We don’t know of one person who doesn’t have some kind of debt (if you’re 100% debt free, congrats). The word itself probably makes you cringe… and probably makes you want to cry. Don’t worry, we are both right there with you but now, we’ve decided to make a choice. We’ve decided to become best friends with debt, and so should you. Why you ask? Keep reading.
If you need a quick summary of the content below and in Part 2, just click the button below and you’ll gain access to your free checklist, covering all the strategies.
Who Is This For?
Over the next few weeks we’re going to take you on a journey. We’re telling you that by the time you read the very last word of this series, your attitude towards your debt is going to change. Who is this series for? Everyone who has debt! Whether that be a few hundred, or literally thousands of dollars. Our voices don’t discriminate, and all are welcomed. Even if you have no debt, but want to learn strategies on how to deal with it…welcome.
We both went to a private uni in Australia that’s hella expensive (but this is where we met, and we wouldn’t change it for the world). Needless to say, we have massive student loan debt. “It’s taken me 6 years (6 YEARS!!) to finally look at my student loan statement and see how much I was being indexed. I’ve been avoiding looking at my student loan because I was in no financial position to pay it back – or so I thought”, Amanda admits.
Over the next few articles, we’re going to give you the guidance and info you NEED RIGHT NOW to tackle your debt and start paying that sucker down. Can you guess what our first tip is going to be?
#1 Stop Saying It’s Impossible!
Seriously people, remove that word right now from your vocabulary, because you no longer know the meaning of it. If you’re going to face debt head on, you gotta get in the right mindset first. Don’t worry, you got this! When we think about debt, it’s pretty daunting. Sometimes all we can think about is that final number we’ve got to pay off and that you’re not currently earning enough to even think about making a dent in that thing. Baby steps guys, baby steps. Unless you win the lotto, we aren’t going to sit here and tell you to pay off your debt with one massive payment. We’re going to be realistic.
So, your first step? Write down that nasty figure and where it stems from! Is it a home loan? Student debt? Credit card debt? Car loan? You get the idea. Is it written down? No? We’re waiting… now? Okay, good! It’s like ripping off a bandaid, but like a cut under the bandaid, only time will heal it. In your case, it’s time and a little bit of discipline from yours truly.
Ok, are we in the right mindset now? Let’s move on!
#2 Know Your Current Financial Situation – And Be Ok With It
‘Yes, yes AJ I KNOW that having a budget is essential’. Great! Then you can open that baby up on your computer right now then, or if you’re old school get out that notebook. No budget? Don’t worry, we’re not mad. But we will be if you don’t have one by the end of this series. Lucky for you we’ve written a short eBook on ‘How To Budget Like A Pro’ you can download right now. It’ll only pull you away from life for 1 hour, so get cracking! Don’t have it? Click the download button… NOW.
Before you can tackle debt, you need to be familiar with what you’re current financial situation is… a.k.a, how much is leftover from your income after paying off your bills. There are some expenses we just can’t avoid – rent, phone, internet, utilities, etc. There’s always the option of trying to decrease these expenses but you need to pay them regardless. Knowing how much you have left over is going to set the benchmark for your repayments. Don’t worry if this number isn’t much, it’s something! If it’s zero, well, you’ve got a bit of re-thinking to do. We cover that in our eBook so we won’t go into it here. Didn’t download it yet? Okay, here’s the download button for you again.
#3 Create An Action Plan: What’s Your Weekly Repayment?
Alright, you’re feeling good, you’re feeling inspired, you’re familiar with your current financial situation… let’s do this thing! Create your action plan! First and foremost, we need to point out that loans obviously come with interest.
Now, you don’t want to just be paying off your interest, but you want to be making a dent on your principal amount too. Your first step is therefore, calculating your weekly repayment amount so you can cover the principal amount. How do you do this? Simple! There are online calculators that will do this for you. All you need to know is your a) loan amount, b) interest rate, and c) loan period. Just be aware we are talking about voluntary repayments here, and not repayments that are taken out of your tax if you’re in Australia. If you’re looking at your repayments for student loans in America, then you need to login to your FAFSA account or StudentLoans.gov account.
Not only this, but you also need to understand your debt and what is entailed. Let’s take an Australian student loan for an example. You fill out all the paperwork, you know the interest rate, you finish your degree, and then it’s starts indexing. Do you know what your index rate is based on? Do you know if it changes throughout the year? Do you have a rough idea of how much it’s going to go up each year? Just make sure you’re across all the details before you start planning, and it’ll put you in an even better position to start paying it off.
If you have a student loan through America, do you know when your grace period ends? Do you know what your base repayment is? Make sure you find out all this information and organise it.
#4 Create An Action Plan: Can You Cut Expenses?
Look at your budget. Is there ANYTHING you can cut down? Even just making the slightest reduction will help you. Can you look at a different phone contract? Can you cut any entertainment expenses? There is definitely something in your life you can cut back on. Just choose one area of your lifestyle to decrease.
Yes, this can be hard because you’re used to living this type of life. Well dear readers, nothing will change if you don’t, so if you really want to pay off your debt bad enough, make a change right now! For us, we’ve decided to only eat out once a week (and it’s not going to be an expensive outing either). There are so many other activities you can find joy in that don’t cost any money, so now is the time to explore.
#5 Create An Action Plan: Can You Increase Your Income?
When it come to earning money outside of your day job, it’s hard sometimes to know where to start. And that’s ok! All good things take time. The reality is though, you CAN make money outside of your day job, it IS possible. Need a little inspiration? Check out our article on 18 Ways To Make Money Outside Of Your Day Job. If you can increase your earnings and decrease your expenses, you’re doing extremely well!
You may have noticed the ‘Part One’ at the end of the title. We don’t want to leave you hanging, so we’ve created a summary checklist of the strategies we cover in Part One AND Part Two. In case you don’t have time to revisit this post or when we release Part Two, we’ve got you covered. Just click the button below, join the tribe and you’ll gain instant access to the library. It will be listed under the first section labelled ‘Budget’.
Stay tuned for Part Two next week. We also have an exciting roundup post in the works where we’ve reached out to a few experienced debt tacklers who have got some amazing advice for you.
Amanda & Julia