn. This way of living will help you to stop frivolous spending and force you to be more money-conscious.
You can achieve this by living a more frugal lifestyle. Being frugal is not the same as being cheap and is not about deprivation. It is about being mindful of your spending and only spending money on things that are meaningful to you.
This lifestyle change will help you to spend less, giving you more money to put towards your debt.
Final thoughts on making simple lifestyle changes to get out of debt
My husband, Jason, and I know just how distressing it can be to have a large amount of debt. Know that you are not alone. At one point my husband had a six-figure student loan debt and like most people we have also had a mortgage to pay.
Unlike most people, when we bought our house we made the decision to finish paying off Jason’s student loans, which at that point were thankfully down to five figures, as well as pay off our mortgage in two years. By implementing the above strategies, we were able to succeed.
You will have to work hard to get out of debt but it is worth it. Now that we are debt-free we don’t worry about money and have less stress.
To us, being debt-free is so much more than just not having payments to make. It is about having opportunity and freedom.
We no longer feel like we are chained to work, making money just to turn around and give our paychecks away. It has given us the financial freedom that we coveted and has brought a feeling of peace to our lives.
You can do it too.