Depending on the amount of debt you have, it can take several months to several years to get out of debt. But, there are several things you can to do help speed up the process so let’s get to it!
Track Every Penny You Spend
Before making a budget, you should first track your spending for two or three months. You can set up a spreadsheet with categories like food, gas, dining out, etc. Every time you buy something or pay a bill, put the amount into the category to which it belongs.
After tracking for two or three months, you should have an idea of what you spend in each area in a typical month. This is the information you’ll use to create your first budget.
Make a Budget
I always suggest making a new budget each month. This allows you to plan ahead for things that can change month to month, like trips you may be taking, community events you plan to attend, etc.
When you sit down to create your first budget, be realistic about what you’ve been spending. If you’ve spent an average of $300/month on groceries don’t budget $150 for groceries! If you do, you’ll go over and lose your confidence in budgeting. Set your first budget up based on the amounts you spent while doing your two or three months of tracking.
The next month, you can adjust numbers based on what you have left or where you went over on your budget. You can also start to lower your expenses. If you budgeted for and spent $300 on groceries but you want to lower this amount, change your budget to $280 for groceries. Slowly lowering your expenses is much easier than changing them all at once or by a drastic amount, and it can really help you to get out of debt much quicker!
Related Article: How to Start a Budget 101
Cut the Extras
After you’ve tracked your spending and are sticking to your budget, you should work on cutting the extras from your life. This could be things like cutting down on snacks while grocery shopping, cancelling your TV subscription, or not spending as much on dining out.
The second and more important step is to put the money you’ve saved towards your debt. Putting an extra $5 a month toward your debt can speed up the process much more than you realize because each time you pay extra principle, the interest amount you accrue is also lessened.
Just Get Started
The most important step to help you get out of debt is to just get started! Put away your credit cards, cut them up, or hide them. Stop spending on credit and start paying down your balances. This is also the hardest step for many people, but by doing the other things mentioned you can pay off your debt fast! Remember, you’re not the only one who is in debt, but you’re one of the awesome few who is committed to conquering it once and for all.
Do you currently have debt?