‘Tis The Season of Becoming Debt Free
With 2023 on the horizon, many people have it on their resolutions list to become debt free. Why? Because becoming debt free opens up unlimited opportunities. There’s a sense of security and sovereignty that comes with the idea of being in complete ownership of the things you have while also being able to delegate your income to more than just bills.
However, getting free from debt can feel insurmountable. Many people have hefty credit card balances, student loans, car loans, medical bills and mortgages that put them into paralysis. In fact, Experian conducted a recent study that found more than 340 million Americans are currently carrying some form of debt…so trust me, you’re not alone! And the truth is, while it’s tempting to brush your debt under the rug and avoid it, the longer you let it sit the more it will grow. So the sooner you get started, the better!
Getting your mindset in check is the first step to becoming debt free.
Eradicating fear by empowering yourself to be financially savvy will take you much further than any other on-paper strategy. First, acknowledge any shame you may have and release the idea that debt is “bad.” As financial thought leader Amanda Frances says, “debt is neither good nor bad, it’s just a decision to pay something off over time.” When you begin to reframe debt in this way, as a choice you made in order to access what you needed in the moment through the opportunity to pay it off over time, shame begins to melt away. Psychologically, when we unchain ourselves from shame, we are much more willing to confront the situation at hand.
You may find it motivating to start by tackling your smallest debts first, even if they aren’t your highest interest rates.
While mathematically this may seem like it doesn’t make much sense, mentally it’s the best way to begin your debt-free journey. This was what I did when I first started in order to gain momentum…and momentum is key! Watching my debt dissipate quickly and my open accounts begin to have a zero balance, motivated me to keep going. Eventually it brought me down to just my bigger debts, in which I assessed and began paying down starting with the highest interest rate first. Unfortunately, many people say they never get started because it seems pointless. Therefore, doing everything possible to get quick results, refresh your mindset, and provide tangible evidence that you can do it, is a gamechanger!
In response to the pandemic, the interest rate on student loans as well as monthly payments on them have been put on a temporary freeze. If you’re able, this is the time to put even more money towards paying down your student loan debt. Since interest isn’t accruing, you will see your payments directly impact your balance, which can be challenging to see otherwise. So make it a priority to get that balance as low as you possibly can before the freeze lifts!
How can you start doing this? Well, we all have places in our budget where we can cut back.
Maybe that daily coffee stop? Or lunches out? Perhaps girl’s night out every Friday at your favorite martini bar? Now, this isn’t about deprivation, because that will cause anyone to quickly lose the wind in their sails. Since paying off debt is more of a marathon than a sprint, it’s important to keep your endurance high. However, the question to ask yourself is how can you still indulge but also save money? With the examples above, perhaps that looks like saving your $8 everyday at Starbucks and instead buying luxurious ground coffee from a local roaster that you can make at home. If you’re currently eating out for lunch, try to meal prep and that martini bar every week? Look to go there once a month instead while hosting a game or movie night in with the girls on the other Friday nights.
These small, two-millimeter tweaks that seem like they wouldn’t add up, definitely add up!
While you’re making the above financial and mindset shifts, it’s not a bad idea to move things along even more by getting a side hustle.
Especially today with so many remote opportunities open, there’s lots of flexible options that can integrate perfectly into your current lifestyle. Entrepreneur shared some of the best side hustles of 2022 to get your creative ideas flowing, check them out here. It’s been reported that the average side hustle brings in $483 extra a month…imagine if you had that to put towards your debt? You’ll see a drastic difference in no time!
I hope these tips will empower your 2023 goals and make this the year you finally become debt free! As always, I’m here to support you with any of your financial needs or questions, you can schedule a call and find all available resources here.