My husband and I have paid off $92,000 worth of debt in the past 3.5 years. So, I know quite a bit about what it feels like to be drowning in debt. But today, we have a guest post from Shannon of The Frugal Foot Doc and she’s overcome that much debt many times over. So, in this post she’s going to show you how to create a debt payoff action plan that will help you get out of debt once and for all!
HOW TO CREATE A DEBT PAYOFF ACTION PLAN WHEN YOU’RE DROWNING IN DEBT
Half a million dollars in debt.
It’s real, it’s scary, and I don’t even know how it happened!
Overwhelmed doesn’t even begin to sum up my feelings, when my husband and I finally decided to add up our debt.
If you’re drowning in debt, it can be difficult to even get out of bed, much less develop an action plan to pay it off!
My husband and I are podiatrists in Texas.
We graduated our residency with a whopping $360,000 in student loan debt.
Without thinking twice, we financed a private practice and all the equipment and working capital that comes with it, on top of our staggering student loans.
We inched by for a while, living paycheck to paycheck, and thinking that “someday” we would make more money and everything would be fine.
In the beginning of last year, we started to struggle financially. Little emergencies became BIG ones fast, due to our unstable financial situation.
Right around the time that our finances got really out of control, I gave birth to our third child. A healthy baby boy! Unfortunately, I was unable to enjoy it.
Before I knew it, I was suffering from full blown postpartum depression and anxiety.
The financial stress, along with motherhood and caring for patients, all became too much!
I knew something had to change, but I didn’t see a way out. It was a really difficult time for our family.
After getting the necessary medical help, I decided to share our story on my blog.
I turned my little mom blog into a personal finance blog, The Frugal Foot Doc, to inspire others that were also drowning in debt, that there is hope!
Our debt free journey is far from over, but sharing with others helps us stay motivated!
There are a few things that I did in the beginning of our debt free journey, that helped me push past the overwhelmed feeling of drowning in debt.
If you’re drowning in debt, do these things first to develop a successful debt pay off action plan!
Be Honest with Yourself
I hear people say all the time, “Oh, I just have a few student loans”, or “I have a couple medical bills.” Usually, it’s much more than that!
Looking at your debt can bring up feelings of shame and failure. I know from experience that it can be a struggle!
Although it’s difficult to face the truth, you can’t develop a debt payoff action plan if you’re not completely honest with yourself.
Leave no debt unturned!
One of the first things I noticed, was that I actually felt relief when we had a plan.
Even though it was difficult to see how much we owed, we were able to start making an actionable plan once it was all on the table.
List your debt from smallest to largest.
It can be overwhelming to look at a giant number when you are trying to tackle debt.
Don’t do this! Look at your debt in small, manageable chunks instead.
Start with the smallest debt that you owe, and focus only on that one.
Learn to Budget
A budget is non negotiable when you are drowning in debt.
It’s time to learn how to tell your money where to go!
Learning to create a monthly budget will force you to be intentional with your money, and see exactly what you’ve been spending money on.
It will likely be eye opening to see where your money is going.
You will start to see money as a tool to pay off debt and eventually build wealth, instead of disposable income.
Do a Spending Freeze
Miscellaneous spending is the most difficult to control. This is because most people don’t have a plan for their money, outside of their basic expenses like rent and utilities.
If you have made a budget and you still don’t have any extra money to catch up on bills or throw at debt, challenge yourself to a spending freeze.
Pay the bare minimum basics that you need to live (usually food, utilities, rent/mortgage, transportation), and spend nothing else for a week, or maybe even a month!
This will help you get current on your bills, and also teach you that you don’t need a lot to live comfortably.
We did this when we were starting our debt free journey, and it helped us find extra money and forced us to cut more of our expenses to free up as much cash as possible!
Increase Your Income
If you’re still struggling to find extra money to throw at your debt, you might consider asking for a raise, getting a second job, or a profitable side hustle!
Having more money is not always the answer to your problems with debt, but it might be in your case!
If you have cut down all of your expenses, are sticking to your budget, and are still struggling to make payments to debt, you might consider looking for ways to increase your income.
Ask for Help
Finally, if you’re still struggling to make progress or are feeling completely overwhelmed, you might reach out for help!
Seek an objective person that you know is good with money. They might be able to find something in your budget that you were willing to overlook.
You might even consider hiring a financial coach to help you get started on your debt free journey.
The initial investment for working with a coach might seem difficult since you are struggling with money, but the right financial expert can be well worth it for the savings they will find in your budget!
CREATE A DEBT PAYOFF ACTION PLAN
You absolutely can develop an action plan to pay off debt, even if you feel like it’s hopeless or you’re drowning!
Follow these steps, and reach out for help if you need it! You are definitely not alone in this difficult journey.
It won’t be easy, but if you are consistent over time and do the work, you can develop a debt payoff action plan that works!
Related posts about paying off debt:
- A 3rd Debt Payoff Strategy that you haven’t heard before
- Are you making the Debt Mistake?
- Pay Off Debt or Save?
Have you created your debt payoff action plan yet? Where are you at in your debt free journey? Let us know in the comments below!
Shannon Cairns says
Heather, Thank you so much for featuring my story on your blog!
I hope your readers find these tips to create a debt payoff action plan to be helpful!
Your blog is packed with so many great resources!
Thanks for the great post Shannon!