Paying off Debt with Intensity

With the inflation in the U.S. going nuts over the past year, it’s no wonder that most Americans are in more debt than ever. Whether you are indebted $500 or $50,000, it can seem like a dark cloud is looming over your head. It can be scary, especially if you have debt collectors calling or threatening you regularly. Here are a few tips for paying off debt quickly:

1. Start by saving $1,000-$3,000 in an Emergency Fund right now! This may seem counter intuitive because I want you to save money while you have debt looming over your head. However, when Murphy comes knocking and you need new tires or a hot water heater, you don’t want to accumulate more debt while you’re trying to fast track your way out of debt. Having a few thousand dollars set aside as a cushion can really help. If you already have a basic emergency fund set aside, you can skip this step. Or if you have more savings, you may want to use a portion of your savings to pay off your debt. Think of all of the interest you’ll be saving.
2. Make a list of all debts along with the interest rates you are paying for each one.
3. Call and talk to my friends at Trinity Debt Management before you do anything. They may be able to help you consolidate your debt, making lower payments and paying off your debt in fewer months or years.
4. Start by paying the higher interest rate debts off first. So if you have 4 debts at 5%, 8%, 17%, and 21% interest, no matter the amounts for each debt, begin with the debt at a 21% interest rate. While some suggest paying off your lowest monetary dollar amount first and then picking up steam, you will end up paying lots more in interest this way. Especially if you have some that are under 10% and some that are over 20%.
5. Live a frugal lifestyle. If you don’t do this one, you might as well throw most of the others out the window. No, seriously! You have to live on less than you make, and if possible, live on a LOT LESS than you make while you accelerate your debt payment. This means doing a budget, tracking your spending, and saying no to extra spending (sometimes) for the sake of repayment. It could mean switching jobs or picking up a second job to increase income. Maybe this year you offer a gift or your time and services rather than spending money on holidays. Cancel Netflix for a year. Eat in instead of eating out or ordering DoorDash. The faster you can pay off debt and stay out of debt, the faster your freedom will come. Momentary sacrifices equal a lifetime of freedom. In fact, you might even find spending less brings you more joy than before.

This will be a marathon and not a sprint. There may be some setbacks along the way, but stick with it. Don’t give up! I’m cheering you on! Once you get the ball rolling, you may just feel your motivation increase. For me, I got a boost of adrenaline in seeing the numbers go down!

The above 5 tips will help you pay off debt with intensity. Notice I said with intensity, not instantly. If you want some practical ideas for saving money, check out my list of 18 Ways to Make Some Extra Cash.