I’ve written about the subject of getting out of debt in the past, but because I frequently receive emails from people struggling with massive amounts of debt, I thought I would put together five steps for getting out of debt. These steps are more “big picture”-less procedural and more emotional. After all, until you get motivated to change you will simply spin your wheels.
1. Get angry
We go out of our way to repress anger in our society, but anger is a perfectly normal human emotion. An emotion that when harnessed properly can lead to powerful changes.
Find a way to personalize debt, and then get mad as hell at it. I hate debt for a lot of reasons, but a big one for me was the fact that debt limited my opportunities, and those of my family. My kids have missed out on opportunities to make lasting memories because we’ve had to skip family vacations. I had to stick it out in a soul-sucking career because we were too in the hole to consider moving. I spent many weekends mowing lawns a couple summers ago trying to generate extra income to pay down debt, all the while missing my family dearly.
At some point I said enough. I went from being indifferent, to depressed, to downright mad. That debt was not going to beat me. I would no longer ignore it while it festered, eating away at my future income and robbing my family of opportunity.
2. Stop spending money, cold turkey
When deep in debt you don’t have the luxury of saying things like, “I’ll try to spend less next month.” No, you WILL spend less next month. With the zeal of a heart attack survivor starting a new diet, prioritize your household expenses. Anything not contributing to food, shelter, transportation, health and basic clothing gets cut. Period. No excuses.
- Drop the cable
- Cancel home phone
- Cut out the gym membership
- Get rid of the yard service, the exterminator, and Netflix
- Turn up the thermostat
- Brown bag lunch
- Have a no-spend weekend
- Ride your bike to work
- Eat rice and beans
Get drastic. Get creative. The deeper you can cut spending the more money you can direct towards paying off debt. And the more money you can throw at debt the faster it gets out of your life.
3. Eliminate opportunities to go back into debt
Got a problem with credit cards? Cut them up. Order too much crap online? Erase all profiles storing order information and destroy anything with a credit card number on it. Have a thing for cars? Sell the one you owe $20,000 on, and buy a $1,500 piece of junk to get back and forth to work. You’ll discover true friends couldn’t care less what you drive.
Have trouble in stores? Stay out of them. Shop every other week as much as possible, and only enter the store with a physical list of things to buy. Exit store with only things from that list. No excuses. It doesn’t matter what’s on sale, what’s on clearance, and what you just “have to have!”
4. Focus income towards your debt like sunlight through a magnifying glass.
I recall from my youth that light from the sun when filtered through the lens of a magnifying glass and focused on a particular spot is strong enough to ignite a flame. That’s exactly how you should approach paying off debt.
Focus as much of your income as possible on the next debt in your snowball. That debt should be sweating like a guilty criminal under the bright lights of an interrogator. Work overtime, pick up a second job, start a side hustle. Do whatever it takes to get your income up and direct all additional income towards repaying your debt.
5. Do not backslide, do no retreat, do not give up.
At times, following through on your financial goals will seem like an uphill battle. For instance, sustaining momentum when paying off debt is very difficult. Quick wins give way to long battles with high-balance debt, and it might seem like you are getting no where fast. However, as long as you are making progress, keep chopping away.
Another danger presents when things start to go well. Complacency begins to creep in. You have paid off 75% of your debt, increased your income, and decreased your spending. Suddenly that $1,500 a month you are sending to pay off student loans starts to look pretty good on a television, or on that vacation you skipped the last two summers.
This is a dangerous place to be, because the more comfortable you feel, the more risk there is you will give up and live with that remaining 25% of debt for the rest of your life. Keep your head down, your legs driving and sprint all the way through the finish line. And no matter what, do not quit until all balances reach zero.