Occasionally, something unexpected can occur and force us to take on debt in order to get beyond the issue. For example, the transmission in your vehicle stops working and you need a way to get back and forward to work or its June and your find out that your HVAC system has to be replaced. In other situations, people may dig themselves deeper into debt over time through an assortment of poor financial choices.
Regardless to the circumstances surrounding how debt comes about, if you’re committed to getting rid of it, you absolutely can. As long as you understand that getting out of debt is a cumulative process that relies heavily on discipline, focus and determination.
Liberate Your Income
There are three primary approaches you can use to successfully pay off debt. One approach is to reduce spending or eliminate unnecessary expenses to free up more money to direct toward your debt. The breakdown below demonstrates what that might look like.
- If you reduce spending by $5 per week, that equals $260 per year.
- If you reduce spending by $10 per week, that equals $520 per year.
- If you reduce spending by $15 per week, that equals $780 per year.
- If you reduce spending by $20 per week, that equals $1,040 per year.
- If you reduce spending by $25 per week, that equals $1,300 per year.
- If you reduce spending by $30 per week, that equals $1,560 per year.
- If you reduce spending by $35 per week, that equals $1,820 per year.
- If you reduce spending by $40 per week, that equals $2,080 per year.
- If you reduce spending by $45 per week, that equals $2,340 per year.
- If you reduce spending by $50 per week, that equals $2,600 per year.
I stopped at $50 for the sake of brevity, but the example does demonstrate how reducing spending can free up money to pay off debt. You know how much you spend on a weekly or monthly basis for non-essentials. Adding up those amounts will give you a good idea about the money you could free and use to pay off debt. If reducing expenses is not possible for you, let’s move on to the next potential option.
Raise Your Salary Cap
For those who don’t do a lot of discretionary spending, another approach is to increase your income and direct that additional money toward debt. The breakdown below demonstrated what that approach might look like.
- If you earn an extra $25 per week, that equals $1,300 per year.
- If you earn an extra $50 per week, that equals $2,600 per year.
- If you earn an extra $75 per week, that equals $3,900 per year.
- If you earn an extra $100 per week, that equals $5,200 per year.
- If you earn an extra $125 per week, that equals $6,500 per year.
- If you earn an extra $150 per week, that equals $7,800 per year.
- If you earn an extra $200 per week, that equals $10,400 per year.
- If you earn an extra $225 per week, that equals $11,700 per year.
- If you earn an extra $250 per week, that equals $13,000 per year.
- If you earn an extra $275 per week, that equals $14,300 per year.
- If you earn an extra $300 per week, that equals $15,600 per year.
Once again, I stopped at $300 for the sake of brevity, nevertheless the concept is pretty clear. The amount of extra income you generate is contingent on the amount of free time you have, your skills, creativity and level of determination.
If you’re in a position to both reduce expenses and increase income, that’s a WIN-WIN.
Liquidate
A third approach is to sell as many things as you can. Over time we tend to accumulate a lot of stuff. Things that we may not even use or forgot we even own. Items like this can quickly be converted to cash and that cash applied to debt.
Conduct an inventory of all the things throughout your home, the garage, tool shed and personal storage unit if you have one. Make a decision about what you should sell. Create a list, decide on a price and post the products somewhere online or hold a series of garage sales. If you are able to reduce expenses, increase income and sell stuff you no longer need, that’s a WIN-WIN-WIN.
Conclusion
When it comes to paying off debt the little things can make a big difference. The examples I highlighted above are small in nature and might even seem insignificant, but this is how you get out of debt. It may not be sexy or elaborate but it works! This is the exact approach I used to pay off $176,000 of debt. If I can do it, you can do it too. If any or all three of the approaches highlighted are implemented consistently over a continuous period of time, the cumulative effects are surprising. The little things really do matter.
If you’re serious about getting out of debt, don’t put it off any longer, employ one or all three of these strategies to get moving. Be strategic, stay committed and keep moving forward. If you’re willing to keep chipping away, you will be surprised how much difference little things can make.