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