Accepting debt and learning how to conquer it
One day it dawned on me that I was in some pretty nasty debt due to a car and student loan- to the tune of over $15,000. I also began to realize that I wouldn’t achieve true financial stability or spiritual peace of mind until I was free from it.
There are a few exceptions to this, such as house mortgages or student loans locked in at extremely low rates. But for the rest of us carrying the burden of high-interest debt, the weight on our shoulders of the money we owe can be immense.
Once I came to terms with my situation, I was prepared to start digging my way out of debt. This was a scary process for me.
I was living paycheck to paycheck and couldn’t exactly ream my way out of extensive debt overnight. I had to accept it might take months, or even years, to successfully eliminate all of my current debt.
Here are some ways I’m currently fighting my way out of debt
- Coming to terms with debt. By honestly facing it, I was then able to set my mind to conquering it. Finding acceptance helped ease me into the following steps.
- Changing attitude toward instant gratification. I began to use cash to only buy what I could afford to. I carried a debit card on me for backup, but my credit card was always left at home.
- Shredding credit cards (except for one, also my oldest), but not canceling them. Canceling a long history of credit can severely damage your credit report. I just made it impossible for myself to go on frenzied, psychotic shopping binges anymore.
- Stop being an item whore. I stopped spending money I didn’t have on items I didn’t need.
- Not acquiring more debt - through eliminating my credit card use and impulse shopping for crap items, and through not borrowing any more money in loans.
- Mentally preparing to aggressively tackle crippling debt. I was angry, and I was determined to stop allowing credit companies exploit my hard-earned money.
- Figuring out all current debt amounts; who I owed what to, and under what terms.
- Then figuring out which debt had the highest interest rate. Right now I pay the minimum on my other debts while aggressively throwing as much money as possible toward the highest interest amount.
Once it’s successfully paid off, I’ll use that same amount of money to then throw at my second highest interest debt; continuing this ‘snowball’ process until all my debt is eliminated.
- Or, if that feels too overwhelming (and for many of us it may, depending on how critical our debt is), tackle your lowest balance first. Once it’s paid off, throw the same amount of money towards your second lowest balance. Aggressively continue up toward your highest balance until all debt is eliminated. You’ll witness results sooner this way, which could help keep you motivated.
Although paying off your highest interest debt is the more sensible approach, paying your lowest amount first is more psychologically effective if you’re feeling overwhelmed under the burden of debt.
And then stop using credit cards except when used responsibly;
- Once debt free, continue to pay your balance off in full each month. Your credit card company will hate you for it ;p
If you can’t do this, stop using credit cards.
Don’t give up. Stay mad, and stay aggressive. It’s really scary being broke and finding yourself in this situation.
Even now I need to continually remind myself that I’m working toward greater financial freedom. Knowing I’m taking necessary and positive steps to accomplish this helps bring me satisfaction and peace of mind.
Don’t consult credit consolidation firms or consumer credit counseling firms unless you absolutely need to. You put yourself in this mess and you’re capable of digging your way out again.
Don’t pay minimum balances longer than you need to. Do you think it makes sense to pay $6,000 for a $2,000 item over the course of five years?
(Of course not, but your credit card company wants you to believe it does)
Baby Steps are Key ~†~ Fight to get out, and stay out, of the debt trap