If you are reading this, you are likely interested in divorcing debt for good. You might be tired of that student loan still following you almost 15 years after graduation. Perhaps you want to end the cycle of depending on payday loans. You may desire to retire early and use your money to invest instead of padding bankers’ wallets. Whatever the reason, you just know you want out of debt and quickly.
Here are 5 strategies to supercharge debt payoff:
1) Reduce or Eliminate Your Monthly Bills
We had a CRAZY goal to eventually pay $0 in housing costs (rent/mortgage) and that became our reality. Choose a bill or two or more and make a targeted, concerted effort to eliminate it or reduce it. You can negotiate with your cell phone service provider (usually threatening to switch does it) or other utilities. If you are REALLY serious you can cut out things like cable or internet. I’ve heard of people splitting wi-fi with neighbors, taking roommates or moving in with mama! NOTE: Don’t forget to use your savings to pay off debt!
2) Reduce or Eliminate Your Variable Expenses
For the purposes of this discussion, these expenses are different from bills. Bills are payments you make each month for a service like electricity or water (we are excluding debt payments here, too.) For instance, you can attempt to reduce spending categories like groceries, entertainment, eating out and beauty services. Find lower cost alternatives and use your savings to pay extra on your debt!
3) Negotiate with Creditors
If you have loan balances that have been persisting for a while, check in every so often to see if the creditor will shave something off the balance. In debt collection, typically the more time that passes on a balance, the less likely a creditor is to receive full payment. For this reason, they are often willing to negotiate a payoff to something, even if it’s a smaller amount. We once negotiated with a creditor to bring a $12,000 bill down to $3,600. TIP: Be sure to get the reduced balance and payoff agreement IN WRITING. Don’t give them any access to your bank via debit card or ACH. Either wire money or use money orders to pay the balance.
Start a Side Hustle
When we were starting out our journey to debt freedom, we needed extra money like nobody’s business. We were broke! Start small then scale up as you are able. As a stay at home mom with a newborn, my options were limited but through prayer and determination, I found a few that brought in money right on time: selling on eBay and Cragslist, teaching Spanish and marketing services. I eventually settled on database consulting and this side hustle got us to debt freedom and has been padding our savings ever since. Your side hustle has the potential to wake up the entrepreneur in you and take you to heights you never thought of! If you are not sure of what to start with check out some ideas here.
Keep Track of Your Success
If you create goals, revisit and track progress against them, you are more likely to reach your goals. I like visual aids and lists. Evernote is a good tool to start with. Creating something like a vision board is a fun accompaniment to your written list as well. Visuals that show your progress can be useful and motivating. Personal Capital has a neat dashboard that tracks your net-worth in graphical form. As you pay off debt, your net worth increases which can clearly be see in the dashboard component immediately upon logging in. Before I knew about that, we kept a rough version of our debt elimination progress in colorful chalk on white paper taped to the wall. Everyday, I’d be in my office working in my air-conditioning exempt room (read: hot as eva) with the sole motivation of wanting to see the numbers budge. It was my daily motivation to cross out a balance, reduce it and lower the overall balance. It would eventually carry us into debt freedom.
I hope you found these strategies useful. Do you have any others that you are using to wipe out debt on supercharge mode?