June 28, 2012, 6:00 am

How-to Crush Your Debt Forever

by: MD    Category: Credit Rating & Credit Bureau
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Is your debt holding you back from the life that you want? Do you want to finally start saving more money?

It’s time to take a step back and look at crushing debt. I enjoy writing about making more money, starting a business, and working on cool projects. The thing is that many readers are in a position where they’re still stuck with debt and can’t make too many moves for the time being. I totally understand that. This is why it’s important to focus on getting rid of that debt.

I wanted to put together a primer on crushing debt to help you get started and build some momentum.

How can you crush your debt forever?

Calculate how much you owe.

Do you know how much you exactly owe? The first step in dealing with your debt is to figure out how much money you owe in total.

When looking to see how much money you owe, I recommend considering the following thoughts:

  • How many outstanding credit card balances do I have?
  • Do I have to pay my parents back?
  • How much school debt do I have?
  • Who needs to be paid back first?

Once you figure out how much you owe in debt, you can move forward. You just need to know where you stand.

Decide which debt to attack first.

Which debt are you going to deal with first?

There are two schools of thought here.

  1. The first belief is that you should attack the debt with the highest interest rate first. This is the mathematically correct option since you’ll be saving yourself money in the future on interest charges.
  2. The other school of thought is to go after the smallest debt first. This strategy is all about chasing after a quick win. When crushing debt, you can get pretty discouraged at times. This theory believes in psychological boosts that come from seeing results.
Both options work. The end goal is pay off your debt. It doesn’t matter how you get there. I just want to make it easier for you.

Find a side gig.

It would be totally helpful if you found a second gig to help you deal with the debt. The more money you have coming in, the more you can put towards your debt. Thus allowing you to become debt-free much quicker and ahead of schedule.

The hidden benefit of working extended hours is that you can prevent yourself from spend money by being at work. It’s tough to spend money when you’re at work. Whenever I want to get hardcore about my savings, I pick up the amount of hours that I work.

Automate your payments.

Setup your bank account so that your debt payments are made automatically. You don’t want to be the victim of a simple mental error. This is why I believe in automation. Once you set your payments up, you can forget them.

Keep on going.

This is the least fun part. You just have to keep on going. There are no shortcuts here. Just repeat. Viciously pay off your debt with your eye on the prize. Don’t forget to still have some fun (without the plastic).

Reward yourself once in a while.

I don’t want to see you snap on your road to becoming debt free. This is why I recommend that you reward yourself after a small win or when real progress is made. A reward doesn’t mean that you put yourself into more debt. It can be something simple like a night out or a dinner at your favorite restaurant. I want you have to fun and feel good about what your doing. Burnout can be avoided by simply treating yourself when you deserve it.

I have more on this in my premium guide, Completely Conquer Credit.

That’s how you can become debt free. You won’t be debt free today or tomorrow. If you stick it out you can have a credit card balance of zero in just a few months.

Once you’re debt free you can quit your job, build your savings, go on more trips, and live the life that you want. It all begins today with the first step of your journey. I hope you’re ready.

What are you doing to crush your debt?

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Comments

Even once automated I do not recommend forgetting about the payments. If you have variable income or an unexpected transfer comes out you may not have enough money to cover it. Also if a payment doesn’t come out for some reason you could be charged a late fee or higher interest rates. Always check to make sure things are working as planned to avoid these simple slips.

We were auto-overpaying our current mortgage and that was working wonders. Once we close on the house being built, we will go back to that and hopefully pay off our current mortgage by next year and the one we are getting within the next 10 years or less. Other than mortgage debt, we are saving so we won’t need any other debt again…hopefully…if our current cars can make it another 2-3 years. :-)

Ugh, I’m in the keep on going phase, and IT SUCKS.