Moving toward debt free

At the beginning of this year I didn’t take much responsibility for the money I had or where it was going. I would put the bare minimum on my debts and spend the rest on things that didn’t matter.

I never had a lot of money and just figured that is how life was, struggling to get by, nearly everyone I knew was living pay to pay so that must just be how life just is, right?

Fast forward 8 months and of the $16k in debt I had, I am down to my last $4k and have gone from 2 credit cards and a loan down to 1 credit card. And you know what? It wasn’t really that hard

Here are the things I’ve learnt along the way:

1. Know what you owe.

This is huge! Before I started focusing on getting debt free I never paid much attention to the interest rates or interest going onto my debt each month. I checked the minimum payment and did what I could to pay that. It turned out that I was paying about $250 a month in interest alone and my repayments were barely even covering it. Basically I was one of those people that credit providers love, the ones that pay all interest and nothing else forever.

2. Look for alternatives

Do you have a high interest credit card or loan that is weighing you down? Try looking around for a low or no interest balance transfer credit card. Once I took a look at my cards I realised I was paying around 16% interest for each and on $16k that is quite a lot of money so I researched around and found a card that as 2.99% for 24months! That seemed like a reasonable amount of time to get that all paid off!

I went from paying roughly $100 a month per card in interest to paying $10 a month, in the end I only had the card for 5 months, I paid less interest the entire time than I would have in a month with the old provider.

3. Don’t take the first option

Look around at your options, just because you’ve been with a bank for 10 years doesn’t mean you have to stay with them or, if you do make sure they work for your loyalty. Recently I paid off the card I mentioned above and called to cancel it. I mentioned that I had some more money I was interested in transferring but their interest rate was too high. They provided me some options which were ok but not what I was looking for, once I declined these options they mentioned that “oh, by the way we have the exact thing you’re looking for” yeah, they held out hoping I’d take the 7% option before offering me 0% interest for 9 months.

While banks want your business they also want to make money. Be tough, stand your ground.

4. Prioritise

This may sound pretty straight forward but you would be surprised how hard it can be prioritise paying off debt. I used to budget a certain amount to pay off my debt but I’d leave it until last, just in case I needed some money for something. Needless to say I rarely ever put the amount I’d budgeted onto my debt because I always found something else I absolutely needed to buy.

What I found worked for me was to budget what I would need in that pay period and deposit/transfer the money onto my debt straight away, you might have to sacrifice some other things but in the long run more of your money will stay yours (as you begin to pay less and less interest) and you’ll be debt free faster.

Obviously these suggestions are just that, they are what have worked for me but may not necessarily work for everyone. Hopefully though, it will make you think about what you can do to pay off debt and make life easier for yourself.

Have other solutions that have worked for you? Leave a comment and let me know.


3 responses to “Moving toward debt free”

  1. I have fallen into debt because of Avon. 🙁 I had to quit my job, and I’m currently unable to work. :L Also, my PTSD gets the best of me especially in stressful situations, thus one of the major reasons I am unable to work. /;

    And it sucks, because I have this debt collector company calling. They somehow got my house number. I live with my grandparents. I only gave them my cell phone number for reasons. Ugh, I hate it. I wish I could work out a way to pay them back

    I feel as though I’m in a never ending spiral of doom. I’m glad you’ve got it under control for yourself, though. 🙂

    • I hope you can work something out. Have you tried going to a bank to see if they can offer you anything? A financial planner might be able to help you sort through it all.

      • No, but here you have to have good/somewhat decent credit for that.

        I’ve tried to contact Avon directly, and they never get back.

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