Being in debt and feeling stuck is a major source of stress and worry.

Just thinking about your debt can cause your anxiety to soar. Peace of mind is one big reason you need to get out of the weight of owing money.

Most people can agree that getting out of debt is an excellent goal. Many believe they can not shake the shackles of debt ever, and they give up.

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But you can break free.

How do you do it?

Debt consolidation companies are there which will help. That is one way. However, there are drawbacks to this approach. Your credit score and financial ratings are affected when you go this route.

You can get out of debt on your own. It just takes some work, organization, determination and discipline.

Several factors in your life will need to be addressed.

Debt is not just a financial problem.

It is an internal problem. One created inside your mind. Your psychology and thoughts have created some of your debt – especially consumer and credit card debt. You must tackle these issues. At the same time, reduce the actual debt. Otherwise, you will find yourself in the hole again.

Questions and ideas to think about include:

• Can I be more mindful when I buy something?
  • Ask yourself, why do I need to buy more?
  • Is this something I really need or want?
  • Do I want it only because of an advertisement or trying to keep up with friends or family?
  • Can I delay gratification?
  • Can I be OK with less?
  • Can I afford this without putting it on credit?
• What is missing in my life that shopping or upgrading is covering up?
  • Am I bored?
  • Am I covering up feelings of anger or resentment or revenge?
• Can I picture myself in 20,30 40 or even 50 years from now?
  • Picturing your future self is a wonderful way to stay motivated to save money. You will be that age someday (hopefully!) and what you do today can help make that age less stressful.

 

While you are figuring out your thoughts and behaviors around money, you will also be working directly on your debt.

Important steps to reduce debt

Ignorance of where your money is going is a leading cause of debt.

1. Track your money — For a while I used an app called Mint. It worked like a charm, it can link your banks accounts and help you set up a budget. Some people make their own spreadsheets. Some write purchases down manually or in one of many budgeting apps out there. There are many options and ways to track where your money is going. The important thing is that you do NOT skip this step. If you don’t know what you are doing, how can you change it? Tracking is a crucial, non-skippable part of getting out of debt.
2. Set up a Budget. This can be done in the same app you track your money sometimes. Or else just figure out a budget yourself. Stick to it! There are many budgeting apps and programs you can use if you need help.
3. List out all of your debts on paper. In order from smallest to largest. First, pay off the smallest debt. Put as much as possible monthly on that debt. Pay only the minimum payment on the others. This is called the snowball method and is the quickest way to pay off debts. Once you have that one paid off you move the focus to the next smallest debt remaining and so on.
4. Sell excess items and put money directly onto debt payments. You can do this if you really need to speed things up. You should have excess items that you don’t need or use and have some value.
5. Stop eating out. Eating out often can drain your finances. Use that money to pay off your largest debt.
6. Pay cash for everything — people who use credit cards spend more money. — If you want to pay off a card, you must stop adding anything to it! Stop using your credit cards!
7. Find a side job and put all that money onto your debt. (Remember that this attack phase doesn’t last forever. So remember to visualize clearly your future self with no debts!)

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OMG, my debt is almost gone. Now what?

Yay! You’ve reduced your credit card debt! Now, don’t blow it.

The next phase of getting out of debt is staying out of debt.

• Keep checking in with your thoughts about money. Your thoughts about competing with others and be mindful around your spending.
• If you must use your credit card, you must pay it off in full every month. Credit card interest rates can compound your spending and spiral out of control quickly. This takes discipline.
• Keep tracking your spending and comparing to your budget.
• Start saving for your future.
  • House
  • Trips
  • Retirement
• Keep your future self always in the back of your mind. It really helps to visualize your elderly self and start taking care of them now.

Call to action:

What do you think? How can you use some of these ideas to make your financial life less stressful?

I challenge you to take one step today!

“Debt is not just a financial vulnerability, it’s also an emotional one. To let go of the things that are weighing you down in life and leaving them behind gives you freedom and security.” Barry Cripps