Paying off debt takes patience. Lots of patience and an equal amount of determination.
If you are expecting to read about some sort of magical, get-rid-of-debt-quick solution — you are going to be disappointed.
But if you are ready to work hard for your freedom from debt, keep reading for the secrets to paying off debt.
I carried balances on my credit cards all throughout college. By the time I was finally starting my first job as an auditor, I had $30,000 in credit card and student loan debt. Although I never missed a payment, sometimes I was only able afford the bare minimum payment amount. It became a vicious cycle of me paying what I could and the balance barely budging or, even worse, increasing.
1. Decide on a debt payment strategy.
Snowball Method: Focus your debt payment money towards your smallest balance, while paying the minimum on all your other balances. Once you have paid off the first balance, “snowball” that debt payment money to the next smallest balance. Continue this method until every loan has been paid off. This strategy provides you with quicker gratification and motivates you to tackle each balance.
Debt Avalanche Method: Identify the loan with the highest interest rate and focus your debt payment money towards it, while paying the minimum on your other balances. Repeat the process once the first loan has been paid off. This method makes more financial sense, because you will be paying less interest in the long run.
2. Make a budget and stick to it.
My biggest mistake when paying down my debt was not sticking to a budget. I was still putting unnecessary purchases on the credit cards that I was trying to pay off! Give yourself X amount of cash for spending money and leave those credit cards at home.
3. Be persistent.
Don’t let those big credit card or loan balances discourage you. It may seem like they aren’t getting any smaller, but you will start to see results if you stick to your debt payment strategy and budget.
The secret to paying off debt is having a plan and sticking to it. Simple enough, right? “Easier said than done”, you might say to me. And you are right. Paying off mountains of debt isn’t an easy task, but I did it and you can too.