CRUSHING DEBT

Today, we're diving into the nitty-gritty of debt payoff. We've touched on this topic before, but today, get ready for an in-depth exploration of a specific debt payoff strategy that can transform your financial confidence. If you've been looking for a specific strategy on how to pay off debt, this post is for you.

THE WEIGHT OF DEBT

Let's start things off by acknowledging the emotional toll that debt takes. It's not just about numbers; it's about the stress, anxiety, and frustration that many of us feel. If you find yourself caught in the debt cycle, it's crucial to recognize and understand these emotions. Debt impacts more than just your bank balance; it's a significant player in your overall well-being & mental health.

And my belief is that it's not all on you - our education system does not equip us to understand the debt that we start taking on at a young age. Young adults are bombarded with debt: credit cards, student loans & car payments. And we don't learn a thing about them in school so most of us have no idea what we are doing. We are also told that student loans are "good debt" but are naive to understand how long it will take to pay off 100k of school debt!! So, you don't know what you don't know - there is no use to stay in that shame for past mistakes. You can only move forward, so now is the time you know better & do better.

DEBT PAYOFF STRATEGY:

Now, let's get practical with a step-by-step debt payoff strategy.

1. Save your 3-month emergency fund: Dave Ramsey starts with saving $1,000 and I just don't think that is enough anymore. You need to be able to cover more of an emergency so you don't go into more debt while you're trying to get out of debt. Save 3 months of living expenses to get started.

2. List all debts from highest interest rates to lowest: be sure to include monthly payments and balance. You are now going to prioritize your largest debt (this will most likely be your credit card debt).

3. Pay all minimum payments and put any extra toward the highest interest rate debt. When you make this extra payment, make sure the payment is going straight to principle. If there isn't a good way to do this online, you may need to call.

4. Once you pay this off, roll that minimum payment + extra payements into the second priority. Again, make sure that is all going straight to the principal.

5. Repeat this until you have paid off any debt over 6% interest

Once you've gotten rid of all the high interest debt (anything over 6%) we are now going to take a more balanced approach moving forward. I would recommend splitting your excess between your debt & investing.

WHAT ABOUT YOUR MORTGAGE?

Surprise – I am not a big advocate of paying off your mortgage early. The reality is, the numbers don't often make sense. Most people have VERY low interest rates for their mortgage at this point in time and you will be able to make more money by investing those extra payments then you'll save on interest by paying off your house. Paying off your house is more of a behavioral and personal choice rather than something that is backed up by numbers. I put this on the lowest priority of debt.

CELEBRATE YOUR WINS

Debt payoff is a marathon, not a sprint. It requires discipline and perseverance. So, here's the deal – celebrate your wins. Mentally, you're going to need some success in order to be able to keep moving forward. Getting out of debt is no easy feat & takes a lot of focus. Celebrating wins fuels your motivation and keeps you charging ahead on your journey to financial confidence.

All in all - I am pretty proud of you for doing the research to figure out how to go about paying off your debt. I know that is a big first step! But, I know you can do it! Remember - if at any point you realize you may need a little accountability to make this work, don't hesitate to reach out!