Do you feel like your debt is holding you back from living life to the fullest?
Are you afraid that if you had an unexpected drop in income or increase in your expenses that it would put you in financial stress?
That’s how we felt when we started our debt free journey three years ago.
When my husband and I decided to pay off all of our debt, including our mortgage by the time we turn forty, we did so in part because I had just become a stay-at-home mom and we felt extremely vulnerable voluntarily dropping down to one income.
At the time, our son was not quite two, and I was pregnant with our daughter. Having one young child and another one on the way, we felt irresponsible knowing that if for some reason, my husband were to lose his job, we would only be able to survive on our savings for a few months with all of our financial obligations, including our debt.
The other reason we decided to eliminate all of our debt as quickly as possible was because we heard a success story of a young family, similar to ours, who had just paid off all of their debt, including their mortgage. They had two young kids and lived on a single income, and we knew that if they could do it, then so could we.
So we dug in and in two years, we paid off $120,000 of debt on a single, middle-class income!
If you’re ready to get out of debt, then here are three things you must do to set yourself up for success!
Get your head out of the sand.
A lot of people avoid looking at how much total debt they have.
If you’re serious about getting out of debt, then it’s time to come to terms with reality and face the truth. No matter what your total debt balance is, you’ve got to get really clear on your starting point so you can look back with pride and say, “We paid off $X amount of debt!”
This part is difficult for so many people because they fear that their total debt is going to be overwhelming and they’ll get discouraged.
But ignorance is not bliss here.
Your total debt just might be less than you think, and if it does turn out to be more than you realize, use that as motivation to get out of debt fast and get out of debt now.
Which leads to the second thing you must do to set yourself up for success —
Draw a line in the sand.
You must commit to getting rid of the debt and stop adding to your debt pile!
Raise your right hand and repeat after me: “From this point on, my debt is going DOWN! I will no longer rely on debt to fund my lifestyle. I am committed to getting rid of my debt, no matter what it takes!”
Get mad at the debt and the thousands of dollars of interest you’ve already paid. Think about the thousands of dollars in interest you’ll be saving by paying your debt off quickly.
Focus on what you’ll be able to do with your money once the debt is gone and you’re no longer tied to those payments. How much money are you paying each month toward debt? Look at that number and think about how quickly you can save for your kids’ college or save more for retirement or for that family vacation you’ve been putting off. Maybe you’ll use that money to invest in real estate or start a business to bring in even more income and create true financial freedom for yourself and your family.
Get really clear on what life will be like without the debt hanging over you and draw a line in the sand on debt.
Once you’ve done that, then it’s time to…
Build your financial castle on the rock, not the sand.
Okay, okay, I was really trying to continue with the sand theme so this one may be a bit of a stretch, but my point is that you’ve got to have a stable plan to get out of debt.
I work with a lot of people who want to get out of debt, and they’ve tried to pay a bit extra here and a bit extra there, but they have no real plan.
As the saying goes, “If you fail to plan, you plan to fail.”
This is what I do when I work with my coaching clients. I take them through my 6-step Debt Freedom System to develop their comprehensive roadmap to debt freedom.
Maybe all of this sounds great, but you might be thinking, “Yeah, Monica, it would be nice to get rid of the debt, and maybe you can get out of debt living on a middle-class income, but I make barely more than minimum wage, and my debt is up to my eyeballs! It’s not possible for me. I’m just stuck!”
I hear you, and I understand where you’re coming from.
When I was deep in credit card debt, I was making only $9 an hour. I couldn’t keep up with all of my bills. I had to choose which ones I was going to pay each month. I was overwhelmed and discouraged.
But you know what? I realized that my income wasn’t set in stone.
And yours isn’t either.
If you say it’s impossible to get out of debt, then you need to revisit step 2 and re-evaluate your commitment.
I guarantee you that there is someone out there who has gotten out of debt on a lower income than you, and I guarantee that there is someone out there who has paid off more debt than you have right now.
You can break free from debt.
It is possible for anyone on any income and in any situation to do so.
I challenge you to think about what life could be like if you didn’t have to make any payments toward debt. Would you have an extra $500, $1,000, $2,000 or more each month if your debt was completely gone? What could you do with that money? Would you have less stress if there was a sudden change in your income or cost of living?
All you have to do to get started and set yourself up for success is to:
- get your head out of the sand and face the truth,
- draw a line in the sand and commit to getting out of debt no matter what it takes, and once you’ve done that,
- don’t build your financial castle on the sand. Instead, create a solid, comprehensive plan to build your financial castle on stable ground.
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