Are you in debt? If you are like the typical American, then you are in debt. Do you want to know how to beat debt? Do you want to overcome your debt once and for all? I was once in credit card debt to the tune of roughly $10,000. I wasn’t happy and dreaded getting the mail.
But I was able to overcome it. How did I do it? With hard work and a realization.
Trapped In The Endless Debt Cycle
If you have tried to get out of debt only to find yourself right back where you started, I can sympathize with you. I had a large balance on my one credit card when I decided I was going to get out of debt. Here was my original plan for how to beat debt:
- Open up a 2nd credit card, one with a 0% balance transfer offer and move my debt over to this card. I would make my payments on the new card while saving money on interest charges.
How well did that work out for me? It was a complete failure. While I did transfer my balance, I simply started to spend on the original card once again. After a few months, I put my foot down and said enough is enough. I was going to beat debt this time.
So I opened up a 3rd credit card. I transferred my balance on my first card to the new card to again, to save on interest. Then I began to make payments to beat my debt. Sadly, I went right back to spending on that first card again.
As you can see, I was trapped in the endless debt cycle that you may be in.
Unfortunately, you are going to be stuck in the cycle until you dig deep down inside and get real with yourself. That is the only way to beat debt.
How To Beat Debt
For me, it happened one day when I was out shopping for a new jacket. I didn’t need a new jacket. I already had 3 of them. As I was considering buying this jacket, the light bulb went off and I realized what I was doing. I was buying things to make me feel better.
At the time, I was depressed. I had just graduated college and couldn’t find a job. I thought when I graduated I would find a job paying six-figures and I would be on the fast track to millions. But it didn’t work out that way. I became depressed and started to buy things like clothes and electronics to make me feel better, to get me high.
Sadly, the high I got from buying things wore off quicker and quicker, causing me to get into more debt faster and faster. Fortunately, I had my wake-up call at the store that day.
I went home (without the jacket) and piled up all of the clothes I recently bought on my bed. I took a picture. Then I took a picture of the electronics too. I carried those pictures in my wallet to remind me that these things aren’t going to bring me happiness. I need to be happy with who I am.
It wasn’t easy, but over time and with some help, my depression subsided and I was able to be happy with what I had. I no longer had to go find happiness, I found it within.
Look Inside For How To Beat Debt
If you are struggling with debt, I encourage you to look inside yourself. In most cases, your spending problem isn’t the root cause of your debt. It’s something else. Until you get at that root, you are going to continue the debt cycle. It’s like a weed in your garden. You can pull it out, but unless you get the root, it’s coming right back in a few weeks.
Realize that digging deep within won’t be easy or fun. Many times it will be painful. But it is what needs to be done if you ever want to beat debt. To help beat your debt and stay in a more positive mindset, don’t focus on the current pain.
Instead, envision your life in the future. What will it be like to live debt free? Enjoyable times getting the mail? The weight of embarrassment from being in debt lifted off of your shoulders? Find the things that will motivate you to push through the tough times today and focus on how great things will be when you are debt free.
I bet that if you close your eyes right now and silently say to yourself I am debt free 5-10 times, you will get a smile on your face and chills up your spine. Doesn’t it feel good to think about beating debt?
Your Plan To Beat Debt
Now that you looked inside and got to the root of your overspending, it is time to make a plan to get out of debt once and for all.
If you search online for how to get out of debt, you are going to find numerous methods. I’m going to tell you the one that worked best for me because I think it will work great for you as well.
You plan is to create a list of all of your debts and list them from the smallest balance to the largest. Then, you are going to start paying off the smallest one first. You will make the minimum payments on all of your other debt, but you will work to put extra money towards the smallest debt.
When the smallest debt is gone, you will begin to work on the next smallest debt. The trick here though is to take the money you were paying on the first debt and start using it, along with the minimum payment, on this new debt balance.
For example, let’s say you have two credit cards. On the larger balance card, you pay the minimum, $50. On the smaller balance card, you pay $150. When the smaller balance card is paid off, you take the $150 you were paying and apply it, along with the $50 to the next card. So, you will be paying $200 a month.
This will speed up the process of beating debt. And it works because you get motivated when you pay off one of your debts. As you pay off the next debt, you get even more motivated.
Now, even though the plan sounds simple, and it is, it will still take time. You aren’t getting out of debt overnight. Because of this, you might need some motivation. I have a couple of tools for you that will help.
- Personal Capital: this is a free tool that you can monitor your banking, investment and debt accounts in. While it won’t pay your debt off for you, it will show you an up to the minute look at your net worth. As you pay down your debt, you will see your net worth rise. This means you are working towards taking control of your money.
- Pay Off Debt: this is an app that will do all of the heavy lifting for you. When you buy the app (it’s just $4.99) it will organize your debt and create a custom payoff plan for you. You can track your progress and see how you are beating debt. It’s highly addictive.
- Qapital: this is a free app that will help you to pay off your debt faster. You link your bank account and then choose a goal. When you buy something, Qapital will round up the purchase to the nearest dollar and transfer that amount to your Qapital account. You can then withdraw the money and apply it your debt. It’s a great way to pay a little extra on your debt and you will be surprised with how quickly it adds up!
I urge you to look within to beat your debt. It’s the only way you will break the cycle. You have to get at the root cause of your overspending ways. Once you find the root cause and address it, you can begin to pay off your debt once and for all.
When it comes to taking that step to pay off your debt, make the process as easy as can be so that you set yourself up for success. As you pay off debt, you will be motivated to keep pushing through and will eventually realize what it is like to live debt free.
[Photo Credit: RyanMcGuire]
Hi, my name is Jon and I run Penny Thots. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.