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There’s one thing I haven’t spoken about on this podcast so far. One thing I find so taboo to me that I refuse to think about it. I’m talking about debt. Debt is the antithesis of what we are trying to accomplish. Our goal – my goal – with this podcast is to hopefully find my way to financial independence, or at least, better financial stability, and to help others find peace with their finances.
If you’re in debt, getting out of debt can sometimes feel impossible. It’s easy to talk about paying off credit cards or loans, but the path to becoming debt free isn’t easy. The simple answer is consistency. Imagine your debt as a mound of dirt. If you want to get rid of the dirt, and all you have is a shovel, you’re going to have to do it one shovelful at a time. It’s hard work. It’s not fun. You’ll get there eventually, but it’ll take a while. The feeling of finally being rid of the dirt (or debt) is the fun part.
We can move this dirt pile by using some of the methods we’ve already talked about in past episodes. The easiest to do is lower your expenses. We talked about building a budget in episode 2 “3 Simple Budgeting Methods.” Budget for the bare minimum and use what’s leftover at the end of the month to pay down debts. A second, more difficult method is to increase your income. Can you get more hours at your job? Are you able to find a second job or a side gig? There are many different ways to utilize skills that you may have to your financial advantage. Another solution from a previous episode is using your emergency savings. Do you have an emergency fund? Can you use some of it to get rid of some or all of your debt?
I understand these solutions may not be for everyone. Sometimes we just don’t have time for a second job. Sometimes we don’t have the resources to enhance our skillset. Here’s where I personally fall back on the “shovel” method from our earlier analogy. Consistent payments of as much as you can, hopefully more than the minimum payment, and you’ll get there.
If you’re listening to this and you have no debt, good for you. Stay there. Don’t go into debt in the first place. There are situations where you can take advantage of certain kinds of debt, like having a credit card for the points or using a loan to start a business, use for an investment or pay for your education. That’s topic for another time.
If you do need to go into debt for any reason, have a plan to get out quickly. Plan a weekly or monthly payment and consistently pay it down until it’s gone. If you need to open a new credit card, see if they have a zero percent interest period for new customers. This way, you won’t have to spend extra in interest payments.
Debt is like tying an anchor to yourself and attempting to swim. All it’s going to do is weigh down your progress and keep you from reaching your goals.
Question of the episode:
What are your experiences with debt? Are you currently in debt? Or have you paid off a large amount before? What methods did you use? I’d love to hear from you, so please leave a comment below.