hey guys it's Tasha and Joseph with one big happy guess how much we paid off $30,000
in five months and in this video we're gonna be sharing our tips to help you
pay off debt fast
so before we get into the tips we're gonna just throw a couple
caveats out there because we know that you see all the
time about people paying off you know $100,000 worth of debt in two days and
some you know other crazy extreme stories like that and so the first thing
that we want you to realize is you can only pay off debt as fast as your income
allows so when you see people paying off giant amounts of debt in a short period
of time it's really highly likely it's actually you know it's definitely that
they have very big income to help facilitate that rapid debt payoff or
they're tricking you and they got an inheritance or it did something like
sell their house and they include paying off the mortgage as oh we paid off debt
well but then you also lost an equivalent asset and that's how you paid
it off so that doesn't really count and then in that case we've paid off
$300,000 in one day because you know we've sold the house in the past so just
take all of those stories with kind of with a grain of salt and don't let that
make you feel bad about your progress because your progress is right sized
for your life in your situation so number one you have to stop using your
credit cards if you keep using your credit cards the balances will only get
bigger and bigger and it's not to say that you it's impossible to use credit
cards responsibly or that you won't be able to slowly start using your credit
cards in the future when you feel confident that you can pay them off and
full every month but the idea is to stop using them get used to sticking to a
budget build good financial habits so that when you pay down that
debt if you do decide to use credit cards in the future for rewards or
something like that you won't build up the debt again and end up back in debt
that's right so you'll start using your cash or your checkbook and start really
getting to know your online banking because you want to check that balance
you want to make sure that you're not spending too much money you want to make
sure that there's nothing unexpected coming out of your account that you need
to cancel that happens from time to time also all right step two you want to get
to know your debt yes and so that means you want to get to know the terms you
need to know the interest rates what the minimum payments are when they're due
I'm just the more information that you know about the debt the better you can
structure the plan to pay it off yeah so you'll want to get a piece of paper use
microsoft use Word or Excel, Google sheets whatever to list out all of your debts list out the due
dates for all of your debts because you're gonna make sure that you're
paying your minimum payments on time so you're not wasting money on fees
you'll list the interest rate for all of your debts the minimum payment and I also
think that it's a great idea to know how long it's going to take you to pay those
debts off and you might have to use an online calculator
I like undebt.it is undebt dot IT I believe because it will calculate it for you and
it's a free tool and then also look at how much interest you'll pay over time
and I think all of those numbers are really important because they'll
motivate you you'll know exactly what is at stake and how much money you're going
to be saving yourself if you pay your debt off quickly on the other hand if
you actually have low interest debt it'll show you you know that maybe you'd be
better off saving but yeah let's assume you have really high like double-digit
you know 20% interest rate which is you know kind of typical on your credit
cards okay so the other thing that you want to do is make a budget so we've
done videos on our bare-bones budget that we've been following and kind of
what kind of what we're doing now but it's very very important if you don't
have a budget to go ahead and get that budget done so you understand where... how
your cash is coming in where it's going out and it helps box in any overspending
areas and it is the basis for the next few steps yes so step four four its to
look for places in your budget to trim the fat so we usually have you know a
generous fun money budget which was $200 each a month or I think it's gone up as
high as $300 each a month when we were doing really well I feel like yeah like
when we were before we had a baby right when we were living in an apartment in
Philadelphia it was closer to $300 each a month we were living it up but we
knocked that down to $100 each a month which is still not absolutely super
bare-bones but we could have go down to zero and we have gone down to zero in
the past just kind of depending on what what's going on things like cutting our
cellphone bill we actually have a video where we talked about some of the frugal
habits that we've adopted over time to help us stay on track with our money
goals so on the other side Instead of cutting expenses step five you want to increase your income
okay so this could be a side hustle you might be able to make something to sell
might be able to take a part-time job, mow lawns, babysit walk dogs, house sit there are lots of
opportunities out there like mystery shopping Amazon Turk I mean there there
are so many freelance opportunities do some freelance writing what is it Fiver or
something fiver yeah I mean I've done things like um so we took the LSAT
to go to law school so I actually did an online LSAT tutoring um side gig for a
little bit and that was interesting but you know it just it just goes to show
you showing their SAT tutors online high school tutoring high school kids there
are all sorts of things side hustles that you can do to pad your income to
make those balance go down quickly okay so other two parts
of that you definitely have to do it you gotta think about it getting a raise at
work if you never ask for it you're not going to get it you're only gonna
get a small raise if that everybody gets you know so show that you're an outstanding
outstanding performer differentiate yourself from others and
then ask your supervisor hey I think I'm thinking deserving a raise then you know
worst things can happen is no and you haven't lost anything the other more
more important and more substantial is if you find another job if you're ready
to take the next step up you can get a 10 to 20 percent raise from switching
jobs so do not just think oh I'm stuck where I am I'm never even getting any
better oh well don't don't do that to yourself
take the look see what you can do consider refinancing your debt now
caveat flash warning here if you're the kind of person if you're a stick kind of
person where you need to feel like a bad you need to be upset about having to pay
all this interest every month and that's what you need to do to help you stay
focused to paying off that debt then don't refinance your debt at a
lower interest rate if you know that because it's 0% you'll go back to paying
the minimum payment don't do this right this is for people who are
motivated enough by their future financial goals by not wanting to be
limited by these current debts it absolutely makes sense to pay the least
the absolute least amount of interest that you can pay because that puts more
money back in your pocket so if you are able to refinance your debt at a lower
interest rate and you have to also look at the fees for refinancing that debt
and make sure that the numbers shake out actually better you should do that
because that will get you out of debt faster determine the strategy to paying
off the debt so there are kind of two approaches so there's your kind of debt
snowball approach where you take your smallest balance and then pay that off
first and then kind of move to the next smallest balance you get
this momentum it makes you feel good that you're that you're paying off
something there's like well you have one less payment and so so that can
certainly work and give you this mental benefit of success that is going on but
it might not mathematically save you as much money and so depending on what your
debt looks like you might be better off taking the highest interest rate first
and paying that and then the next highest interest rate and then going
down there now another alternative which is actually
what we did which it depends on the reason why you're paying off debt so for
us we decided to pay off two of our debts very quickly our window loan and
our credit card debt because we wanted to have a larger monthly surplus because
I took a pay cut and so because I took a pay cut we said we looked at the numbers
and things started being a bit tighter than we were comfortable with and so we
attacked the two debts that actually had the biggest impact on our finances in
light of their interest rate so we actually paid off the these two debts
that had 0% interest rates but collectively the payments were
relatively high right and so those payments together you know since we
could take out that huge chunk we didn't want our monthly and operational surplus
to to be so constricted and so that's kind of neither of these but but it's
important to crunch the numbers and really figure out not just what's gonna
save you in paying off the debt but also what preserves your financial stability
and in your comfort peace of mind and you know maybe you have one debt that
you really don't like because oh you you financed a car and the car is not really
working out and you really are upset about it well you can get that off the books or it's like you divorce debt
or something like you know the washer and dryer that you brought with your
ex-spouse and every time you make that payment it just errr you know yeah you can
get rid of those nobody but if you're trying to do whatever's the most
mathematically sound again undebt.it is great for that because you can put in
all you put in all of your debts you put in all of your interest rates and then
it you it has like six or seven different repayment options that it
considered including the debt avalanche and the debt snowball and it shows you
which one will benefit you the most financially so that's it seven quick and
dirty tips to paying down debt super fast absolutely so pay down your debt
build well your future counts on it hi guys see you next time