You’re strapped with debt, up to your eyeballs in loans and don’t see a way out. What do you do? Pay it off! Duh, right? Recognizing the problem is the easy part. What’s next? You figure out how to get to the finish line. It seems so far away, but you’d do anything to get there quickly. What do you do? Easy. Follow these seven steps:
Act your ‘wage’
You’ve heard it before. Stop acting like you’re wealthy. You’re BROKE! Stay out of malls, restaurants, movie theaters and stay at home or go for a walk in the park. It’s that easy. Stop spending money. Stop buying things you really don’t need to impress people you really don’t like.
Save more than you spend
It’s simple math. But contradictory to what so many people do. What goes in doesn’t have to all go out. If you make $3000 per month, live off of $2000. Heck, if you can live off of $2000, try living off of $1000. Every penny you save above and beyond a standard emergency fund and basic necessities should be thrown at the debt. No matter how large. The only way to eliminate debt is to throw money at it.
This is the hardest one for me. I am a pretty patient person, but when it comes to getting out of debt I just can’t stand to sit around. But sitting around is about all you can do sometimes. It’s a slow process, going from broke to debt-free. There’s no quick fix, no one thing to solve the problem. It’s a combination of many things that have led to your poor financial situation and it’s going to take time (and a lot of other things) to fix what you’ve broken. Patience is key; never give up.
Work your butt off
This is another tough one to swallow. Nobody seems to want to work hard. Most of us prefer to be lazy. But lazy doesn’t pay bills, create wealth or build a solid foundation for your family’s future. Working your butt off does. If it takes two jobs, go for it. Work three or four if you have to. Hustle on the side. What’s your passion? Photography? Writing? Video editing? Graphic design? Web development? App development? Painting? Interior design? Cleaning? Organizing? Mowing lawns? There are a million things you can do to earn some extra income, and they all start with working your butt off.
Working your butt off also applies to your current career. Say you’re a mid-level manager, or a recent college graduate in your first job. There’s a lot of potential to grow, make more money, and advance your career. Be the one at the office first, and the last to leave. Grow your time-management and productivity skills. Become a leader and excellent public speaker. Don’t be afraid to speak your mind. All of these things will lead to career and personal development that will naturally bring you more money – not immediately but certainly over time.
If you don’t understand money, there’s no way you can control it – whether big or small. Poor families that win the lottery tend to blow all their winnings and suffer the consequence of returning to poverty. Don’t be like them. Read books, understand what a 401(k) is, learn about mutual funds, taxes, and other areas of life, too. If you want to advance your career, read books that will give you insights to get to that next level. Knowledge is power.
My recommended starting point in the world of personal finance is Dave Ramsey. Visit his site, listen to his show, buy Total Money Makeover or Financial Peace. His Baby Steps are tried-and-true, and the only ‘guaranteed’ way to build wealth. Emergency fund, debt-snowball, retirement savings, mortgage payoff, and so on. The simple stuff. The building blocks to financial freedom.
Learn to say ‘No’
Friends and family that don’t understand your passion to be debt-free won’t make it easy to get there any quicker. Friends want to go out for drinks, food, and generally spend money with you. Family can be the same way. Make it clear to your family and friends that you can’t spend money, and would prefer to do something cheap, like grab a six pack and binge watch The Office for the tenth time. All it takes is the ability to say ‘No’ when the activity is out of your budget. Even better, recommend cheap alternatives. And if your friends or family are laced with debt themselves, help them to realize the urgency to be debt-free too.
Don’t give up
I know I mentioned this earlier, but it’s huge. With all things that take time, you’re going to fall off track every once in a while. Are you in shape? There’s no huge difference. Being in shape and being financially fit are one and the same Getting in better shape is a slow process that begins to take form after weeks of dedication to healthy eating and physical activity (or in our case careful spending and saving). When you fall, dust yourself off and remind yourself what it will feel like to not owe anything to anyone – and to have all that extra cash in your pocket each month. Remember, it’s 100% possible, people have been in much worse situations than you, and the light at the end of the tunnel isn’t as far away as you think.