Get out of Debt by Lowering Your Monthly Costs
Let’s Talk About How You Can Get Rid of Debt as Quickly as Possible. A lot of people don’t realize that in our previous videos, we’ve shown that if you have a ten thousand dollar bill and you make minimum payments on it with a 20% interest rate, let’s say it’s $200 minimum payment, you’re going to end up spending twenty-one thousand dollars – eleven thousand dollars in interest. That doesn’t make sense, so you want to get rid of that debt. But what can you do to do that?
The minimum payments and the payments that you’re making, they’re going to go some to principal and some to interest. So let’s say it’s a $200 payment, maybe a hundred goes to principal. What does that mean? Your ten thousand dollars becomes nine thousand nine hundred dollars. The other hundred dollars of your two hundred dollar payment is gone; it went to interest. They don’t show you that on your statement, but that just goes in the bank’s pocket.
Now, if you make a higher payment, you can usually do it; it’ll have a button when you make your payment, and you can say that you want to make a payment just to principal. Typically, online, you can do that whenever you want. It can be in the middle of the month; it doesn’t have to be on the date it’s due. You can make your minimum payment whenever it’s due and then log in and during the month make additional payments of whatever you can. That money goes directly to principal, meaning the bank doesn’t get a piece of that.
So if you already made your payment and you went from ten thousand to nine thousand nine hundred, it’s the middle of the month; you’re able to send in another 50 bucks, 100 bucks, 200. Now your 9,900 goes to nine thousand seven hundred. Now, before, some went to principal, and some’s gone, but if it’s going just to the principal, it pays it down. That’s exactly what you want to do to be able to get out faster. You might say, “Easier said than done.” Do whatever it takes. If you pay someone to cut your grass, cut it yourself. If you pay someone to clean your house, clean it yourself.
I went through a time period where I had to make a lot of changes. Obviously, I was cutting my own grass. I was also cleaning the house myself every Saturday morning with my family. We’d spend hours cleaning the house, top to bottom. Bathrooms, you name it. I did things such as when people weren’t around; I would actually turn off the air conditioning and spend the majority of my time on the weekends sleeping in the basement. That greatly decreased my expenses during the summer.
I took all of those savings and more; I got rid of some of the cable that I had and just went on a really cheap Hulu for nine dollars a month. I got rid of some of the cellular bills and got cheaper ones. You’d be surprised how quickly you can take those $100 or $150 bills and find an alternative service for 10 or 20 dollars, particularly when it comes to cell phones or watching something online. You don’t have to do this forever; the goal is to get rid of that credit card debt because you’re wasting so much money on interest.
So you take that additional amount that you’ve saved, and you now send that in. You don’t think it’s going to make a dent, but it makes a huge dent. If you’re able to save a hundred on your streaming services and maybe you save $100 or so on your cellular bill because you got a much cheaper service, you’re just using Wi-Fi a lot of places now. You can quickly come up with a couple of hundred dollars a month. You put that to principal, and you’re going to pay off your bills way faster than that minimum monthly payment.
Then, that minimum monthly payment is gone. You can go back to those other services if you really wanted them and need them, or you just continue to pocket that money because you have lower monthly expenses. Then you’re going to be able to start saving and investing and have a much brighter future. Just stop giving the banks all that money in interest.
I’m also going to show you or tell you my personal motivator as to how I got rid of a bunch of debt and what it was that made me continue to want to focus on it. So my motivator was really basic, and it’s going to sound stupid. I had a list of my debts: car, credit card, personal loan, whatever they were. I went through a time where I needed to get rid of all of that. I’m a goal-oriented person, and I also need to make lists.
So I wrote down everything I owed, and I started tackling the ones that had the highest percentage rate, the ones where I was throwing away the most money on interest payments. And I bought these cheap little trophies off of Amazon, I think it was maybe 12 for ten dollars, little plastic things, and they had a white spot where you can write on them. I wrote the first credit card down and the amount I owed and I put it on the shelf. I wrote the next thing down, personal loan, and put it on the shelf. I wrote the car loan down and put it on the shelf on the bottom shelf.
And then, as I tackled each debt, I took that cheap little trophy and I put it on my desk where I work so I could see that I accomplished something. I’m a big believer in setting goals, writing them down, and when you accomplish them, scratch them out. Do something for yourself, maybe go out to dinner, maybe whatever it may be that you enjoy doing. Do something as a reward, and it will help motivate you. Even if it’s cheap little trophies, whatever it takes to get you to focus, because whatever you focus on and you think about and you look at on a daily basis, those are the things you will actually put your time, your attention to, and those are the goals that ultimately you will meet.
Good luck! Please subscribe so you don’t miss any of the future videos. I’d really appreciate it if you smash the like button, and please look at what we’ve got in our get out of debt category of videos, as well as our which credit cards to use, not carrying a balance use so that you can get rewards and points back. Let’s flip this on the banks and get something in your pocket instead of theirs. I’d appreciate it. Thank you, and good luck on your journey!
