Debt has become about as American as hot dogs and apple pie. The average household in America has more than $6,000 in credit card debt — and that’s just one piece of the puzzle. When you add mortgages, auto loans, student loans, and medical debt, it’s no wonder some feel like they’re drowning.
As if that wasn’t tough enough, it’s not unusual to run yourself ragged to pay off debt only to find yourself right back in the same place years later.
If that’s happened to you, no one blames you for feeling frustrated. Let the frustration happen, but then turn it into action. Here are eight tips for paying off debt — for good — from financial experts who’ve been there and seen it all.
8 expert tips for paying off debt once and for all
1. Get your mind right
It’s hard to make any monetary progress before you center yourself. Andrew Daniels, founder of Family Money Plan, explained why.
“Getting out of debt takes time. Think like a marathon runner instead of a sprinter. Because the marathoner is ready for the long haul, while the sprinter is exhausted almost immediately after starting.”
As tempting as it is to rush to pay down your debt as quickly as possible, focus instead on how to pay off debt sustainably. This is even more important if this is your second time around with debt.
2. Evaluate your true goal
It’s also important to understand what kind of relationship you want to have with debt. Here’s what Carrie Smith Nicholson of Careful Cents has to say.
“Living a debt-free life is totally different than being debt free once. So ultimately your decision comes down to being debt-free versus living debt-free. Being debt-free means that you don’t mind being in a small amount of debt, or with controllable debt, while living debt-free means no debt ever.”
Before you get started, decide what type of life you want.
Some people choose to avoid debt forever after paying it off because they’re fearful of being in over their heads or simply don’t want to pay interest on anything ever again. Others, however, might find ways to strategically use debt to reach their goals without falling into previous traps.
The upside to living without debt is knowing you’ll never fall in too deep again. The downside is that individual financial goals can become less attainable, such as owning a home. Of course, the opposite of each goes for living with debt. You might be able to attain more of your dreams — but they’ll come at a cost.
There’s no right or wrong answer here. If you don’t think you can handle debt again, then deciding to avoid it is fine. But if you feel ready to do it better the next time — or only take on amounts that are more affordable to pay off — then just make sure you carry the lessons you’ve learned throughout the repayment period.
3. Uncover the source of the debt
After you’ve looked forward, the next step is to take a look backward. Now’s the time to understand why you have debt in the first place (or for the second or third time).
Financial behaviorist and author of “Financial Intimacy: How to Create a Healthy Relationship with Your Money and Your Mate,” Jacquette M. Timmons, weighed in.
“Take stock of the reasons you accumulated the debt. If you don’t invest the time to identify why you got into debt, along with your debt patterns, you’ll never stay out of debt for too long.”
Then move on to the emotional side of debt. Erin Lowry, author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together,” explained how.
“Landing back in debt might very much have to do with your relationship with money. Getting an accountability buddy, a money coach, or even a financial therapist might help you, not only get out of debt again, but stay out for good.”
4. Master your cash flow
Now let’s get down to the numbers. This is where you can learn tips for paying off debt faster — but it’s still important to understand your cash flow first.
Douglas A. Boneparth, a financial planner who runs the advisory firm Bone Fide Wealth and co-authored “The Millennial Money Fix,” suggested becoming the master of your cash flow.
“This means that you have an intimate understanding of the money moving in and out of your life. So much so that you can anticipate what’s going to happen up to three months down the road.”
So, how do you do it? According to Boneparth, it’s all about the budget:
“Masters of cash flow start by creating a budget and then reconciling that budget against what’s actually happening over a period of time to see if your monthly average is aligned with what you’ve budgeted. If it hasn’t, and you’ve gone over, you need to be honest with yourself about your spending and what you really want for yourself.”
From there, goal setting can swoop in for the win.
“I find that those clients of mine that have identified, quantified, and prioritized their goals do a much better job of staying out of debt and actually become great savers. Having direction in life and going after the things you really want tend to help people build discipline.”
5. Build an emergency fund first
“No matter what your interest rates are, build a $1,000 savings cushion before making extra debt payments. With that in place, you can handle unexpected expenses without adding to your debt while you’re trying to pay it all off.”
Debt can be like a black cloud threatening you with a storm every day, which is why so many of us only want to focus on tips for paying it off faster. But not being prepared with an emergency fund can lead to even greater setbacks.
Life happens. Have some money put aside for emergencies, so they don’t derail your payoff plan once it’s in action.
6. Strategize, strategize, strategize
It’s time for the fun part, creating a debt payoff strategy. This can help you stay focused on the road ahead.
Two popular strategies are the debt avalanche and debt snowball. Both advise targeting your debt payoff by either paying off the highest interest rate (debt avalanche) or lowest balance (debt snowball) first while maintaining your minimum payments on the rest.
The magic of these plans is that you maintain your monthly debt payment amounts even as things get paid off. By doing so, you create momentum to pay off your debt faster.
Next up is to lower any interest rates you can. Shawn Tydlaska, financial planner and founder of Ballast Point Financial Planning, has helped clients do this with balance transfer credit cards. But you still have to create a plan.
“I have seen some clients refinance credit card debt with a balance transfer, only to find themselves still in debt when the promotional period ends.”
What you can do is divide your balance transfer balance by the number of months you have until the rate goes up. That amount should become your new monthly payment. But don’t ignore your other debt. “Once we refinance their debt, we come up with a game plan to pay off any remaining cards that do have an interest rate.”
7. Don’t get caught up racing to zero
By taking the steps above, you’ll likely be making major progress toward your freedom from debt.
But as financial writer Kali Hawlk explained, you should also make sure not to put too much pressure on yourself.
“Don’t get caught up racing to zero. Getting rid of debt is important, but you should try to strike a balance if you want to work steadily toward overall financial success (instead of achieving just this one goal of debt repayment).”
8. Don’t beat yourself up
Finally, be kind to yourself. Debt is frustrating. Debt can be agonizing. And the second time around with debt can amplify those emotions even more.
Break through these feelings with the reminder that debt can happen to anyone. Then heed the advice of financial writer and debt-payoff veteran Cait Flanders.
“Don’t beat yourself up over any of the decisions you’ve made that have gotten you back here. The most important thing you can do is change your mindset about your debt, and that starts with making peace with the situation.”
And, while you’re at it, remember the good things you’re already doing. “The fact that you’re aware of the numbers is a great first step. Now it’s time to change the story you’re telling yourself and decide today is the day you’re going to start working toward your debt-free future.”
Carve your path on the road to debt freedom
As personal finance expert Eric Rosenberg said, “The path to debt freedom is simple — spend less than you earn every month, and use the difference to pay down your debt.”
But figuring out just how to make that happen and stay motivated is going to be different for everyone. As you’ve already seen from having debt, paying it off, and ending up there again, sustainability is going to be the key to lasting success.
What’s more, expect that you’ll falter along the way. There’s nothing wrong with failure. What matters is what you do with it. Analyze what tripped you up, consider changing strategies if you need to, and then get moving again.
Paying off debt once and for all is no easy feat. But if you’re determined to accomplish it, then don’t let anything stand in your way.
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