In the last installment of How To Payoff Your Debt Faster, we learned that to pay off debt faster, you first have to set your financial goals and understand your monthly finances.
Once you’ve got a firm grasp on your monthly finances, you then have to understand and adjust your spending habits. You know how much of your income you spend on a monthly basis and you know how much money you have left over (if any) after paying bills, expenses and liabilities. What do you typically do with your monthly net income?
Identify the three areas majority of your money goes. Justify those costs by measuring them against your newly set financial goals. Can you justify these spending costs as you try to pay your debt off?
Two of the biggest lessons I’ve learned in this step during my journey to debt freedom:
Keep your expenses low - Cut costs wherever they can be cut and stick to that until you reach your financial goals or keep them if you like (its a good habit to keep to build wealth)
Compromise and keep the things that bring you joy - Financial experts will tell you to cut costs entirely on things that aren’t priority. Listen, I strongly disagree. These experts are misleading you, friend!
Listen, understand how you spend your money and why you do. If you spend $50 on Starbucks every week because a fresh cup Starbucks coffee starts your morning off right. Then do not cut those venti drinks out of your life as you try to pay off your debt. Instead, reduce. For example, you could buy Starbucks only 3 days a week, the rest you make at home with a Starbucks coffee bag. Or if even that is too dramatic, bring your daily venti size drink down to a tall size. Compromise and keep the things that bring you genuine joy. With the money you save put that towards your debt. Cut expenses wherever else you can.
Adjust how you typically spend your money and watch how your relationship with money starts to change. For example, I loved my bi-weekly nail appointments, but it was costing me to much money a month. I compromised and ended up reducing that cost, instead of cutting it out complete.
Use my FREE budget tool to help balance out your expenses and visually identify where you can make changes. After that, get started on your debt-free budget plan.
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Step 4: Choose a debt-free payment method >>>
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To follow my journey to debt-freedom, live and step-by-step, follow my Instagram, here.
For a consolidated list of the steps I took to pay off over $22K debt in 7 months, check out my blog post - How I Paid Off Over Over $22K in 7 Months While Living Paycheck to Paycheck!