As a financial coach, I help people get organized so they can really start understanding their money. Part of the process is, you guessed it, getting out of debt. Here are some quick tips that have helped my clients get organized and tackle debt.
You must have a plan!
Financial personality, Dave Ramsey, says that “You can wander into debt, you can’t wander out.” To get out of debt, you need to come up with a plan and understand exactly how much money is coming in every month (income) and where your money is going every month (expenses). Once you understand this, it will be clear what changes you need to make to start tackling debt.
Get your plan on paper.
Now, this doesn’t mean you need to create your plan with pencil and paper (even though some will choose to do that!) It does mean that you can’t just think about a plan and keep it in your head and call it a plan. One of the most effective ways to create your plan is using an online budgeting tool that helps you create your plan and track your progress. As I coach clients to get out of debt, we use a special software program called WizeFi. It helps them see how debt is affecting their financial future by showing them what their financial future looks like on their current path as well as their wealth potential if they were putting their money in the most optimal places each month. So stop thinking about a plan and get it on “paper”.
React to the truths revealed from your plan.
When the numbers are laid out in front of you, you will be able to see a few things. Thinks like wasteful spending, income problems, subscriptions you no longer use, etc. Maybe you don’t need to spend the $200 on cable when you can see everything you want to see using Netflix and Amazon. It may be clear that spending $50-$60 a week on coffee is taking away from other things you would like to be doing. And do you really need that gym membership that is used every 6 months? Once your plan opens your eyes to your spending habits don’t just ignore it. React!
You will not be able to get out of debt unless you make some sacrifices here and there along the way. Maybe you need to eat out less or cut back that expensive coffee habit. Maybe cutting the cable bill altogether is what you need to do. Start thinking of the short-term sacrifices you can make so your long-term future is brighter. Because once you take the extra money from those sacrifices and start applying them toward debt, it will accelerate your journey towards financial freedom.
Get an extra job.
Many times your plan will show you that you simply need more income coming in during the month. So maybe for this period when you are trying to get out of debt, you need a part-time job. Delivering pizza, babysitting, house sitting, tutoring, and seasonal retail jobs are just a few examples of good part-time jobs that can bring in more money. You could also bring in more money by selling some stuff. Clean out that attic or basement and post items on eBay or have a yard sale. Then take all of this extra money and throw it at your debt.
Keep your eye on the prize
To get out of debt, you need to tackle it with intensity and commitment. But with “life” happening all around you, that is hard. One great way to stick with it is to become “future-oriented”. This means that instead of focusing on the sacrifices you are making today, focus on the joy and relief you will have when you are out of debt. Here is an example. One of the top concerns people have about retirement is being a burden to family members and loved ones. People don’t want to reach their retirement years and have to depend on family to support them financially. So look into the future and see yourself being a blessing to your family, not a burden and let that vision drive you to make the decision today to get out of debt!
Ready to get organized and start getting out of debt? Interested in the program I talked about above that can help you get a plan and understand your money like never before?
If so, schedule a 15-minute call button and let’s set up a time to talk!
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