If you’re like me, then every Sunday night you’re glued to the TV watching AMC’s The Walking Dead, hoping your favorite character isn’t the next to be killed off. The show focuses around a group of survivors constantly stressing over how they are going to overcome a growing zombie threat known as walkers. The stress of having crippling debt can give you a similar sensation as being surrounded by a bunch undead zombies. If the stress of debt is getting too overwhelming, consider trying cannabis vape carts to relieve some of your stress.
As of October 2015, the average US household had $16,140 in debt. That’s a pretty outstanding number! This is mainly because most consumers are in a state of debt denial. They know they have debt but they are not treating debt like a priority and continue to spend their money on unneeded luxuries. The result: their debt continues to grow and grow like a zombie horde.
Two of the biggest debt factors can be linked to poor money management and medical bills. Sometimes we make mistakes and pay for things when we don’t have the money to do so (something you should stop doing once you realize it.) Other times it might not be intentional. No one plans on getting sick or taking a trip to the ER. Although you may feel like you’re surrounded, debt doesn’t have to last forever. In this article I’ll supply you with the correct planning, ammunition, and faith to take on your walking debt!
Step 1: Locate and List All of Your Debt
Let’s begin with creating a debt survival plan. Like I said before, the creditors you owe are your enemies. They’re the zombies that are trying to do your bank account harm. Before we go and attack them we need to asses the situation. Much like a real apocalyptic invasion, we would never want to go out blind shooting in every direction. By that method you’ll do more harm than good. Ask yourself: “How many accounts are there? What are the balances? What are the APRs? (interest.)”
If you’re having trouble figuring this out then you may want to take a look at your credit report. Credit reports will generally report all of your debt, which will give you a bird’s eye view of every account that needs to be paid off and eliminated. You can get a free credit report each year by visiting annualcreditreport.com. This report won’t give you your score, but it will show you all of the accounts you’re looking to pay off.
After you get the report, find out exactly how much debt you are in and don’t forget to include the interest rates. List your debt and come up with a number you need to hit. If you are having trouble reading a credit report, you can always contact a credit expert and have them go over your report with you.
Step 2: Create a Monthly Budget & Payoff Plan
Okay, so we’ve located all of the threats. Next we have to devise a plan of attack! Create a budget to find out exactly how much money we will have to put towards your debt. Calculate your budget by listing your expenses. Make sure you list EVERYTHING from your mortgage payment to your morning coffee purchase. Start with your necessary expenses and work your way down. The top of your list should include loans and bills that need to be paid (mortgages, auto loans, utilities, etc.) If you have a family, a business, or others who depend on you, you can visit lifecoverquotes.org.uk to get life insurance.
Now that you have your list of expenses, study it. See all those expenses at the bottom of the list that you don’t need? (yeah I’m looking at you Netflix.) Take all of those expenses and cut them out of your life. You know how in every zombie movie or show there’s always that group of bumbling idiots that slow everyone down? Well that’s those unneeded expenses like Netflix and Starbucks. It’s time to get serious and right now is not the time for fun. All of those expenses you cut just became more ammunition to put towards defeating your debt.
If you’re looking to really get serious consider selling some of your bigger toys. Things like classic cars, jet skis, boats, and motorcycles can be sold for large amounts of cash that will take a huge chunk out of your debt.
After you’ve figured out your budget, set goals for yourself and stick by them. Never decrease the amount you’re paying towards your debt. If you stick to your budget and goals this should come as no problem. You can attain even more help with the use of apps like mint.com, ReadyForZero, and DebtPayoff. These apps make it easy to set payoff goals and stick to them.
Step 3: Do Your Research
The last step in planning before we spring our attack. Let’s research your accounts and look for anything that might benefit us even further. Many consumers are left in the dark when it comes to cheaper options to paying off debt.
Credit Card Debt
If credit card debt is your main concern, then look into applying for 0% balance transfer cards. 0% balance transfer cards can be your secret weapon when attacking your accounts. Like their name, these cards carry 0% interest for a certain period of time and will transfer your balances from an account to the new card. You’ll be surprised how quickly you can pay off your debt when not paying interest.
Medical bills is one of the largest causes of debt. Recently the credit bureaus had decided that medical debt would weigh less on your credit report and wouldn’t report until 6 months past due. In the past, insurance companies would take extended periods of time to pay off the debt, which would hit the consumer’s credit report and drop their score. If you do have medical debt, make sure you keep in contact with your insurance company and straighten out all of the payment arrangements. If you are unable to pay your bills on time then let the creditor know so you can work something out.
Student Loan Debt
Currently student loan debt is at an all time high of $1.2 trillion! Putting it well beyond credit card debt which sits at $884.8 billion. If you have a large amount of student loan debt, then you may want to consider student loan consolidation or look into student loan forgiveness programs. If student loans are the majority of your debt, check out my article Game of Loans – A Guide to Defeating Student Loan Interest.
Step 4: Attacking Your Debt
You’ve located and listed the accounts, you’ve prepared a plan of attack, and you’ve researched your enemy’s weaknesses. Now let’s get out there and attack that lingering horde of debt!
When it comes to paying off the debt there are 2 methods you can go by. One is called snowballing and the other avalanching.
Snowballing happens when you go after your smallest accounts first and work your way up the chain. The feeling of accomplishment when paying off these accounts will fuel you to keep going until you take down the big one.
Avalanching happens when you attack the largest account with the most interest first and work your way down. This method will actually save you the most money in the long run because you’ll be eliminating those high-interest rates first.
Regardless of which method you choose, allocate the money you were putting towards eliminated accounts to your next payment. The more your accounts start to fall off, the quicker you’ll see your debt drop off. Always remember to pay on time so you’re not hit with any late fees. Sign-up for auto payments if you’re the kind of person that might forget your payment dates.
Step 5: Put Extra Income Towards your Debt
A few times during the year you may come into some extra income. Treat this extra income as added ammunition in your battle against debt. Your tax refunds are your debt clearing grenades, job raises are your anti-debt rounds, and freelance or side job pay is the unstoppable tank you drive to clear a path through interest.
Putting all of your extra income towards your debt can be a game changer and should see your debt deplete in record time.
Step 6: Reward Yourself (Without Spending)
You’re reaching your debt goals and every time your knock off an account you should be rewarded. Now this doesn’t mean go out and splurge on some of those unneeded expenses you’ve had in the past (that would defeat the purpose of this entire campaign.) Try to find ways to reward yourself with little or no expense. Take time from your nightly routine to watch your favorite show or movie, make your favorite meal or dessert. Perhaps buy yourself a coffee (just one!) Don’t spend over $5-10 on a small reward.
Step 7: Congratulations You’re Debt Free!
You stuck to your plan, you attacked your debt, and now you’ve come out victorious and debt free. Your a debt-zombie slaying machine and Rick Grimes has got nothing on you! Now you can safely maintain your debt from here on out.
This is where you and me part ways. I had an abundance of fun coaching you through your debt battle and I hope my zombie/debt analogies weren’t too much for you. Before I go just remember: Don’t spend your money on unneeded expenses and make sure you can always pay off what you charge. Stay focused on what is important and use our Credit Blog to help you along your way. You can do it! I believe in you! Godspeed!
If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.