Need help paying off debt fast? Worried it’ll take forever? When you’re in a lot of debt it can be the only thing you can think about, and you feel like the world is gonna end.
In this video I’ll show you how I was in $76,252 in debt in my early 20’s and paid it all off super fast (even though the start was suuuuuper slow).
- Get clear on the exact number (to the cent)
At the end of the day, debt is just a number. It can come with a lot of emotions and stress, but ultimately is just money. You need to come up with the money and when you do, it’s all good again. Take the problem from an abstract one to a very specific and clear one. Get the number.
- Put the number in a prominent place
You need to keep the problem top of mind at all times. It affects all other areas of your life so it’s important to address. You’ll get a lot of motivation from updating/reducing the number as you pay off your debt faster and faster.
- Cut up the credit cards
Stop the leaks in the bucket by getting rid of your credit cards. No point trying to pay off debt when you’re still actually accumulating more bad debt. If you’re wondering how to pay off debt quicker, you must do this step.
- Leverage balance transfers
You can move your credit card debt from one provider to another, they’ll get you 30, 60 days etc interest free, which can be very useful, especially if you are wanting to pay off debt with a low income.
- Pay more than the minimum monthly repayment
It’s tempting to pay off the minimum balance, but you absolutely must squeeze out every dollar you can to get ahead of those repayments. It’s lame at the beginning but well worth it.
- Work out your monthly paydown
This is crucial if you want pay off your debt and save money. Deduct your monthly expenses from your monthly income, then divide your total debt by that number – it’ll help you work out roughly how many months it’ll take for your to pay down your debt. It will be a good wake up call to ensure you pay off the debt fast enough.
- Managing your psychology
When you have a big amount of debt, it can be draining. You will have days where you’re sick of living lean, but eventually you will get there. Take the emotion out of the equation, it’s just a number – and with hard work and consistency you’ll pay it off faster than you might think.
- Make the hard decisions
Paying off debt requires you to make hard decisions. People who struggle to pay off their debts often refuse to make these hard decisions, or take too long to make them. If you need to sell your car, do it. If you need to move to a cheaper area or to a worse house, do it. The quicker and harsher you are, the faster you will pay off your debt.
Hope you find this useful and if you have any questions, please comment below and I’m happy to help you out.
@raycorc on Instagram
Good day there, Ray Corcoran here. In today’s video, we’re going to be talking about how to get out of debt and for obvious reasons, debt is not a lot of fun. In the states the average credit card debt is about 5,700 and the average credit card debt in Australia is about $4,200 Australian and the question we want to answer today is, how do you get out of debt and how do you get out of debt fast? Because, we haven’t got 10 years to get out of debt and I’m talking specifically about a bad debt, like credit card debt. Debt is a big problem for a number of reasons and one of the reasons you want obviously get out of debt is because, if you’re in debt you’re not really going to be able to invest.
And if you think about building your wealth like rungs on a ladder, we want to start off with obviously you want to go from being in debt, your next level up is being broke and then once you’ve gone from broke, you want to go to having a savings buffer and then beyond a savings buffer, you want to start with potentially getting some investments and then beyond that you want to get multiple investments and so on. So, before we get into the actual tips themselves just wanted to share a story because, when I was in my early twenties, I was in about 70 to $80,000 of debt and that was extremely stressful and at the time I just didn’t know what I was doing, I was not earning a lot and I wasn’t spending it on silly things like clubbing, I was still doing all those things but, the reason for the debt was actually just I was buying marketing courses and being a part of business groups and all this stuff and you’re spending a few thousand here, 10,000 there, 5,000 there and it really added up.
After doing a few stupid things like that, it got to a point where I was $70,000 plus and it got extremely stressful because I didn’t have the cash coming in to pay for all of that. Anyone that’s been in debt can understand how with all these high interest rates, it’s like a freight train that starting to get away from you a bit and it’s gaining a bit of momentum and it’s like a snowball with all the really, really high interest rates on credit cards you feel like the debt’s getting bigger at a faster rate than you can pay it off, which is a pretty disempowering.
So, the first thing you need to do is work out how much you actually owe to the cent. Now, it’s really important that you get the exact amount as of right now, just so you can get total clarity. One of the hardest parts about having debt is its just gotten so big or so out of control that you don’t even know how much you owe, you need to figure out how much exactly you owe and to whom. So, I’d really recommend you need to break it down into highest interest all the way down to lowest interest rate. So, one way to think about it is if you had an investment where you could make a guaranteed…
Some of these credit card interest rates are 15%, 18% some something ridiculous. So, think about if you had investment opportunity where if you put in a hundred bucks you could get back an 18% guaranteed return with a degree of a hundred percent certainty. That is literally the same thing as you paying off some of your highest interest debt. So, it’s really important that we knock off the really, really high interest stuff first and then work our way down to the lower interest and lower pressure debt. So, get the exact number, find it out, set aside a couple of hours and get clear on the exact amount. The second thing we want to do is I mentioned this in another video in terms of saving, but it applies to debt as well and that’s to put the number in a prominent place.
So, when I had that big amount of debt in my early twenties, I saw this internet marketer guy John Reese. I just saw some random video and he talked about this exact topic and how he wrote the exact number out on a piece of paper and stuck it on the wall, I think in his bedroom or his bathroom or somewhere where he would see it every day. And at the time I was how funny that I see this right now with this debt I’ve got I’m going to try it, how could it hurt basically? So, I wrote it down and it was a very small thing, but for me I found it very, very beneficial in terms of psychology and getting momentum and I’m sure there’s some science behind this, but the fact that I had the exact number written on the piece of paper and every time I updated it, I crossed out the number and wrote the new number. So I went from $74,231.22 to $71,222.10 or something like that.
But every time I knocked off and then it got into the sixties and then it got into the fifties and then I got into the forties and so on and it’s like when you’re in a running race, the closer you get to the finish line you summon up that little extra bit of energy and you’ll find that when you start to get within striking distance of that last little bit of debt, the flood gates open and you’ll just start going really, really hard at it and that’s what I found, I just found when I got closer and closer you know what? It’s not a big number anymore it’s a good chunk of lower than that and now I’m getting more momentum.
Number three is we need to cut up all your credit cards, anything that’s causing you more debt right now Obviously we need to get that out of the way. So, you either cut up all your credit cards or you cut up all your credit cards, bar one and drastically reduce the limit for maybe some small expenditures that you need to pay. Just cut up the credit cards, get rid of them, get them out of your life, it’s going to be like trying to fill up a leaky bucket if you’re trying to accumulate money but you’re still actually spending a little bit more. You’re spending is what got you into this situation and lack of spending is going to get you out.
Number four is a leverage balance transfers. So, obviously when you move from credit card to credit card, you can look at bounce transfers where you get an interest free period So different credit card companies will compete for your business and if they can say “Hey, if you want to take all your credit card debt from one provider to us, we’ll actually give you 60 days or 30 days or whatever in interest free period.” Now, when your debt is accumulating and you’re getting hammered with high interest rates it can be a bit of a breather, but a word of caution you need to be careful with doing this and read the paperwork and the fine print to make sure that typically after that bounce transfer period is over the interest free period, what’s going to happen is you’re going to have often even higher interest rate on the end of that.
So, if you don’t trust yourself with doing that, don’t do it but if you’re pretty confident that in that period, I can really make the most of it and try and knock off some of the debt that can be a really, really good option to do multiple balance transfers. Number five. So, it’s really, really important that you don’t just make the minimum monthly repayment, the minimum monthly repayment is literally the most pathetic end of things and obviously you might need to start there, but every extra dollar counts especially early on, if you want to be strict at any point in this paying off the debt journey, the earlier, the better.
Number six is you want to be going over how much you actually make total. If you’ve got one job or multiple jobs whatever it is, just workout how much you make per month and also look at how much you’re currently spending per month and maybe look at the last three or six months to see how much you have coming in and what you have coming out every month and we do that to establish how much of your debt you’re actually going to be paying off every month. And I’ve mentioned this in another video, we want to work out roughly what rate you’re paying your debt off at. So, an example I used on another video was, if you’re making 5,000 and you’re spending 4,000 and you’re paying off a thousand bucks every month and you’ve got 70,000 or 60,000 in debt, it’s going to take you five years to pay that off.
So, for many people, this won’t be acceptable or it won’t be ideal so, you need to work out, we need to drop your expenses and your costs and then once you’ve done that, let’s look at increasing your income, can you work more hours, second or third job? Work on getting promotion, which might not be immediate, but you can build up to that in a couple of months and look at the maths. I find that a lot of people skip this step, it’s really important to work out the maths because you need to be realistic. I’ve had certain times where I’ve been saving for something or trying to pay something off and then I’ve worked out the actual maths and I’ve realised that the rate I’m going at is nowhere near the rate that I need to be going at for me to have achieved that goal in the timeframe that I want.
So, very important to work out what rate you’re currently paying it off, because that will give you a specific date as well which is really important. It’ll give you a specific date when you expect that debt to be paid off so, you’ll know by 8th of December 2022, that debt will be paid. The next step is really around managing your psychology as you pay off the debt. So, throughout this process, because if you’ve got a significant amount of debt like I did of bad debt, your emotions are going to be going up and down along the way, you can have days where you feel like you’re not making any progress, you have days where you didn’t pay off as much as you wanted to, that’s all to be expected it happens to everybody and you need to be aware that your emotions will go up and down along that journey, because it’s a marathon not a sprint so, you need to make sure that you’re not getting too caught up.
If you have one bad week who cares, just get back on the horse and look at what can I do better next week or next month to ensure that my costs stay low, my income stays as high as possible and that I allocate as much as possible to the debt in the next period or maybe try and play catch up. The reality is you’re going to have to cut your lifestyle a lot and this probably ties into one of my last points which is, there’s going to be a lot of hard decisions you have to make, depending on how much debt, debt’s a scale, right? So you might have a little bit of debt it’s easier to manage or a heap of debt which is a very stressful really majorly affecting your life, relationships all that stuff. So, if it’s a lot of debt, if you’re on the higher end of how much debt it is for those people, you’re going to… everyone’s going to have to make hard decisions, but you even more so.
So, if you have a large amount of debt, you’re going to need to make some hard decisions. You’re going to have to live in areas you probably don’t want to live in potentially. You’re going to have to live in a house that you may not want to live in, it’s not the standard you’d like to live in. You may need to skip events that you would love to go to and you really, really want to go to. You may not be eating as nicer food maybe as you want. These are the hard decisions that you need to make and as I mentioned in my previous videos, don’t do half saving, anyone that does half saving they take forever to do everything. People that want a little bit of luxury, a little bit of this they always say “I’ve got to leave, I’ve going to treat myself, I don’t live to work” and all this rubbish.
I fully disagree with that, I think that is the most backwards thing ever. If you’re in debt, you’ve done some silly things just like I did. You’ve done some silly things, you need to pay the price literally and now is the time to pay it all off, get it all sorted so you can move forward with your life. I don’t see the point in just scraping by every year because you need to live a little. For me that’s not living, I don’t know about you? But that doesn’t sound fun at all.
Hope these tips have helped if you liked the video give it a like, give it a like multiple times if you need to and if you want to subscribe, subscribe, this channel is in its early days so, we’d love for you to subscribe and get involved. If you have any questions, let me know, if you found it useful let me know in the comments below and I’ll see on the next video, cheers.