My eldest son once declared that when you’re wealthy, you don’t have a budget. I disagreed. Many people think this way, however I would argue that the more money you have, the greater the need for a clear spending limit and ways to tackle debt on a budget. Here are the pros and cons of debt consolidation.
We discuss…
- Strategies to tackle debt
- Where to find the money
- Staying Motivated
- Know what you owe
In my business, I have to budget money for everything from advertising, payroll, and all of my expenses to run a blog. Every part of my life and business has a budget. Every aspect of my life also has debt too.
Life, business, family, and debt all go hand in hand because we have goals and dreams to provide more for our family and build a family legacy. Debt can be a tool to do both, BUT I am a firm believer in paying back those debts and maintaining amazing credit. Then we are able to reinvest in our lifestyle and business.
Our Strategies to tackle debt on a budget
Photo by RODNAE Productions from Pexels
We create a budget and keep track of everything in spread sheets. After that, we take a look at any monies left over and decide how much of that can or should be allowed for debt repayment. In addition to that, we look for ways to slash our expenses associated with life and business to find additional funds to throw at the debt.
Where to find more money
Each household has to get creative with their budget if they want to reduce debt. A family deep in debt may need to find the money to free up their credit by making major sacrifices.
Additional money to tackle debt can come from a tax refund, the sale of a second car, changing your diet (going vegan can dramatically reduce your grocery bills), turning off ALL entertainment subscriptions, or selling everything you own of value.
Some people can even benefit from debt consolidation help because it can be easier to make one payment rather than owing people all over town. 0% balance transfers also helped us to dramatically reduce interest payments.
I was able to pay off my student loans years ago and people always ask me how I did it. I just tell them that I was able to do it because I wanted to. There was nothing stopping me from doing everything possible to clear that ledger.
Paying off my student loans gave my credit a huge boost that I then used to get an increase on my credit card limits, and score an awesome interest rate to buy an investment property. Many people build wealth with credit!
Staying motivated to tackle debt
Like with any goal, you have to become somewhat obsessed with achieving the end result. My family goes through cycles of accumulating and debt repayment, and let me tell you, during times of debt repayment I become addicted to it. Knowing that we’re freeing up credit to buy more assets is really a driving force for us.
Know what you owe
The starting point for all of this is knowing what you owe and to whom.
I start by making a list of ALL of each debt and include what we owe, who we’re paying back, and what the minimum payments are. This will allow us to analyze which debts should be paid back first. For example, if you have two credit cards that both have $3,000 in debt on them, but one of them requires a higher minimum payment, then it makes more sense to pay off the debt that has a higher minimum payment. We then roll that freed up money into paying off more debt. This is known as the snowball effect.
Some families may get a tax refund, and be tempted to make home improvements that add value to your property. The beginning of the year can be a fantastic time to pay down debt because the tax refund is essentially “extra money”.
We don’t burry our heads in the sand when it comes to tackling debt. I create a budget, look for ways to cut costs, reinvest that money into debt payments or to go back into my business and properties.
What’s your “Tackle Debt on Budget” story? Maybe it can help one of our readers. Leave a comment below.
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