Do you know the date of when you will be debt free? The 8th wonder of the world is compound interest and it will work against you every single day that you pay interest to someone else! Interest payments have the power to keep you broke. I have yet to hear a person who is living a fully funded life tell me that their car loans and credit cards were the reason they became wealthy. So what should you do about your debt? You can start by calculating your Debt Freedom Date by using the calculator found HERE on our website.
You will document every debt you owe including the name, balance and the minimum monthly payment. You will be able to see just how close or far away your debt freedom date is. This is so empowering because once you know, you can make changes in your lifestyle to move that date closer and closer to you.
Our team has conducted research to document the steps people have taken to speed up their climb to debt freedom:
- Reduce Interest Rates: Many people with substantial consumer debt do not realize that 50% to 75% of their payments are merely going to the lender as interest payments – greatly reducing their ability to lower the debt. If you have high interest rate credit card balances, consider transferring them to a 0% interest balance transfer credit card. If your mortgage interest rate is higher than those listed at BankRate.com, consider refinancing.
- Pay Raise: Are you being compensated fairly? Few things speed up debt elimination faster than receiving additional income from your current job.
- Tax Refund: A tax refund might be an “interest free loan to the government” but it also represents an opportunity to force yourself to save money which can be used to impact debt in a big way.
- Bonus: Do you receive an end of the year bonus? Use it the same way you would as a tax refund by throwing it towards that outstanding debt.
- Found Money From Better Budgeting: When I started preparing and living by a budget, it literally transformed my finances. I freed up hundreds of dollars each month that was disappearing in the form of “miscellaneous ATM cash withdrawals” and impulsive purchases.
- Sell Some Possessions: Sell the boat, motorcycle, extra car, and collectibles. Eliminating possessions will free up space, eliminate stress, and greatly speed up your debt freedom date.
- Work Overtime: If you have the chance to earn additional income by working extra hours, you can use this money to speed up debt reduction.
- Extra Job: If you do not have the opportunity to work overtime at your existing job, obtain a second job – or start a small side business. The key here is to focus on something short term and commit to putting all additional money earned towards debt.
However you decide to eliminate your debt faster, the first step is knowing your debt freedom date. Calculate yours today!
Want more tips like this one? Subscribe to the Monday Money Tip Podcast HERE.