How to Pay Off Debt Fast
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SIX FIGURE STUDENT LOAN DEBT.
Yes. That’s me!
Since we are getting all up in my biz here, my husband and I also financed a medical practice right out of residency.
So, add a nice little chunk of business debt on that, and call it half a million.
We’re super broke doctors.
Related Post: This is Why You Can’t Afford to Be a Doctor
I’ve been through pretty much every emotion related to the overwhelm that comes with that kind of financial stress. Including, a diagnosis of full blown post partum depression last year.
I’ve tried ignoring it, denial, sticking to budgets, failing at budgets, crying, yes…everything.
I’ve rationalized, and listened to other people tell me that it’s totally normal for doctors to have debt, and it will all be fine someday.
Unfortunately, all of those excuses weren’t really working for me.
If you’re like me, and you’re feeling pretty hopeless about you’re six figure student loan debt, don’t give up yet! I’m here to show you how to survive this, and prove to everyone that it can be conquered!
You will find several different theories and strategies for paying off large amounts of debt.
There’s really no getting around the fact that it’s going to take time, but with the right strategy, focus, and a willingness to work like crazy, you can be debt free.
How to Pay Back Six Figure Debt FAST
1. Tighten Up that Budget.
Do not fear a budget. It doesn’t have to be as restrictive as it sounds. It just needs to be a written plan to follow.
If you don’t have a budget in place, you will keep wondering where your money is going every month.
With a budget you will know exactly where every dollar will go each month, how much you have left over so you can throw it at debt, and how much extra you need to meet your goals faster.
Related Post: How to Make a Budget for Beginners
2. Increase Your Income.
I love a good side hustle. My blog for example, is a fun way that I am able to bring in extra income each month. It’s perfect for me because I can work on it at any time day or night, and I don’t need to be away from my three young kids.
The internet, and the world of apps, has made the opportunities for cool side hustles very tangible.
Yes, delivering pizzas or babysitting are still great options, but you can also drive for UBER, walk dogs, or even do fun freelance work on Fiverr! That sure beats the heck out of, flipping burgers.
The more income you have to throw at your debt, the faster you will get out. Remember, this isn’t forever. Hustle now and celebrate later!
3. Decrease Your Expenses.
When we first decided to get on a tight budget earlier this year, I was convinced that all of our bills were as low as possible and there was just no way to save any more.
After going through and asking myself if we absolutely needed every thing on our expenses list, I started to see some obvious things we could get rid of.
Once I had narrowed it down to the basics, I went through the necessary items, and decided to make some calls to see where we could get savings. No, we haven’t cut the cable completely yet, but we did go down to the most basic package. Nobody needs that many sports channels (except for my husband).
I switched car and renter’s insurance companies and saved over $100/month. I put our cell phones on an unlimited plan because we were being charged crazy fees for data overages.
We even started giving ourselves a weekly allowance to help control our “miscellaneous” spending. Now I think twice before I drive through Starbuck’s to get a coffee, because it’s going to come out of my cash stash for the week (and it’s tight y’all).
Related Post: How to Get Free Starbucks
I eliminated around $2500 in frivolous monthly spending, and probably even more than that, just from simply budgeting and shopping around for better prices.
Yes, it was time consuming, but um I think totally worth it! I’m in the process of doing this right now for our office and it’s going to be awesome for our bottom line (hopefully)!
4. Refinance or Consolidate
If you are extremely intense about paying off your debt, (and can be done in 1 or 2 years), then there’s probably no need to refinance your loans. However, if you’re in this thing for more like 5 years, then it might be something to look in to.
There are several student loan refinancing companies with excellent reviews such as SoFi and Credible. Many people are able to save thousands by using these companies.
Don’t rely on this method as your ultimate debt payoff strategy though.
If you get a nice low monthly payment, it’s easy to fall in the trap of keeping that debt around for years because it’s easy.
If you want to get out of debt fast, you need a budget, more income, and lower expenses.
5. Debt Snowball Method
I love this method, because it’s all about momentum.
If I look at my Navient loan, the lump sum is GI-NORMOUS. If I just look at that number, it’s easy to feel completely overwhelmed and want to give up before I even get started.
However, this huge loan is actually broken down into several little loans. There are still some big ones, but we will cross that bridge when we get there.
The smallest one is about $1,000. I feel like I could knock that little guy out pretty darn quick.
Then I could cross it off, and move to the next one.
Little by little you gain momentum. This method is all about behavior, and not so much about the math.
If you have a lot of different debts from several lenders, write them all down from smallest to largest and ONLY focus on the smallest one. This will give you confidence and motivation to keep going.
6. The Avalanche Method
This is the opposite of the Debt Snowball. In the Debt Avalanche method, debt sufferers start with the loan that has the highest interest rate.
If it you are super analytical, this method might work better for you. You do YOU.
To use this method, just write down all of your debts from largest to smallest interest rates, then attack the largest rate.
Before you start any of these methods, you should be caught up on bills, and making minimum payments on all of your outstanding debts. This way you’re not losing any ground.
Which of these methods is the most appealing to you? Are you a snowball or an avalanche? Let me know in the comments, and don’t forget to follow our debt free journey!