1. Stop Adding New Debt

If you want to be debt free, you have to live at or below your means, so commit to stop paying for anything you can’t afford today. If it’s too tempting to have credit cards, cut them up. This leaves cash or a debit card as your only options. Overspend on your debit card and you’ll face hefty overdraft charges!

2. Create Your Financial Picture

How much debt do you have? How much can you afford to pay toward debt each month? Creating your financial picture will answer those questions, giving you the tools you need to plan your attack!

3. Choose Your Method

Find the debt payoff method that works best for you and start working it! Two popular methods are the debt snowball and debt avalanche. I used the debt snowball and it worked like a charm! For an added boost here and there, check out the debt snowflake!How soon will you be debt free? Undebt.it can help you crunch the numbers and find your timeline! If you’re careful, you can use a credit card balance transfer to speed up the process and save some money in the process. The benefit of a balance transfer is the 0% introductory rate (usually for 6 months to a year.) But if you can’t pay the balance before the introductory rate ends, this will backfire on you, because you’ll have to pay all the accrued interest, plus any fees associated with the balance transfer. Read the fine print carefully and do the math, before using this strategy!

4. Create Your Spending Plan

Use the information from your financial picture to create a spending plan, focused on paying off debt. This is simply a list of everything you need to spend money on, for each paycheck, and is a great way to ensure the maximum amount goes toward debt, while leaving enough to cover all essentials – like rent, food, utilities, etc.

5. Create Your Budget

If you thought a spending plan and budget were the same thing, you’re probably confused right about now. They’re actually two different things. Your spending plan is a list of everything that needs to be paid…once the money hits your account. Your budget is an up-to-date account of how much money is currently in your account – broken into categories of how it needs to be spent – plus a register showing how your money has been spent in the past. If it’s kept up-to-date, this gives you an accurate picture of your money anytime you need it, in order to answer the “can I afford it” or “did I pay it” questions. Still confused? YNAB is my preferred budgeting system – and their 4 Rules explain it all!

6. Follow Your Plan!

You can create the best plan in the world, but it won’t work if you don’t use it. So now that you’ve done all the work to create your plan, follow it! There may be detours for the unexpected and you may need to make changes along the way, but stick with it and you will slay your debt!

I did it! Many others have done it! It IS possible! YOU CAN DO IT!

Need help getting started? Book your FREE Budget Consultation! Or check out my FREE 10-Day Budget Challenge!