Tired of carrying your debt over from year to year? Did you make a new year’s resolution to destroy your debt in 2015? Having a debt destruction goal for the new year can be very motivating. It also pays to harness that momentum before it gets lost in the busyness of the year and to put a plan together for destroying your debt early on. The tips below can help you destroy your debt faster this year, but it’s also a great idea to seek out guidance from professional debt counselling agencies like Debt Rescue as well.
Stop Accruing Debt
This tip for destroying debt sounds obvious, but that doesn’t mean it’s easy to do. You can’t get on top of a problem if you’re solving it with one hand and making it worse with the other. If you’re serious about destroying your debt this year, the first thing you will need to do is to get a handle on your spending patterns. You will need to stop adding to the debt mountain you have resolved to destroy. This will mean making absolutely sure that your spending does not exceed your income at all and, if possible, actually tracks below your incoming funds.
Know Your Money
Track your spending for a month or so, so that you know where all your money goes. Be thorough, even about cash withdrawals at the ATM and cash purchases. Scribble down anything you buy with cash, so that you know exactly how all the money that came out of your accounts for that month was spent. This will give you an accurate idea of your spending patterns and where your largest discretionary expenses lie.
Make Your Plan
That’s right – once you know where your money goes, it’s time to make a plan for cutting back so that you can create a surplus. This means you need to make a budget (you knew it was coming, didn’t you?). A budget is nothing more than a money plan – and you can call it that if it makes it seem less intimidating to you. Ensure you’ve created a plan that has some ‘extra’ money left over after all your essentials are covered. This money is to be directed into the debt you are aiming to destroy. You can keep some of your non-essentials if you like, but remember that the larger the surplus directed towards destroying your debt, the faster that debt monkey will get off your back, so it’s up to you how ruthless you think you can stand to be.
Stick to It
The hardest part of any debt destruction plan is sticking to it, but that is the challenge you set yourself when you made your 2015 resolution. Think of how good you’ll feel when you’ve achieved it. Focus on how liberating it will be not to have to think about how to pay that debt any more. Ever. Feels pretty good, doesn’t it?
The fastest way to destroy your debt is with a sound money plan (or budget), a determined mindset, and a lot of discipline. If destroying your debt is one of your resolutions for 2015, you’ve already taken the first step towards achieving it by making that commitment to yourself. Stick with it and your finances will thank you in the long run.
Do you have any tips for destroying debt faster this year? Let others benefit from your knowledge via the comments below.