Just over a year ago, I had $3,000 in credit card debt… and I was not happy about it.
At the time, I had just made a career switch and had landed my dream job as a writer and blogger for ReadyForZero.
But I had spent a few months between jobs while I worked to jump start my new career and during that time I dipped into my savings and then began putting some of my monthly expenses on the credit card.
At the beginning of last year, I made a commitment to pay off that credit card by December, and to my great satisfaction, I was able to do it successfully. When I had finally made the last payment, I felt a tremendous relief and a conviction to avoid any debt in the future.
That’s why I was so excited when Jeff started the Debt Movement to help people pay off debt in 2013.
I knew that getting people together and sharing tips and experiences would help motivate many of them to stick with their plans and get to debt free ASAP. And that’s exactly what’s happened. So with the end of April approaching, I thought I’d talk about 4 secrets that I’ve learned for paying off debt faster
1| Know Your options
With financial products and services, many times people aren’t aware that they have options. And that’s a problem, because choosing the wrong credit card or loan (with high interest rates) could cost you hundreds or thousands of dollars. Before you do anything else, evaluate your interest rates. For credit cards, you want a rate closer to 10% than 20% or move the balance to a limited time 0 APR credit card. For other types of loans it depends, but compare to what’s advertised in order to get an idea for what is fair.
Then see if you can get a lower interest rate. Start by calling your credit card company and telling them you’d like a lower rate. If you’ve been a long-time customer and haven’t missed any payments there’s a strong possibility that they’ll say yes. If not, take a look at what’s offered by other companies. You can consider doing a balance transfer, which allows you to take advantage of low-interest introductory period – just be sure to read the fine print before signing on the dotted line.
If you have student loans, study all the repayment options that are available to you and be sure to use any federal programs that can speed up your progress.
2| Get organized
It’s almost impossible to tackle a long-term debt problem without getting your finances organized. Otherwise, how will you ever know what is causing you problems and what measures you can take to speed up your progress? The most important thing is to understand exactly where you money is going each month. Start by reviewing your budget (or creating one if you haven’t already). It may help to think of this as your spending plan because it allows you to plan how much you will spend each month – and on what.
Your spending plan should empower you to reduce your expenses in order to pay off your debt faster. That doesn’t mean you have to give up everything fun, but you should be purposeful about which things you decide to purchase each month and make sure you’re not engaging in impulse shopping or letting your short-term desires overwhelm your long-term goals. For more tips on budgeting, check out our Budgeting Tips resource center.
3| Set goals
The most famous and successful athletes use visualization to improve their performance, and the reason is that the human brain responds powerfully to what it sees. That means you can create a vision for yourself in order to get the outcome you want.
By setting a concrete goal (like “I’m going to get out of debt in 2013”) and then filling in the vision with details (like “I will pay $200 more per month”) you give yourself a clear path to pursue, which is much easier than pursuing an abstract idea like “getting out of debt.”
Make your goal concrete and envision as many successful milestones as you can. And then go get them!
4| Make income on the side
While everyone understands the concept of saving money, many of us don’t immediately think of earning more money as an answer to our debt problem. But the fact is, making money on the side has become significantly easier these days thanks to a whole bunch of new websites that connect people online.
You can get paid for writing, designing, tutoring, transcribing, filing, copy editing, designing, programming, and a million other things online through sites like Elance.com where you bid for jobs posted by people all over the world. Even if you only have a few hours a week to dedicate to this, it could speed up your debt payoff quite a bit. For more on how to do this, take a look at Carrie Smith’s blog post on how to make money from home.
Hopefully with all these secrets you will be able to get out of debt faster and get on with your life!
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