There are a lot of opinions out there about debt. Some people say that there is good debt, while others feel that all debt is bad. I believe that no debt is good debt. Debt just keeps us from doing the things that we want to do in life.
Why Pay off Debt?
Some people have credit card and or have student loan debt, some have personal loans, loans from family, etc. Any money you borrow and have to pay back is considered debt. Becoming debt free is not just an activity or task to check off your to do list, it is a complete mindset change. It is a choice you have to make to get rid of the debt and make the right choices for your life.
My life changed the day I decided that I was tired of giving all my money away. I knew there were things I wanted to accomplish and the weight of debt was keeping me from reaching my goals. I made the choice to sacrifice certain things to pay off my debt. These days nothing makes me happier than hitting that send button for a final payment. The joy of knowing that I have paid off one more debt is so unbelievably satisfying.
Make a Plan
To pay off debt you must figure out how much you have and what types you have. I had both credit and student loan debt. I was able to pay off my credit cards, but I am still paying off my final student loan. The first step I took in tackling my debt was to list them all down. Write it on a paper, put it on a spreadsheet, but write it down. Now take a moment to just digest the amount of debt that you see on the paper. Once you have all your debts listed make a plan.
How are you going to tackle paying it off? How much extra money do you have to put toward this debt every month? Remember when we talked about creating a budget this is when it comes into play. Having a budget in hand will let you see how much extra money you have each month to put towards repayment.
Debt Payoff Method
There are many opinions out there of how you should pay off debt. For me paying it off starting from the lowest amount to the largest amount just made more sense. That way you are knocking out your balances faster than trying to pay the one with the highest interest rate first. You may have a small amount of debt and can pay it off in a short amount of time with some discipline. Or you may have a large amount of debt and can’t see the finish line. But don’t give up hope.
Figure out why you want to get out of debt and keep this reason in mind whenever you get weary or tired of the process. There are days when I just want to be over and done with paying off my student loan. But, then I have to remember why I wanted to be debt free. Keep going whether you are at the start of the journey, in the middle or nearing the end. Becoming debt free will give you more freedom and less stress.