There are many financial gurus who have outlined the “most efficient” way to pay down debt. Dave Ramsey is a master at it. But honestly, how you pay down your debt is personal to you, as long as you pay it. You must do something that works for you (and your family).
My approach to debt is simple: I took out the loans happily, pay them back happily. This is a marathon, not a sprint, be strategic.
I want to find joy in paying down debt, therefore I outlined a plan that works with my budget. I want to watch my debt decrease and my savings rate increase. The goal is to eliminate debt and reach financial wellness; where I do not have to work for money, instead my money works for me. This is my why.
This year, I am only focusing on my credit card and auto loan debt.
Our first approach to debt repayment was building up an emergency fund. This was imperative for me to feel secure. If there is an emergency during this process, we can easily pull from our savings. This prevents us from using credit cards or taking out a personal loan to cover the emergency.
Next, I picked up a second job. More income! My wife also picks up extra shifts as needed, but honestly this is my burden, I feel the need to prove to her and myself that I can do it, even though I know I do not have to. Any income earned on this job goes directly to the debt.
I’m focusing on paying the high interest credit card first, as I pay the required minimum payments on the other debts using the avalanche method.
There are two methods to approaching debt repayment. Avalanche and snowball methods.
- Avalanche method, you pay your debts from the highest to lowest interest rate, regardless of balance.
- Snowball method, you pay from the smallest to the largest balance, regardless of interest rates on your debt.
With my current plan, I will be able to pay off my high interest credit card by March 2021. Once I clear that balance, I will put those payments towards the next high interest credit card. And so on.
Paying down debt is an emotional rollercoaster. The marathon is not easy. There will be times where you get discouraged and times you want to give up, but stay the course, the rewards are stupendous!
Before you outline a plan for yourself, ask yourself, or better yet, write down why you want to pay off your debt. In those challenging moments when you feel discouraged, come back to your why.
Are you in debt? Do you currently have a debt-repayment plan?
If you are not in debt, how did you stay out of debt?
Am also paying off debt,its really an emotional journey.
I started with avalanche then now am doing snowball.
I used avalanche to level down the debt ,then began using dave ramsey steps.
Thank you for your comment Roselyne! Paying down debt is great! Find the joy in doing it and see your debt disappear without stress! You can do it, especially since you have a lucrative business already!!
Akei thanks for being so transparent and sharing your plan to wealth with us. It makes me feel better about my own debt and inspires me to start my own plan!
Hi Zee! Thank you so much for your comment. Debt can seem astronomical but with proper planning it can be manageable! Best wishes with your plan, remember to give yourself grace when paying down debt. It’s a marathon not a sprint.
Thank you so much, Dr. Akei, I am paying up my credit cards and it is really a rollercoaster of emotions. This article has outlined some key assurances that I will benefit from. One of the challenges I have always faced is I never had an emergency fund, therefore whenever something came up, I always dug down to my credit card. I have started building my emergency fund. Thank you again for the incredible blog.
Thank you Hildah! Paying off credit cards is a rollercoaster, but we make a plan and adjust as we go. Building up an emergency fund is important, this is something we had to do before we tackled our debt. It does not make sense to focus on paying debt then have no money when an emergency happens. Thank you so much and I hope you can learn more from this blog.