Debt Free 101: The Basics of Paying Off Debt

You’ll reach debt freedom—the question is just “when?” Will it be 10 years from now, 20 years from now, or 30 years from now? Or will it be sooner? Nobody wants to spend countless dollars in interest payments when they don’t have to — I sure as heck didn’t want to — so let’s look at the basics of getting of debt in order to help you get on the right path to debt freedom so you can pay off your debt much quicker than 10-20 years.
The way to avoid paying off debt for what seems like forever (which is the timetable creditors prefer) is to pay it on your own terms. In order to do this, you need to understand the mechanics and psychology of paying off debt and then use them to your advantage to shave off years and even decades from your debt repayment schedule.

Find Your Debt Payoff Muse
You need a reason to get out of debt. Not any old reason will do. Everyone says they want to live debt-free, everyone says they want more cash flow in their lives, but not everyone will have their student loan debts paid off before they retire, and not everyone will get out of credit card debt with ease. By failing to figure out your debt muse, you may very well cost yourself thousands of dollars and wasted months in debt. What do I mean by this?
You need a reason aligned with your priorities and values to propel you through to the other side. If your only reason to get out of debt is to have more money each month (a darn good reason, by the way), then you will quickly lose speed when the going gets tough. If your reason is more along the lines of wanting to make a career switch, raise children in a debt-free household, be a stay-at-home parent, or start your marriage off without debt, then you will be more likely to stick with your goal.
But don’t let me put words in your mouth! Instead, take an hour or so to really think about the deeper reasons why you want to be debt-free. You’ll be glad you did. And that answer will guide your debt repayment from here on out.
Get Honest with Yourself and the People Who Depend On You
How much debt do you actually owe? Who are your creditors? How much interest are you being charged? What are your minimum payments, and, added up, what percentage of your paycheck is used towards servicing debt each month? These are the kinds of questions that you need to answer, not only for yourself, but for the people who depend on you. Honesty is the best policy, as not only does it build strong, trusting relationships—with yourself as well as with other people—but it also forces you to confront the situation and take action.

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Create Your Payment Blueprint
Do you think an architect would dare to build a structure without first creating a blueprint? Not if they want to keep their job. By creating a payment blueprint upfront, you can then automate everything moving forward. Aside from this being very convenient, it also means that you are more likely to succeed than if you leave it up to you to manually make payments above the minimum each month.
Your payment blueprint needs to include how much you can pay each month for each debt, and which particular debt you want to tackle with all of your extra gusto first (a free account with ReadyForZero can help with this step). We recommend the Debt Avalanche strategy, but there are other strategies that can work, like the Debt Snowball. Determine which one meets your needs and will inspire you to stay strong as you continue paying off debt.
Find New Money in Your Same Old Paycheck
In most cases, paying off your debt load early means you will have to pay above the minimum payments. Perhaps you don’t think you have extra to be able to do this, and have even thought about getting a second job. And there’s certainly nothing wrong with that if it works for you. However, it might be easier for you to find new money in your same old paycheck than you think. That’s because your variable expenses—food, entertainment, memberships, etc.—are in your control to change immediately.
And what about contracts you have signed and other financial obligations you have committed your paycheck to? The good news is that there may be hope in decreasing these commitments, or getting out of them all together (and making cheaper choices moving forward).
For example, did you know that you can get out of your cell phone contract without paying a termination fee? Use a website like to find someone to assume your contract and obligation for you. If you figured out that leasing a car means you will never experience life without a car payment, try swapping out your car lease and buying a beater car instead. Believe it or not, there are now websites that can help you do just that. And finally, get out of an overly expensive cable/internet/phone bill by calling your provider, telling them you wish to cancel, and asking to be put through to the retention department. They should throw a few cheaper alternatives to you as it is harder to get a new customer than to retain an old one.
By following the steps above, you will not only have a clear outline for how to get out of debt years before your creditors want you to, but you will also have a reason that makes sense to you on an emotional and gut level for doing so. With both the know-how and a debt muse, you will be unstoppable!
Image Credit Kerri Lee Smith

This post was published by Amanda, Guest Blogger for » ReadyForZero.
ReadyForZero is a company that helps people get out of debt on their own with a simple and free online tool that can automate and track your debt paydown.


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