Do you have debt? Have you thought about tackling it but aren’t able to get started? If so, you’re not alone. Even when you realize that you need to get out of debt, it can be hard to know where to start. So today, since it’s Friday, let’s take a look at 4 things you can do this weekend to begin conquering your debt. If you do these, then on Monday morning you’ll feel 100% better about where you stand because you’ll have some forward momentum and you’ll be excited about continuing your progress.
1. Demand a lower interest rate
What you need to do first — as soon as you’re done with this article — is call your credit card company and ask for a lower interest rate. Believe it or not, you can sometimes get a lower interest rate just by asking for one!
The impact this can have on your finances over the long run is tremendous. Lowering your interest rate from, say, 18% to 10% could save you thousands of dollars depending on your total balance.
So how can you accomplish this? Here’s a step-by-step guide:
- Be prepared: Know your history with the company and know how your current interest rate (or APR) is calculated. This will help you negotiate.
- Make the call: Be polite and make sure you are speaking with an employee who has the authority to change your interest rate.
- Ask for a lower rate: Explain how you’d like them to lower your interest rate because you’re a loyal customer. If necessary, you can tell them you’re thinking about switching to a different company that is offering a better deal.
If you’re able to actually get a lower interest rate, you’ll already be on a path to getting out of debt quicker! After all, one of the things that makes it so hard to pay off your balances is all the interest that accrues, so less interest means an easier path to financial freedom.
Do this today — Friday afternoon — and you’ll have a head start on your get-out-of-debt weekend!
(If you’d like to get a lower interest rate on your student loans, you can try the steps above, but rates for student loans are often less negotiable)
2. Ending Your Credit Card Spending
Of course, a lower interest rate won’t help you if you keep spending more than you can afford to pay off. So the next step is to take drastic measures to keep yourself from continuing to use those dang credit cards!
Here are a couple of methods we recommended for cutting off your credit cards for good:
- Freeze them: Take each card you want to stop using and put it in a separate paper cup. Then put the paper cup(s) in the freezer. Next time you have a desire to run to the mall and buy a new winter jacket or an expensive dinner, you’ll have to figure out how to carry a frozen block of ice in the car with you. More than likely, you’ll remember why you put the card in the block of ice in the first place, and you’ll think of something better to do than hit up the mall.
- Cover them: If you prefer a less drastic approach, you can put tape over the magnetized bar on your credit card, or better yet use these free ReadyForZero stickers to cover up your cards. That way, when you take out your card to buy something you’ll have to look at the sticker and decide if you really want it bad enough to break your commitment to end your spending.
- Delete the numbers from your computer: For some, the lure of online shopping is too hard to resist. If you know this is true for you, log into the accounts you are most likely to use (Amazon, eBay, etc.) and delete your credit card number.
If you take one of these actions tomorrow — on Saturday morning — you’ll be one step closer towards getting out of debt. It’s really the most important step of all, because you have to limit spending if you want to eventually start seeing those balances get paid off.
Will you do this tomorrow? Yes! Because this is your weekend to start getting out of debt.
3. See Where Your Money is Going
This is pretty straightforward, but very valuable. Take 15 minutes on Saturday afternoon to tally up your expenses for the last month so that you can see where you’re really spending money. You might be surprised! Have you thought about how much you actually spend on going out to eat each month? What about your daily coffee or newspaper? You don’t have to make any big decisions about changing behavior right away, but simply seeing how the money is being spent can help you make better choices over time.
If certain types of spending seem to be a problem for you (like your morning latte) then at least you’ll be aware of it and can start finding strategies to cut down or reduce that particular type of spending.
4. Make a monthly plan and track your progress
Most importantly, you’ll need to make a plan for how you will pay off your balances. This will be your task for Sunday morning. As much as you’d like to watch a football game or take a bike ride, be a little disciplined with yourself and invest the time to get this right. (Remember, you will feel outstanding on Monday morning if you’ve accomplished this!)
Decide how much you can afford to pay towards your debts each month. It should be significantly above the minimum payments if possible. Then decide which account (credit card, student loan, home loan, etc.) you want to pay off first. Any money above your minimums will be directed at this one. For example, if you decide you can pay $600 toward your debts each month and your minimum payments for all your accounts total $450, then you can pay an extra $150 toward your ‘target’ account.
Of course, any successful get-out-of-debt plan needs a way of tracking progress. You’ll want to see how well you’re doing, and when you do, it will be that much easier to stay motivated. So figure out a way to track your progress on a monthly basis. (ReadyForZero can help you visualize your plan and track your progress)
If you stay focused, you could have a solid plan in place by lunch time on Sunday! Then you’ll have the rest of the day to enjoy the feeling of accomplishment from taking the first steps toward getting out of debt.
On that note, we wish you a happy and productive weekend! Remember, if you take these four steps over the next 48 hours, you’ll wake up Monday morning with a smile on your face because you’ll be on your way to financial freedom.
Good luck, and let us know how it goes!