With Step 5, we’re going to get into the hard stuff – the actual debt payoff. If you have kept up with the series of newsletters or the Facebook group, you have completed the following:
- You have reflected on the actions, inaction, thought process, or events that got you into debt.
- You have “faced the truth” by compiling a complete list of your debt.
- You have reflected on ways that you can find more money in your budget or bring in more income.
- You have started your emergency savings plan.
With these steps in place, it’s time to create your own custom action plan for paying off the debt.
To start, you need to do some brainstorming.
Sit down with paper and pen (or at your computer) and write down your answers to this question: “What can I do today to lower my debt?” Just write the first 20 ideas that come to mind – you can worry about whether they’re even possible later.
Your list might look like this:
“What can I do today to lower my debt?”
- Consolidate my credit card debt into one monthly payment
- Apply for a home equity line of credit for debt consolidation
- Sell home and downsize
- Live frugally and only buy essentials so that I can pay off the debt faster
- Stop funding my / our retirement until the debt is paid off
- Apply for zero percent balance transfer to pay off debt quicker
Now, put the list away and wait a few days. Stepping back from what might be a difficult choice will help you reevaluate your priorities.
After 2 or 3 days, come back to your list and choose one. There is no right or wrong answer. Remember, you are designing a plan that tailor-made for your individual goals and needs. You have to determine what is best for you and your situation.
Now, go through the process of exploring whether that choice will work for you. You may have to contact a third party like a bank, mortgage broker, real estate agent, etc. You may have to look for zero percent balance transfer offers. You may have to get the whole family on board to see if they can live on a smaller budget. If it all works out, then you can start your plan. If not, go back to your list, choose another option, and explore it thoroughly.
Because you didn’t accumulate your debt overnight, it won’t be going away overnight either. You will make your choice (you can try many choices on the list), and you may need to follow through on it for over a year or for several years.
This whole process is definitely worth your while, because you will gain control over your finances. You will stop working just to pay your creditors, and actually save money as you eliminate the finance charges you’ve been paying.
Yes, I know (and have been there) that these are hard choices to make. But if I can do it so can you.