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Are you ready to start paying off debt, but not sure where to start? In this post, I’m sharing how to get started paying off your debt, so you can become debt free and be financially free, too!
My husband and I have worked so hard to pay off our home and land, and are so proud to be debt free 6 years after buying our home and 2 years after buying our land.
We knew we wanted to become debt free as soon as possible so we didn’t have to worry about owing anyone, and we would have more freedom in our lives. We have worked hard, lived frugally, and been committed to our debt free dream.
And you can do the same! You can start paying off debt today and reach your big goals so much sooner!
How to Start Paying Off Debt
If you are serious about paying off debt and realizing your dream of becoming debt free, the best place to start is by making a debt payoff plan. Because without a plan, you don’t know where to go.
Making a plan to pay off debt doesn’t have to be complicated, overwhelming, or take a lot of time. You can keep this as simple as you’d like. Our plan was always very simple!
The Ultimate Debt Free Roadmap Workbook:
I’ve created a workbook that will help you work through these steps, so you can build your debt payoff plan faster and easier!
The Ultimate Debt Free Roadmap workbook will help you easily create your custom debt payoff plan. The pages area all ready to be filled out, and the workbook takes you step by step through the process to create your personalized plan to pay off your debt.
Get The Ultimate Debt Free Roadmap workbook here!
Here are the 4 steps to take to start paying off debt:
1. Calculate your current debt.
List out every debt you have, the current balance, the monthly payment, and the interest rate. Total all of your remaining debt.
2. Set and break down your big debt free goals.
I love to dream big and set big goals. It really helps me to have something to focus on and a challenge.
I want you to set some a big goal to become debt free. But it needs to be specific, with a specific amount and a timeline.
Know the exact amount you need to save/pay off.
When do you want to achieve this by?
Once you make your debt free goal, you can break it down into smaller goals to make it more achievable.
Then, you know what smaller goals to work on to reach your bigger goal!
Example: If your big, crazy goal is to save $50,000 in 5 years, you might wonder if that is even possible. But when you break it down to $10,000 a year, that seems a little more realistic. And when you break that down even further to $833 a month, that seems even MORE doable. Keep breaking it down. $208 a week? Not so bad.
Breaking down big goals is the best way to reach your goals. Baby steps!
Here’s how to break down your big goal into smaller, baby goals that are much easier to achieve and focus on:
- Break your debt free goal down into a yearly goal.
- Then, break it down into quarterly goals.
- Then, break it down into monthly goals.
- Then, weekly goals.
- You can even make daily goals.
If your goal has a longer timeline, like 10+ years, you can break it down into a 10 year goal, 5 year goal, 2 year goal, yearly goal, and then the smaller goals.
3. Make a debt payoff plan.
Here is where my workbook, The Ultimate Debt Free Roadmap, will really come in handy for walking you through creating your custom debt payoff plan. I’ve got pages you can fill out to quickly and easily work through creating your own debt free plan.
You can get the Ultimate Debt Free Roadmap workbook here!
I suggest starting with your smallest debt, and focus on knocking one out at a time.
Pay the minimum payment on all loans, but focus on tackling and getting rid of the smaller debts first.
By paying off the smaller debts first, you will build momentum and get practice paying off debt. Once you get that first debt paid off, you will want to keep going and tackle the others.
You want to find a quick win to get started, so the small loans are the best place to start.
Once you get that debt paid off, work on the next smallest loan, until you get them all paid off.
4. Find ways to pay off debt faster:
There are several ways you can pay off debt faster.
You can declutter your home, sell things, and put the money towards paying off debt. Here’s a list of 77 things you can declutter and sell to make extra money.
Making extra money is a great way to pay off debt faster. This is something that really helped us! We did side jobs like making and selling crafts, flipping furniture, renovation jobs, fixing cars, and more. Here are 30 side jobs ideas you can try.
Another thing you can try is to cut your spending in different areas. Try cancelling a monthly subscription, cancelling the newspaper, getting a cheaper cell phone plan, only eating at home, or setting a weekly grocery budget.
Anytime you get a bonus or raise at work, apply it towards your debt. Just pretend you didn’t get a raise, and have the money automatically transferred to pay off your debt on pay day.
Quick Recap:
Just to wrap everything up, let’s recap what steps you need to take to start your debt free journey.
- Assess your current situation so you know where you are now vs. where you need to be.
- Set big goals and break them down into baby goals so you know exactly what to work on.
- Map out your debt free plan and stick with it.
- Find ways to pay off your debt even sooner.
I’m so excited for you to work towards your big dream of becoming debt free! I know you can do this!
My step by step debt payoff plan workbook, The Ultimate Debt Free Roadmap, can help you work through this process quickly and easily so you can create your personalized debt payoff plan in no time. It will help you know exactly what steps to take to become debt free.