Wealth-Coaching

Eliminating debt can seem so hopeless at times. As you examine your monthly outgoings, you see that there is nothing to cut out in the way of expenses. Or you can make some savings, but it is meager. But where does that leave you in terms of your debt elimination challenge?

Having no surplus of funds does indeed make eliminating debt more difficult, but not impossible. Wouldn’t it be nice if I could just give you a money tree that just grows and bears money all year long, or at lease give you a winning Lottery ticket? Don’t we all secretly wish that we could get that lucky number and not have to wory about money again? Realistically speaking, though, there are a few techniques that you can use even without the surplus that you need "before" starting to focus on eliminating debt.

One technique is to focus on the debt that has the smallest balance. Although the interest rate is important to recognize in terms of all of the outstanding debts, paying off the one with the smallest balance will give you the biggest advantage psychologically because it can be paid off the fastest and it will be another headache that you don’t have to deal with. In addition, it will then free up some money to be paid towards the next smallest debt. Repeating this process will accelerate the payoff of the remaining debts providing that you keep your ongoing expenses the same or less.

Debt can be overwhelming and just thinking about trying to pay back all of it can sometimes make you feel like there is no hope in sight. However, when you focus on the smallest debt and you keep asking the question, how can I pay that off without going into more debt, you will eventually get an answer that will help you pay that off. The important thing is to not get overwhelmed, focus on the smallest debt, and think positive. I can’t personally make extra money appear for you, however, you can make it appear by focusing on the most important thing first. Perhaps you’ll get an idea regarding something you can sell on Ebay. Or perhaps there is an overlooked income opportunity that will bring in sufficient money to take care of that smallest debt.

Another debt elimination technique is to find a way to change the terms of any of your outstanding loans. Of course, this all depends on your situation and what you can find. Some debts, you won’t be able to refinance and you just have to pay extra each month. However, by checking around, you oftentimes find out that certain banks or credit unions do better at certain types of loans. We had an auto loan that had a very high interest rate. We were told at a few places that we wouldn’t be able to lower it below 12%, but then we checked with our local Credit Union and found out that we could get approved for a 7% loan. It cut off several hundred dollars in payments each month, thus freeing up some cash to be used to further pay down debt.