There are many others who may have more or less credit card debt, but we all have one reason. We spend more money than we spend. Simple and important. There may be a lot of“reasons” why we get into debt, but all of this comes down to more than one cost. It does not matter whether mandatory expenditure, medical costs, emergencies or any other reason. If you spend more than you spend, you will be in debt.
I have written several times about the reasons why we are in debt. There are many reasons, but it all boils down to spending more than we bring. I set up a business, used credit cards to fund it, bought a Jetski, and funded credit holidays. The business failed and the water motorcycle broke down. What I have to prove is monthly debt repayment.
I like credit, it loves me. Unfortunately, our relationship is doomed to failure. Credit card gives me what I can’t afford and charges it to me in the future. If I knew what I knew now, I wouldn’t get my first credit card in college. I will take the time to learn more about credit and use it in a wiser way. I can’t take back what I’ve done, but I can use this failure to tell me what I shouldn’t do.
Fortunately, I learned my lesson from my mistakes and had no trust at all. In fact, I often use it, but use it in a wiser way. I know what I’m doing now and haven’t paid a penny of interest since paying off my credit card debt.
Here are the steps we use to repay $50000 and $25000 in consumer loans. Yes, we squeezed more than $75000 in debt in four years. This is possible, and hopefully these steps will help you achieve your goals.
Step 1-stop spending without thinking
This sounds easy, but it is the hardest so far. You must figure out why it costs so much money. I spent it to fund my business, just to buy something I didn’t need. I bought it to meet my needs. It is time to figure out the difference between demand and demand. I studied my finances carefully and found that I needed to change. I shut down my profitable online business, stopped eating out, cut off our cables, and created a detailed shopping list. I take lunch to work every day is a better way, saving a lot of money. These are my reasons to stop spending money. And do something. In addition to paying regular bills, you also need to figure out the use of the remaining funds and cut off expenses. It may be harsh, but it is important.
If you have not done so, I strongly recommend that you register for services such as Personal Capital or Mint.com. Seriously, they all changed my financial life. When I started using Mint, I turned to Personal Capital because it was easier to use and didn’t bother me with all of these ads. It’s even better at introducing my investments(yes, I even have them when I’m in debt! ).
Step 2-choose your debt payment method
Once you figure out how to stop spending, you need to choose a debt payment method. There are many options, but the main two are Debt Snowball and Debt Avalanche. If you want to know the difference, take a look at my snowball and avalanche breakdown. I chose the Avalanche method because it means math to me (the key is there!). I use my emotions to take on debt, but I want to exclude them. By using the Avalanche method, I can save thousands of dollars in interest payments. This is my emotional victory.
To tell you the truth, it doesn’t matter which way to choose. If you choose a way, the only way out of debt. There are no winners here by choosing one over the other. If you choose anything, you are the winner! Keep this in mind and move forward. I even saw people start using a method and switching. You can do it month by month. Starting today!
Step 3-keep the goal and focus
Welcome to the next most difficult step. It is not easy to repay the debt, it usually takes some time. None of us have luxury goods to pay off our debts in a few months. This is likely to take years. It took me four years to pay off my credit card and consumer debt (about $75000). It took longer than some, because we have been saving debt. We try to ensure that we maintain our goals. There are many temptations in daily life, but you have to understand your goals.
Do you want to bury your debt or would you rather have financial freedom? I chose financial freedom. Don’t be afraid to tell your friends or family that you can’t do something because you can’t afford it. You may not want to provoke your friends or family, but these are necessary changes. If they love and respect you, they will understand. Paying off your debts is about becoming a better person and more economically stable. You must do everything you can to keep your goal. I made some simple changes and more difficult changes to make sure I continued my debt payment plan.
Step 4-make more money
You can only save so much, so there may be many times you don’t have enough money to speed up your debt service. In addition to working full-time, there are many ways to make more money. I make money by selling things on Craigslist, selling on eBay, conducting surveys (yes, this can work), creating blogs, and making money on certain projects through Upwork. I work hard every night and earn some extra cash. I can pay with my credit card. You have to be outside the box when you pay off your debts. Think about what you’re good at and see if you can make money from it. Still, no. You have to spend money to start a sideline. That is unwise.
Step 5-learn how to save more money
As you might imagine, when I deal with credit card debt, I don’t have many saviors. In fact, this mentality occurred before that, but credit cards and consumption only pushed savings to the back. I don’t care about saving money. I have time in my life. I really wish I knew what I know now. It will be painful to use your unnecessary expenses to realize what you have done to yourself.
Just look at the power of compound interest. Kindness is something powerful. I realized that I would take my money off the table in the future, as well as the general emergency. I didn’t save too much for retirement, I didn’t invest, I didn’t pay cash for an emergency. I did something wrong. I had to teach myself how to save money.
Fast forward for a few years, I still save for emergencies, I invest, save for retirement. I scrapped the “fear of investment” atmosphere and opened a Betterment account in 2012 a month after credit card debt disappeared. This is the best decision I have made in terms of investment. They make it easy for Neanderthals to do this (, Geico!). I have recommended the service to anyone who is willing to listen. You can also check out WealthFront, because they are great substitutes for Betterment.
It seems that it is really harder for us to save money than we do now. I have a special section on this website. Saving money is really not that difficult. We just messed up the priorities. We can’t distinguish between demand and need to stop. Once I stopped using everything I needed, I realized I could not have so much and leave more money in my pocket. This is all a state of mind. Change it and your financial freedom will follow!
Step 6-celebrate your success
This is my most important step, I think everyone should be involved. Because we know that spending is very emotional, we must create moments of celebration. I used the Avalanche method to eliminate the emotional aspect, but you can’t completely eliminate it. So, to make sure I stayed on the goal, I created celebration steps. During the repayment of the debt, I will celebrate when the debt is repaid to a certain level. If I pay off $5000, I will go out with my wife to celebrate. Now, I won’t go on partying, but I’ll go out for dinner and beer. I pay in cash, so I won’t add it to my credit Card debt, but it’s important. Whenever I reach a new milestone, I celebrate. This step makes me so proactive and keeps me clear-headed. Debt likes to disappoint you,
Step 7-continue your financial education
For me, one of the biggest motivations to win was when I began to branch and learn more about money. Before that, I knew how to make money, and of course I knew how to spend money, but until I dug deep and learned how money affected me, I changed my financial life. It’s been three years since I paid off my last credit card, but I’m still studying