Author Topic: Debt  (Read 690 times)

TellisaW

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Debt
« on: November 27, 2017, 06:40:08 AM »
What was the quickest way you were able to pay off debt and how did you do it?

RWD

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Re: Debt
« Reply #1 on: November 27, 2017, 07:23:08 AM »
Spend as little money as possible. Put the rest of your money towards your debt. That's all there is to it. There are quite a few calculators that will show you how long it will take to pay down a specific debt scenario. Example: http://unbury.us/

EndlessJourney

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Re: Debt
« Reply #2 on: November 27, 2017, 10:15:02 AM »
Garnish your own paycheque and have a set amount that comes off automatically on payday to pay down debt. Don't let it ever hit your chequing account, or FutureSpendyPantsYou will forget that RightNowMustachianYou ever existed.

Cut up your credit card and pay cash for everything from hereon.

Prioritize your debts and pay off the highest interest loans first.

Refinance/renegotiate high-interest loans to lower the interest rates, or roll them into a Line of Credit if you can get one with a lower interest rate.

Garnishing your paycheque and getting a low interest rate are the keys to paying off your debt quick.
« Last Edit: November 27, 2017, 10:19:42 AM by EndlessJourney »
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nereo

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Re: Debt
« Reply #3 on: November 27, 2017, 12:32:14 PM »
The answer is both obvious and really boring.

  • Maximize your earning potential (within reason)
  • Minimize your spending (within reason)
  • Use the remainder to pay down debt and invest (follow MDM's investment order here.)

Some people argue for paying down the smallest debt first (the "snowball method") which can boost your psyche.  However, it's mathematically optimal simply to pay down the debt with the highest interest rate, regardless of the balance (called the "avalanche method).
Most people around here find they can live a normal middle-class lifestyle spending ~$18k-30k/year - largely depending on your family size and the cost-of-living in your particular area. At this spending rate, someone earning the median salary for someone with a college degree of ~$55k/year you can become financially independent in roughly 17 years.  If you can increase your earnings (#1) or further reduce your spending (#2) this time-frame can be reduced to a decade or less.  Some methods for doing this include having a better paying job, a partner who also works (dual-income) or being super-frugal, usually by finding cheap/free housing (or having roommates) and/or not having a car.

Even without going 'whole-hog' most people find they can reduce their debt and increase their savings with their existing salary simply by cutting out the wasteful spending int heir lives and taking advantage of their tax breaks.  Such an approach won't make you wealthy as fast, but it can put you on much better financial footing while only slightly altering your current lifestyle (often for the better).

Read the blog postings here, here and here for more information.

Since you asked, we've never had what most would consider "high-paying" jobs.  We've managed to be (relatively) successful by keeping our expenses down.  Even with our low expenses we live pretty much the same sort of lives as our peers who are spending 2x what we are. Living close to where we work allows us to have almost no commuting expenses, and we planned it that way.

Now, some personal questions for you:
What are your financial goals
What is your earning potential
What are your current debts?
"Do not confuse complexity with superiority"