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I’m going to take a guess here and say that 100 percent of people that are in debt wish they could be out of debt. Because, let’s face it, who actually wants to be in debt?
I’ll use myself as an example first. When my husband and I were dating, we each had credit cards totaling more than $7,000. John had student loans and I had a car loan. We didn’t like being in debt, but it wasn’t until we made a conscious decision to get out of it that things started to change. We paid off our credit cards within a few months and started living off of one income. Living off of one income for a year allowed me to stay home with our baby girl when she was born. I started freelancing, and any extra money we made went straight to our student loans and car loan. Within two years, we were debt-free, and it felt incredible.
Now, I hate to admit it but we are back in debt. We purchased an SUV over a year ago and have been steadily making large payments toward the loan. At this rate, we’ll have the SUV paid off by next summer.
Read: How we stay out of credit card debt
But – we’re already in the mindset of not wanting any debt. Perhaps you feel trapped and desperately want to free yourself from your monthly bills that are holding you hostage to a job you don’t like. Maybe you want to start a side business, or maybe you want to be a stay-at-home mom, or maybe you just want more disposable income each month to put toward investments or rental properties so you can retire early. Whatever your dream is, if you’re in debt – it’s going to be a lot harder (if not impossible) to accomplish it.
Before I go on, have you taken a cold hard look at your current debts? What interest rates are you paying? What are the terms? One thing you can do before preparing to pay off debt is to transfer your balances to a 0% APR credit card or use a Home Equity Line of Credit to pay off the debts if you own a home. Home equity lines of credit have extremely low interest rates because your house is used as collateral. This could significantly lower your debt payments every month and save you thousands of dollars in interest. If you do decide to go this route, make sure you work to pay off the home equity line of credit and do NOT get back into debt with credit cards.
So, the first step in getting out of debt is desperately wanting to make a change. Change comes when you’re current situation is no longer working for you. You want the change significantly more than you want things to stay the same. Hopefully, you’re at this point. Now, it’s time to mentally prepare yourself to get out of debt, which is half the battle.
View your debt as a huge burden, because it is. How much of your income is going toward your debt each month? Now, imagine you didn’t have to make those payments anymore. You’ve just freed up hundreds (or thousands!) of dollars each month. What would you do with that extra money? Focus on this end goal daily.
Write out your future goals and post them on the fridge. What do you want your future to look like? Depending on the stage of life that you’re in, this might be being a stay-at-home mom, it might be retiring early, it might be traveling the world in your retirement, it might mean spending more time with out-of-town family or it might simply mean working at a job you enjoy. Write your goals down, post them in a spot you will see them daily and stay focused on these goals. Debt is one of the main things that prevents people from living the life they want to live.
Get your spouse involved. I could not have gotten out of debt if it weren’t for the help of my husband. We started discussing our finances in-depth before getting engaged and married. If we weren’t on the same page, it would have been hard (if not impossible) to pay off our debt at such a rapid rate. If your spouse isn’t a “saver,” sit down together and write out your goals for the future. While this might not “convert” your spouse, it will at least get you on the same page regarding your future goals, and then you can make a plan together to accomplish them.
Stop viewing debt as the way of life. Debt is NOT the way of life. Banks and lenders are making money from lending their money to you. They are in business to sell you loans so you will buy more stuff and they will make more money. Of course they want to lend you money!! It’s what makes them money! With the exception of a mortgage and perhaps a college education, almost all other forms of debt are completely avoidable. You do not need credit cards, you can pay cash for your next car, you don’t have to finance bigger purchases like televisions and furniture, and most importantly you can live within your means and be significantly happier than living above your means.
You can still live a great life on less. I think a lot of people think they’re lives would change for the worst if they stopped using credit cards and focused on paying off debt. This is a lie that society (and lenders!) want you to believe. Living on less can actually enhance your life immensely. Spend the day outside at the park rather than at the mall. Cook a delicious meal from scratch with your spouse rather than go out to eat a fancy restaurant. Cancel cable and spend more time reading, playing board games or exercising. In my early 20s, I went out to eat all the time, shopped whenever I wanted and didn’t think twice about spending money (hence the credit card debt). Was I happy back then? Sure, but I wasn’t any happier then then I am now. Now, life is much more fulfilling. My life feels rich even though my possessions say otherwise. Challenge yourself for a few months to find free activities to do in your area, to cook your meals from home and to spend more time living rather than spending.
Related: How we slashed $900 per month in expenses
If you want to really speed up your debt-slashing process, a good idea would be to get a part-time job, start freelancing from home or even start a profitable blog. Blogging has the potential to make you a ton of extra money per month. While my blog is not yet at that point, I was able to bring in $100 in my first five months and I’m still going strong.
I will say, for me, the beginning of paying off our debt was the hardest part. This is where we had to change our habits. I stopped going to Starbucks everyday, we stopped playing Bingo at the casino multiple times per week, I didn’t shop as often and we started eating at home. My best advice is to take it day by day. Even now, I make it a goal to spend as little as possible each day. I know that seems strange, but it helps keep me on track.
If you’re in debt and wanting to get out, I encourage you to start now. Keep reading personal finance blogs, start an open dialogue with your spouse about goals and getting out of debt, and focus your energy on finding ways to enjoy life without spending money.
Are you currently in debt? What questions do you have about getting out of debt?
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