Financial Fitness Coaching

View Original

Unlock Financial Freedom: 5 Simple Strategies to Crush Your Debt

🕐 Read Time 5 Minutes

You’ve got big financial goals and dreams. You’ve increased your financial literacy, created a foolproof spending plan, and started contributing to a retirement account. You’ve made big progress but there’s still one little thing holding you back…. debt

Debt can be a necessary tool that allows us to accomplish major dreams like getting a college education, starting a business, funding our first car, or purchasing a home. However, some consumer debts, like credit cards and personal loans, are sometimes the result of poor financial discipline and planning. 

If you’re struggling with lingering debt and want to know how to get out of debt quickly so you can move on to bigger and better things, we've got you covered! 

5 Simple Strategies to Crush Your Debt

Use these creative ways to pay off debt to unlock financial freedom: 

  1. Complete a no-spend challenge.

  2. Use the debt snowflake method. 

  3. Pick up a short-term side hustle. 

  4. Consolidate your debt. 

  5. Bump up your monthly payment. 

These realistic strategies can help you knock out debt (without surviving solely on ramen): 

1. Complete a no-spend challenge.

For those of you with a slightly competitive personality, this one is actually pretty fun! The purpose of a no-spend challenge is to be laser-focused on not spending money in non-essential categories for a specific amount of time (a common challenge length is one month). 

For example, for October, you would only spend money on what is absolutely essential (your mortgage, utilities, insurance, gas, etc.) Nonessential spending like extravagant clothing, entertainment, and dining out would wait until the following month. A no-spend challenge is extra fun when you complete it with a friend! And if you can’t find someone close to you who wants to join in, there are online groups of people who complete no-spend challenges each month (and even some who try to go the entire year!). 

The challenge can be very eye-opening, spark your creativity, and ensure you’re using up the items you already own. The playfulness of having a very specific goal and knowing that it won’t be forever can lighten the mood and keep you motivated. If you’re in a relationship, ask your partner if they’re willing to complete the challenge with you. You can use your surplus of funds at the end of the time period to pay down your debt. 

2. Use the debt snowflake method. 

You’ve probably heard of the debt snowball method (paying off your debts from smallest principal balance to largest) and the avalanche method (paying off your debts from highest interest rate to lowest), but have you heard of the snowflake method? 

This method can be used in addition to other debt-elimination strategies. The idea is to quickly use every small amount of money that comes your way to pay down your debt. Before you have the chance to spend it on something else, you immediately put it toward your debt. This could be a cash-back reward you receive from your credit card, a refund, or even extra cash in your budget categories at the end of the month. 

This method was integral to my own debt elimination story years ago. It kept me laser-focused watching every little applied savings and payment help that balance go down. It also helps highlight your values and enhance your decision-making process based on those values.

3. Pick up a short-term side hustle. 

In addition to cutting back on your spending and using small amounts of cash to eliminate your debt, sometimes you need to temporarily increase your income! A short-term side hustle can help you use your skills and free time to increase your debt-elimination progress. 

Depending on your interests and abilities, you can find an enjoyable side hustle such as tutoring, dog-walking, event planning, crafting, landscaping, cake decorating, fitness training, etc. These activities can be both financially and socially rewarding, providing you with extra funds and a chance to share your talents with others. 

4. Consolidate your debt. 

Sometimes combining your debts (especially if you’re carrying multiple high-interest debts) into one, manageable monthly payment can help streamline your debt elimination process. A few common debt consolidation options include: 

  • Home equity lines of credit (HELOC)

  • Personal loans

  • Balance transfer credit cards

  • Debt consolidation loans

It’s important to carefully consider the associated fees, loan terms, and interest rates when comparing debt consolidation options. If you have a strong credit history and score, can responsibly handle one consolidated payment, and are committing to not taking on more unnecessary debt, then a debt consolidation method could be right for you. 

5. Bump up your monthly payment. 

Another debt payoff strategy is increasing your monthly repayments and/or making extra debt payments. Sometimes just adding $50 to your payment when you can will decrease the total length of the loan and the amount of interest you pay. You can make this additional payment automatically, eliminating the temptation to spend the money elsewhere. 

If you’re paid every two weeks, consider making an extra debt payment during three paycheck months. You can also consider using bonuses or other unexpected windfalls to eliminate your debt. 

Unlock Financial Freedom with Financial Fitness Coaching

At Financial Fitness Coaching, we love to help you find creative solutions to your personal finance needs. Sometimes that includes figuring out the best tax strategies for your personal and business finances and other times, it’s determining the best debt elimination strategies for you. 

Every person and business is highly unique and that’s why financial coaching is so relevant and helpful. We can assess your needs, desires, and goals, and tailor our advice accordingly. To see how we can help you and your business, send us an email at info@financialfitnesscoaching.com or simply schedule a free 20-minute Discovery Call on our calendar.