Whether you are drowning in student debt or in a never ending whirlpool loans, there are answers on how to get your head above water. Although it may seem impossible at times, when you decide to make it your mission to turn your life around it is truly possible!
It’s overwhelming when you look at everything you might owe but don’t be in denial. Once you really have a clear understanding of the type of money you have to work with you can begin to start paying down your debt no matter how large your burden. The biggest thing to remember is that every small step you take is one step further to financial freedom.
When you first start this journey, a few things starting out to try:
- Write down every single person you owe and exactly how much you owe them
- Rewrite this list in descending order- smallest at the top
- Once you have that, tackle the smallest bill and give it all you got
- Make it a goal to send all your extra cents to that debt each month until it’s paid off
- Keep using this method over and over- each time you pay off a debt roll it over to the next debt
This is basically called the debt snowball method. You focus on paying off the smallest debt first (regardless of the interest rate) and once that debt is paid in full, you take the monthly payment you were making towards that smallest debt and add it to the next smallest debt! The main reason for you to use this method is because you will feel successful and you will continue forward momentum.
On the other side of the coin, you could try the debt avalanche method. This method has you starting with the highest interest rate first (regardless of the size of the loan.) You’ll still may the minimum on all of your loans but you’ll put all your extra cash towards the loan with the highest interest rate. This method will save you more money in interest.
Your debt can be scary but you are in control and it’s up to you to take the reins and decide there is a difference between what you need and what you want. Until you’ve paid off your smallest bill, your mindset should be that you have NO extra money for luxuries. If you are willing to sacrifice a little now you’ll be able indulge later without the guilt. Don’t give up, it takes longer to get out of debt than it does to acquire it. If it helps, get an accountability buddy to help you stay on track and stay encouraged.
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