We all know debt can be a real killer (emotionally and mentally) and it can definitely suck the fun out of life. Which is exactly why we’re doing a whole series on the topic, to remove those feelings of stress, worry and anxiety from our lives and work towards a debt-free future. If you’re looking to be debt free and haven’t already read Part 1, make sure you cover those basics first before continuing on to read Part 2. We’re going to pick up right where we left off!

*Don’t forget if you’re short on time and need this summarised, you can grab your free checklist that covers all these strategies in our library. Just click the button below.

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Strategies To Help You Become Debt Free Part Two

#6 Your Emergency Fund Is There for Emergencies…Not To Pay Off Debt

We’ve stressed before the importance of having an emergency fund. This is purely backup for when the worst happens, and none of this should go towards your debt repayments. If you do lose your job for any reason, you’ll need something to fall back on, so leave this fund alone!

#7 Set VERY Clear & Realistic Goals For Yourself to be Debt Free

These need to be a mix of short-term and long-term financial goals related to paying off your debt. In Part 1 we asked you to calculate your repayments. Use this as a guide when setting your goals so you remain realistic. How many years down the track do you want to be debt free? You could even set a goal on how much you want to repay annually. Keep yourself accountable by breaking down the long-term goal into smaller ones so you don’t get overwhelmed. We’d suggest to create a debt calendar (one that is only used to track your debt repayments) for ease of access when you want to know how far you’ve come and far you’ve got to go. If you’re serious about doing this, you’ll need a bit of a vision board going on.

#8 Rank Your Debts

If you’ve only got one form of debt, this is easy peasy for you and you don’t really need to worry about this step. However, if you’ve got more than one, read on!

You may want to rank your debts according to their interest rate. We like to go from the highest interest rate, down to the lowest. You’ll still want to meet your minimum repayments on each loan however, pay more attention to the one with the highest interest rate and get this down as fast as possible. Don’t worry, it’s completely doable! Don’t forget to stay positive in this process. While it can be overwhelming when seeing everything you owe written down on paper right before your eyes, don’t let this dishearten you now. Just face it head on!

Once you’ve determined the ranking, consider putting all your bonus money towards the loan with the highest interest rate. What we mean by bonus money is money from your tax refund, work bonuses, commission, money you’ve earned from side hustling etc. Basically everything you earn outside of your normal 9-5. If you need a few money making ideas check out our article here.

#9 Credit Card Debt? Consider A Balance Transfer

If credit card debt is on your books, then you may want to consider a balance transfer. Credit cards and banks have different levels of interest and it might be worth looking into an option that will help lower your interest rate whether that be choosing a new credit card or a new bank. You may be able to transfer the balance of your credit over to a lower interest rate card, reducing your debt repayments. Great idea? We think yes!

#10 Pay More Than The Minimum Balance

We get it, you have a life…but you also have debt that makes you stress out if you’re doing an activity that costs you money (we’re talking from experience on this one). We’re not saying to cut these activities out entirely (we’re not the fun police), but think about how you can meet more than your minimum repayment. This all comes back to what we covered in Part 1 regarding expenses.

#11 Treat Yo’Self!

…NOT by going out to a fancy dinner – save that for the final payment! That defeats the purpose of this new budget you’ve got going on. But seriously, treat yourself! Once you’ve reached a milestone, celebrate! Cos’ seriously, you deserve it. It doesn’t have to cost you much money. Grab a bottle of wine and make a toast to your latest achievement. It can literally be anything, but stay money conscious.

#12 Yes, You Should Still Be Saving Money

…AJ seriously, how the hell can I pay off all my debt AND still save money? Why wouldn’t I put all of my extra money towards my debt repayments? We don’t believe this is the smartest thing. You still have other financial goals right? Holiday, house deposit, new car…you CAN still aim for these things and you should still be saving money while repaying your debt/s. Just because you have debt, doesn’t mean you have to neglect your other financial goals. If you’ve decided to tackle your debt, you may want to revise your budget to take into account your savings goals. It is totally possible to feed both! If you need some inspo when it comes to your budget, we’ve got a step-by-step guide. Just click the button below.

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#13 Have The Right Mindset to be Debt Free

We mentioned this in Part 1 but we feel we need to dive in a little deeper here. If you’re 100% committed to paying off your debt, there are a few personal traits you’ll need to help you through. Self control is a MUST! And it’s something that is very hard to maintain sometimes (casually just walking around the shopping centre, ‘oh, look a donut! I’ll just waste my $6 on a doughy and delicious round thing with caramel oozing from the edges’). You gotta be strong. Resist the colourful advertising, resist the 50% off sale at the department store…resist your food cravings for donuts.

Be determined and don’t give up! Do we need to remind you Rome wasn’t built-in a day? (Neither was this blog, but we NEVER give up – even though there’s been times we want to). And you’re not going to either! We’ve got one piece of advice for you when self-doubt start to creep its way in. Take a break! Sometimes when you become so focused on something, you get consumed by it, and swallowed whole. To those people who think you don’t need a bit of balance…trust us, you do! The mind is a powerful vessel and like the rest of your body, it too needs a rest day in order to come back refreshed.

#14 Build Your Snowball

If you haven’t heard of the ‘Debt Snowball,’ then we suggest you take a look! It’s another method of tackling your debt and it may be more applicable to your situation… or it may just be a fresh look at your debt to kickstart your journey. You know how when building a snowman you start out with a little snowball and keeping rolling it in snow to make a bigger snowball… well now you’re going to do that with your debt.

Essentially, you list your debts out smallest to largest and tackle your first debt with a vengeance and then move onto the next debt. To learn more about this method, read this short article by Dave Ramsey here. If you like the sound of this method, don’t forget do download our ‘Debt Snowball Worksheet’ to help you along the way! You can get the worksheet by clicking the button below.

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Now What?

Alright! How are you guys feeling?? Are you ready to become debt free now? We’re feeling pretty good about our goals after all that and tackling our debt straight on! Remember guys, your debt is not a problem. It is a challenge. It’s an opportunity to prove to yourself that you’re capable of anything because we guarantee, by the time you’ve paid that baby off, that’s exactly how you’ll feel!

Download your debt checklist which has all these strategies in the one place for your debt free journey. Print it out and let it be your starting point.

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NEXT WEEK we have a special roundup post where we’ve interviewed a few fellow bloggers who give you some amazing advice on tackling debt. Seriously, it’s good! Make sure you like us on Facebook, Twitter and Instagram to know when Part 3 is released.

Have you found these strategies helpful?? We’d love to hear your thoughts, stories, attitudes towards debt etc. Please leave us comment below!

Love Always,

Amanda & Julia

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