Unfortunately, debt has become highly encouraged in this country. You can borrow money for a home, a personal recreation vehicle, a vehicle, land and more. You can just put it on a credit card if you have the money for it now or want to wait to pay for it. For most people, credit and loans are easily accessible and can be had for a price.

This leads to problems. Nevermind all the stress that being in debt can cause a person, it is causing economic problems within our own country. Younger generations do not want to purchase homes because they don’t want to be in debt. Some of them are in debt to their eyeballs because of student loans and a defunct college degree.

While this is happening to the younger adult generations, the middle/older generations are still paying for their homes, maybe still paying student loans, trying to put their own kids through college, and have a lot of other debt too. Many people think that being in debt and paying on a loan is just part of life.

This is crazy!

This debt monster will be a sure downfall to one of the greatest economies in the world. As a country, we are trillions of dollars in debt and they do very little to stop the flow. So, as a citizen, you will find very little help there unless you want to become completely dependent on the system.

So what is a person to do?

Make every attempt to become debt-free and stay that way. This is one of my biggest goals this year. Honestly, it should be everyone’s goals. Once upon a time, a hundred years ago and longer, being in debt was a shameful thing. People were proud of their savings and owning a home outright. They didn’t want to be in debt. They would only purchase what they could afford and easily purchase or produce.

Being in debt can produce a lot of stress and a fair amount of anxiety for the debtor. Usually, when someone is in a lot of debt, one wrong thing can happen, and then they will be in trouble with collections. It can cause a person to lose their home, their vehicle, and more. In some cases, the debt load can be bad enough to declare bankruptcy.

Being debt-free means you have options. I do not have a lot of debt, but I don’t want to be making regular payments every month when I can be putting that money to better use. I have other goals on my list that require me to save up some money for those purchases. I am also sick and tired of making minimum payments on student loans when they could be gone with some effort in a year or two.

So, what do you have to do in order to become debt-free?

1. Make a list of all your debts. This means a list of all the debts you are currently paying or should be paying on. All of them. Even the small ones that you don’t think you should list. Write down the current amounts that you currently owe on them.

This can be a hard reality check. You don’t think something is as bad as it is until you see it on paper. The only thing I would add to the reality check is to put your mortgage in another category as well as your student loans. The mortgage payment should be the last debt you tackle. The student loan should be the second to last because it usually has a pretty reasonable interest rate.

2. Make a budget. You might already have a loose one, but this is where you need to look at the rest of your bills and make a plan. You probably have some areas you can cut down on to make a little more money for payments. You need to figure out how to get out of debt and only your budget can give you the plan to do so.

3. Throw extra money at this debt. Your tax refunds, your bonuses, and your profit-sharing all need to go towards your debt. You might think it should go towards something fun like a trip or new stuff for you, but that should not be the case unless it is something you really need. You want to get out of debt and this is a quicker way of making that happen.

4. Earn some extra money to pay off the debt. You can do this in a variety of ways like getting a part-time job, finding some work at home jobs, selling off things you don’t need, freelance or contract extra work and more. Take the extra money from this extra work and pay down the debt.

5. Only start paying off your student loan and mortgage after the extra debt is paid off. This may seem a little weird considering these are probably your two biggest debts, but they are usually the debts with the best interest rates too. The student loan is generally an easy loan to pay back so I put this one second to last unless you have unsubsidized student loans. Those loans keep accruing interest which means they need to be paid off sooner than your subsidized loans.

Since mortgage loans are generally for a fixed amount of time and can be refinanced, I would save this loan for last. If you can refinance this loan for a lower rate and can afford the closing costs, I would do that. Then pay it off as soon as you can. Some mortgages might have penalties for paying off too soon or early so you will need to look into that also. The penalty might be worth it though if it is less than the interest you would have paid.

Being out of debt is a great feeling. You aren’t being harassed by your bills anymore. You can find better things to stress out over. If the economy takes a downturn, you won’t have to be worried about how to pay your bills or having companies want their money now. If you lose your job, not having those bills will be one less thing to keep you awake at night.

Thanks for reading,
Erica

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