10 Steps to Getting Out of Debt FAST
There are times in our lives where we want things to go slow, like raising our babies. They grow so fast and we constantly beg them to slow down. And then there are times where we just wish things would speed up, like getting out of debt.
No matter where you are in your financial journey, getting out of debt can be a daunting task, especially when you’ve been at it for a while or if you’re staring at a mountain of debt. I remember asking myself, will this ever end?!
Well, here’s the good news, it will end. Maybe not tomorrow, or next week, or even next year but it will.
But, if you are tired of being in debt and are looking for ways to get out of debt faster, look no further.
Here are 10 steps to getting out of debt fast!
In 2017, I remember sitting down and looking over my budget, wondering where I was going to get the money to pay for the rest of my bills. I was making the minimum payments on my credit cards just to get by. But no matter how many times I lived the proverbial shovel out of my debt ditch, it just kept filling up. It was then that I realized that as long as I was doing the bare minimum, I was never goign to get ahead.
It was then that I decided it was time to make a change. So, I dedicated myself to not only doing better, but being better. I wasn’t going to live like this anymore!
Have you ever felt this way? Tired of feeling like the weight of debt is holding you back from experiencing true financial freedom and living out your God-given purpose?
I feel you, and I want you to know that there’s hope and a way out. In this post, we’re going to explore ten powerful steps that align with our Christian values, helping you break free from the chains of debt and embrace a life of financial stewardship.
Trust in the Lord, for He has a plan for your financial well-being.
So, grab a warm cup of your favorite drink, open your heart to God’s guidance, and let’s embark on this transformative journey together. Are you ready? Let’s dive in and witness the blessings of debt-free living!
Assess Your Debt
The first thing you want to do is assess your situation. This means gathering all relevant financial information and having a “come to Jesus” meeting.
List out all of your debts and their interest rates and total it up. You also want to include any minimum payments. Is should look something like this…
Create a Realistic Budget
Next, you want to create a realistic budget based on what your financial situation actually looks like. This means, you have to sit down with your income, bills, debit and credit card transactions, and any other relevant information and create a budget.
Creating a budget will help you understand how you’re spending your money, identify good and bad habits, and show you how much money you have left over to tackle your debt.
So, take a look at your budget. Analyze it. What do you notice? What stands out to you?
With this information, determine how much you can put towards your debt each month without putting yourself in a bind.
Debt Repayment Strategies
Now it’s time to consider your options for repayment. To ensure you are successful in your debt freedom journey, it is important to choose the right repayment strategy for you and your situation.
So, what are your options?
The two most common debt repayment strategies are the Snowball Method and the Avalanche method. Both are very simple and easy to follow.
The Snowball Method prioritizes paying off the smallest debt to the largest. With this method, you would make your minimum payments on all of your debts and then use the remaining funds towards the smallest debt first.
Using our first example, the snowball method would look like this…
Using this scenario as an example, let’s say you have an extra $300 each month to use towards your debt repayment. You would start with debt #1 – Credit Card #2. You would make your minimum payments on all listed debts and then the extra $300 would be applied to debt #1, reducing it down from $400 to $85 (including the regular minimum payment).
The following month you would apply this same practice. Make your minimum payments on all debts, and then apply the $300 to debt #1 first. Since it is already paid down significantly, it would only require $85 to pay it in full, leaving you with an extra $215 to apply towards debt #2.
Then in the third month you would take your extra $300 and combine it with the minimum monthly payment you were using for debt #1 (which is now paid off) and continue to apply it to the next debt until it is paid off.
You would continue to apply this principle untl all debts are paid in full.
It is called the snowball because the principle is that with each account that is paid in full, you can apply more and more money to the remaining accounts, which in turn accelerates your debt repayment plan.
The Avalanche Method is similar but prioritizes the accounts with the highest interest rates first.
Using our example, the Avalanche Method would look like this….
Using this scenario as an example, with the extra $300 each month to use towards your debt repayment. You would start with debt #1 – which in this case is Credit Card #1 (account with the highest interest rate). You would make your minimum payments on all listed debts and then the extra $300 would be applied to debt #1, reducing it down from $1,989to $1,554 (including the regular minimum payment).
The rest of the process is similar to that of the Snowball Method in the rest of the repayment. You would still use any excess funds towards debt from accounts that are paid off, but in all this process tends to be a little slower (or seemingly slower) at gaining momentum.
I personally recommend the Snowball Method in most cases because it creates momentum financially and mentally. You are able to celebrate the smaller wins, which actually encourages you as you head towards the larger wins.
However, there are times where the Avalanche method is a better fit. Like in the instance of extremely high interest rates (typically found on payday and installment loans).
Ultimately, it is up to you what method you choose. The true factor in your success will be your determination, dedication, and motivation. So, consider your options and choose what works best for you.
Prioritize & Strategize
As you consider which option (Snowball or Avalanche) is better for you, it is important to prioritize and strategize exactly how you are going to stay motivated while paying off your debt.
It takes drive and motivation to reach financial freedom. Which you CAN DO!! But the question is, why? Why do you want to reach financial freedom? Why do you want to be debt free?
Are you tired of feeling like you’re drowning every month? Or perhaps you want to buy a house and your debt is holding you back? Or maybe it’s something else entirely.
Whatever your reason, make it plain.
“And the LORD answered me, and said, Write the vision, and make it plain upon tables, that he may run that reads it. For the vision is yet for an appointed time, but at the end it shall speak, and not lie: though it tarry, wait for it; because it will surely come, it will not tarry.”
-Habakkuk 2:3
Cut Expenses & Increase Income
Take a look at the budget we talked about earlier.
Where can you cut back? Do you have 3 different streaming services, when you know you never have time to sit and watch that much tv anyway. Do you find yourself spending a little too much on fast food, starbucks, or at your favorite home goods store?
Consider your goals, what is more important to you? Do you need that latte every day? *Side note: that $5 daily latte is costing you an average of $1,300 per year. Now if that doesn’t put it into perspective for you, how’s this..
According to C+R Research, the average American household estimated their monthly subscription costs at $89 each month, when in fact, they were spending $219 each month on subscriptions. That’s an extra $130 they didn’t realize they were spending each month, JUST ON SUBSCRIPTIONS! Yowza!
So that means the $5 coffee and untracked subscriptions are actually costing approximately $2,860 a year.
Do you realize that by cutting out these tiny expenses, you could pay off nearly $15,000 worth of debt in 5 years?
Add an income increase and you’re well on your way!
Lucky for you, this is the internet age where you can get a side hustle doing just about anything.
If you’re looking for an easy side hustle, check out my post “30 Side Hustles to Put Extra Cash in Your Pocket”.
Negotiate With Creditors
When planning to pay off debt, it is very helpful to communicate with your creditors. Often times, people think if they just simply avoid them, they’ll go away. But what happens is they actually get more persistent and annoying. So don’t be afraid to talk to them. Tell them what is going on and see if they are willing to work with you on lowering your payments, interest rates, or offering a special repayment plan.
Something creditors will offer a repayment plan that reduces the overall cost of the debt if you’re willing (or able) to pay a large lump sum or 2-3 installments.
The most important thing is to be proactive. Don’t make them chase you. Be upfront and courteous and they will be more likely to work with you.
Seek Professional Advice
If you’ve looked over your debt or your financial situation and said I don’t know how I’m going to do this… you are not alone.
Seeking professional help is a wise and mature thing to do. Now, you might think I’m a little bias given my profession, but there are times in our lives where we are unable to solve the problem ourselves and we MUST seek professional help.
Story Time: Two months ago, I took my kids to the park in the small town where I live. We were having a great time when my 5-year-old daughter shouted “mama, let’s go over to the skate park.” With my 8-month-old in tow, I agreed. With a running start she traversed the ramp and jumped to the top victoriously!
Now me, I’m 33 years old, but still think my body is 16, so I followed her. Less energetically, I made it to the top! Immediately my sweet girl reprimanded me saying, “Mama’s with babies are supposed to use the stairs, NOT the RAMP!”
She then went to the other side, sat down, and slid down the ramp as if it was a slide. Ambitiously, and with my baby still in hand, I looked at the ramp and thought to myself, If I step carefully I could easily walk the 8-ish steps down this ramp. WRONG! I took 2 steps, slipped and landed square on my butt! My baby was ok, thank GOD!
But then I felt a shocking pain in my hand. Lifting it off of the ground, I looked at my now limp fingers and thought what did I do?
Now, I’m also the stubborn type and insisted I was ok and didn’t need to go to the hospital. But over the next few hours my finger swelled and turned a plumb purple. That’s when I knew it was time to seek professional help. This was not something I could fix on my own, despite my strength, resilience, and desire to do so.
Just like you wouldn’t try to fix a broken bone on your own, you also must recognize when fixing your financial situation may be beyond your control and it’s time to seek help.
If you’re feeling overwhelmed and unsure where to start, or you’ve already started and can’t get any traction, get in touch with me and get a free financial consultation.
Remember, there is no shame in seeking professional help.
Stay Motivated & Track Progress
As you’re on the journey to paying off debt and finding financial freedom, it can be easy to fall off track.
To stay motivanted, give yourself little challenges and wins. It’s ok to celebrate each win as long as you don’t lose your focus.
When I was going through this journey, with every account that was paid off I would treat myself to something special (my favorite coffee, a new pair of shoes, dinner, etc). It created a kind of milestone oasis in the middle of this debt free desert.
It also helps to measure your progress. I created a debt free board with posterboard from the dollar store and printed graphs that I made. Each time I made a payment I would mark the change on my board. Or you could use something simple like this…
Or if you consider yourself tech savvy (or just prefer less paper), you could use a debt snowball app.
Avoid Future Debt
Most importantly, as you’re going through this journey, learn to replace unhealthy money habits with healthy ones. Stay current and consistent with your budget.
Also, if you don’t have one yet, create an emergency fund to ensure you don’t fall back into debt when an emergency comes your way.
Find Your Community
One of the hardest things about getting and staying out of debt is changing your lifestyle. And your lifestyle is heavily influenced by the people around you.
So, find a community of like-minded people who are debt free or on the journey and talk to them. God calls us to be a peculiar people, which means we aren’t going to do things like the rest of the world. And having a community to support you will keep you from feeling alone in your journey and will help you stay on track.
And remember, God has a plan for your life. He has brought you to this point for a very specific purpose. Stay the course and you will make it through.
If you are struggling with getting out of debt or have other financial concerns, feel free to click “Get In Touch” and let’s chat.
Or you can Join my free Money Mastery Workshop, where I talk about the biblical principles of budgeting, building wealth, debt and credit management, and much more!
