I became debt free in 2020 by using the methods below to pay off all my consumer debts during the COVID-19 crisis. Becoming debt free gives you peace of mind and protects your from unexpected financial disasters. Here’s a list of ways to pay off your debt faster.
- Stop Shopping. Excessive shopping is what gets you into debt in the first place. No more trips to the mall, shopping outlet, or Amazon. Get rid of your shopping habit first because that’s what got you into debt in the first place.
- Create a Budget. A monthly budget is a spending limit that you will not exceed no matter what. It helps you figure out how much you can live off of.
- Track Your Spending. This is the foundation of getting rid of your debt. You must track your spending to see what you can eliminate and throw towards your debt. I use Mint (it’s free).
- Build an Emergency Fund. An emergency fund provides cash when something unexpected happens soy you don’t have to go into debt. $1,000 is the bare minimum but I recommend 6 to 12 months of living expenses.
- Start with the Smallest Debt. Build some momentum by attacking the smallest debt first. It builds confidence and helps you focus on your bigger debts.
- Make Frequent Payments. When I paid off my debt, I started paying my debt down weekly instead of monthly. More frequent payments will get you out of debt sooner. Try daily payments if you want to get out of debt even faster.
- Sell Everything You Don’t Use. If you own something of value that you don’t use, sell it on eBay or Craigslist. Go through your home and find stuff you don’t need anymore. Sell it and use the extra cash to pay off debt.
- Stop Hanging Out with Spenders. Everyone has a friend who spends too much money. They overspend then complain about being broke all the time. Avoid these people as much as possible. If you have a family member like this, then don’t hang out with them at places like malls because their bad behavior can rub off on you.
- Use Debit Cards. Stop using credit cards for everyday purchases. Debit cards promote more healthy spending habits because you can only spend what you have.
- Sell Investments to Pay Down Debt. I sold all my Apple (AAPL) stock to pay off my biggest consumer loan. It’s better to become debt free than invest because you won’t have to fire sell your stocks in case of an emergency. You can always buy them later.
- Stop Eating Out. Cook your meals at home and buy whole, organic foods in bulk. Fruit, vegetables, bread, rice, beans, and other whole foods will keep your weight down and save you money over the long run.
- Don’t Go on Vacation. Use that money for paying down your debt. Before I became debt free, I didn’t take a vacation for a long time. Most people charge their vacations on credit cards and go deeper into debt. Don’t be that guy.
- Avoid Nightlife. Going out at night is a huge drain on your finances. People use their credit cards while drinking then are shocked at how much they spent the night before.
- Start a Side Hustle to Crush Your Debt. Earn some extra money outside of your regular job and use all the extra cash to pay off debt.
- Avoid Borrowing Money Like The Plague. Say no to debt in the future. Avoid car loans, mortgages, credit cards, student loans, etc. If you want to buy something then save up the cash. Earn more money to buy expensive stuff. You can do it!
These are some easy ways I paid off my debt in 2020 and went debt free. If I can do it then you can too!