8 Reasons You Should Get out of Debt Right Now!

Debt is something that all of us have dealt with at least once in our life. Whether it’s college tuition, car loans, mortgage, or something else, we’ve all been in debt before. While debt is a part of life, it’s not one that has to stick with us forever. Here are eight great reasons why to get out of debt as soon as possible.

When you’re in debt, all of your other financial investments are less impactful. Even if you’re making good money off of stocks, some (or maybe even all) of that money is going towards paying off your debts. When you get out of debt, any extra money you make on your investments goes straight to you.

Debt is stressful. The more you have and the longer you have it, the more stressed you’ll become. Managing debt for a few years may be manageable, but it can really affect your health and stress-levels if it becomes a life-long burden.

When you’re in debt, you’re not working for yourself. You’re not working for your own vacations, home improvements, or anything else. Instead, you’re working to pay your debtors; they’re making all the money off your hard work! Getting out of debt will make you feel great because you’re only working for yourself!

8 Reasons You Should Get out of Debt Right Now!4

When you get out of debt, you’ll be a lot more stable—financially as well as in other areas of your life. Any unforeseen accidents or problems won’t cause you to stumble and fall financially like they would if you had debts to worry about.

Believe it or not, your familial relationships will improve (especially with your spouse) when you don’t have debts to worry about. Most arguments in the family are caused (or somehow affected) by money; so when you have more money coming in and less money going out, it’ll make things at home better.

Once you manage to get out of debt, your credit score will steadily improve. And, when your credit score is better, every other area of your financial life improves, too! Interest rates are lower and you’re array of financial options increases.

Prepare for the future by getting out of debt now. Once you don’t have any more money going towards debts, you can start putting money in a retirement plan, your children’s college funds, or other things. By getting out of debt today, your future will be much better.

One of the best reasons for getting out of debt is that it gives you control over your life! You won’t be subject to interest rates, late fees, loan sharks, angry bankers, etc. When you’re free from debt, you’ll feel so much more free an in control of your life.

8 Reasons You Should Get out of Debt Right Now

How to Pay off Debt with a Debt Snowball

The debt snowball method is very motivating because you start to see results of your efforts quickly.  To get started, organize all the debts that you have from lowest balance to highest balance.  Ignore the interest rate at this point.

Next, pay the minimum payment on each of your debts except the one with the lowest balance.  Pay as much extra as you can on the debt with the lowest balance.  Often, when people are trying to pay off debt, they pay a little bit extra on each account.  This doesn’t make as much sense long term.  We are trying to eliminate balances, and apply that payment to the next one.  

Once the first debt is completely paid off, take the payment plus the extra you were paying and apply it to the next smallest balance.  This feels so good to eliminate a debt, and move on to the next one!  It is easier to continue a hard thing when there are satisfying milestones along the way.

So, at this point, you are paying the minimum payment, plus the minimum payment of the last card as well as the extra amount you were applying to that balance.  This snowballs fast and as you continue on this route, you will begin to pay your debts off faster than you had planned.

Debt snowballs work wonders.  My husband and I paid off 16k in debt in a year and a half, making very little extra money.  We had to sacrifice a few things in order to have extra money to be able to apply in the first place.  We went out to eat once a month, instead of once a week.  We also ordered water and shared a larger meal.  We also cut out extra projects and found free or discounted things to do for entertainment. It required sacrifice and discipline, but ultimately, it was well worth it. It was very motivating and quite satisfying to pay each card off.  We started cerimoniously paying them off together and celebrating with dessert. 

For other great ideas on getting out of debt or ways to budget, see these related articles:

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Learn to Cut Back

Make a list of the money you have flowing out into different expenses. If you have cable, or streaming networks you pay for, such as Netflix or Hulu, put those on your list next to how much money it costs you each month. If you have smartphones in your family write those down as well. List magazine subscriptions, gym passes, art classes, or anything that comes to you as a regular expense. Then you need to look at your list and decide how to cut back. Maybe you can just eliminate a few things, or maybe you need to cut it all out for a little while until your bank account becomes more stable. There is no point in paying for a huge cable bill, or random magazine subscriptions that you never read, while you’re struggling to make ends meet. The more you cut the better off you will be.

Get into Survival Mode

Don’t spend money on things you don’t need. You have to get into a survival mode and focus only on the essentials. Avoid eating out, shopping sprees, going out to movies or events, or anything that is unnecessary. If you can control your spending habits and you can cut back on these things, you will be amazed how much money you save. It doesn’t mean you can’t have fun though. Start making a fun meal plan with ingredients you already have at home, look online for free date ideas that can still get you out of the house, and find ways to mix and match pieces in your closet to wear them in ways you never have before. Overall, just make sure you are only spending money on the things you have to have to survive.

Make More Money

To help you feel more fluid in your budget, you’ll need to find ways to make more money so that you can attack your financial situation from both ends. There are a lot of ways to make money from home on the side.  You can pick up extra shifts at work, or get resourceful and see if any of these 50 Ways to Make Money on the Side are good options for you.  If you don’t have a job that pays well enough and you are having hard time getting ahead, consider finding a new job, improving your skills or even getting educated in a new trade or field to improve your quality of life.

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Prioritize Your Bills

If you have a lot of bills to pay, make sure you decide which ones have to be paid off first. Hopefully you cut back on everything from the list you made, but now it is time to sort through what important bills are MOST important. Take care of things like your house payments and energy bills first and then keep moving down through the things that are most important for you to keep surviving and having your basic needs met.

Keep a Positive Mindset

Overall, remember to stay positive. Of course this is easier said than done, but it is so important when trying to get out of a financial bind and start to plan effectively. Negative thoughts are destructive and won’t help you moving forward. Try to think each day about good things that happen to you, opportunities that come your way, connections you have with other people that could help, and really anything that keeps you positive and focused on your ultimate financial goals. If you can’t master a positive mindset, you other strategies could fall apart.

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