Do These 2 Things Before You Start Paying Off Debt!

Don't pay off debt until you have done these 2 things!

You have a ton of debt and you got lucky this month and have an extra $500.00 lying around.  What should you do with it? 

Your gut may say put it towards your debt.  Unless you have done these two things, putting it towards debt is the wrong decision!

So before you start paying down your debt, you need to get your financial life in order so you don’t waste that $500.00 by racking up another $500.00 in debt next month. 

The very first thing you need to do before you spend any money is to create a plan so you avoid digging your debt hole deeper next month.

The first thing you need to do is Create A Budget.

Create A Budget To Get Out Of Debt

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Without a budget, throwing any money towards your debt is useless.  You may knock down your debt this month, but without a plan for your money, you’re bound to tack on more debt next month – to include more interest owed to the lender. 

If you have credit card debt, you’re racking up at least 16% more in interest. 

If you have 0% interest for the next year, I hope you have a plan in place to pay off the debt in full before the year expires, when your interest rate jumps up.

A budget is a simple strategy to tell your money where to go.  Before I used a budget, I would sit down to pay the bills at the end of the month and wonder where all my money went. 

If you need a refresher on how to do a monthly budget, refer to my related article on Budgets.

Also, get your free budget printables here!

Your budget should take you an hour or two the first time you attempt to complete it.  You need to account for all your expected income as well as your expected bills.  You can figure out how much you usually spend on things by looking at your past month of expenses. 

Find out how much you spent on food and decide on what a reasonable number is.  With a budget you will create a game plan for yourself on how much you can spend and on what.

Once you have a budget set up, it’s time to do the second thing before you spend that extra money!

free budget printable

Fully Fund Your Emergency Savings

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I know this sounds odd, but if you do not have an emergency savings of $1,500 – $2,000, you should start saving money before you start paying down debt. 

If you do not have a fully-funded emergency savings, the next life event that happens, your car breaks down, your washing machine goes out, or you have a water leak you were unaware of, can catapult you right back further in debt.

The idea is to provide yourself with a cushion to protect you from life, before you start tackling your debt.  So if you have that extra $500.00, you need to do a budget, and put that $500 towards your emergency savings if it is not already funded.  Pay the minimum on all of your debts until you get that emergency savings filled – then attack your debt!  Next month, if the car breaks down, you can pay for the repairs in cash and not add more debt to your credit cards. 

Stick with the budget, get your emergency savings back up and get back on the debt destruction plan!

How To Quickly Fund That Emergency Savings

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$1,500 seems like a lot when you are drowning in debt, but I’m confident you can save up that amount in just a couple of months! 

How you ask?  Well, if you have created a budget, you should have identified plenty of places where you overspend and where you can cut back next month.  Create a surplus in your budget by cutting cable, temporarily ceasing going out to eat, and any other extras you pay for.  It’s all temporary until you get your financial pendulum swinging the other way.

Now that you have found extra money through a budget, let’s get the savings filled even faster!  What about all that junk in your closet or garage you haven’t touched in years? 

Have a yard sale next weekend and put everything you can think of on Craigslist and your Facebook Marketplace. 

Sell, sell, sell! 

You may think that no one wants your junk, but trust me, there are buyers out there!  One man’s junk is another man’s treasure.
By cutting your expenses and selling a bunch of stuff, you will easily hit your $1,500 – $2,000 goal in no time.  When you have your momentum going, continue with your selling and budget tactics to destroy your debt as quickly as you funded your savings!

Check out my related posts on how to make extra money: 19 Ideas To Make Extra Money and The Ultimate Guide To Save Money!

You Can Get Out Of Debt

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If you look through my blog, you can see how much time and effort I put into it.  This is the 55th article I have written and I have so much more content lined up. 

Why do I do this? 

Because I have seen transformations in people and I love being a part of their success stories.  This blog is as much for you as it is for me. Your world may be dark and hopeless, but I have seen people climb out of their debt filled lives and thrive with their finances! 

I continue on with this blog because I know you may be the next person who decides that enough is enough!

I want to be there for you when you make the commitment to change your life for the better!  I know you have the ability to change your financial life – to live debt-free and eliminate your financial stress.  I just need you to believe in yourself as much as I believe in you! 

I know you may feel lost or hopeless but I pray you read these words and the light bulb goes on.  You are the one with the key to your financial peace – a world without financial stress. 

Your life will always have some type of stress, but let’s get rid of the stress that we can control – our money stresses!  Your finances are entirely within your control – it really comes down to you finally saying “no” to all those activities and shiny new things you buy.

By spending less than you make and being intentional with your income, you can take control of your financial life and stop worrying and fighting about money.  It’s time you stopped digging and started climbing out. 

You can do this, and I will be right here with you!

If you haven’t already, please enter your email below to subscribe to my blog.  I hate spam as much as you do so don’t worry, it will just keep you up to date with my articles. 

Keep at it my friends – you work too hard to be this broke!