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Are you two stuck with a ton of debt? Learn the strategy, tools, and tactics to pay off your debt sooner!
How Can We Pay Off Our Debt Faster?
The first episode of Couple Money was released this week and I’ve gotten some wonderful feedback from you. Thank you so much for listening!
I'm using your suggestions for this week's episode.
I just finished up a Q&A session today. It's a more informal and much shorter than the usual weekly episode.
In this episode, we get into:
- why optimizing is not the same as maximizing your money
- finding the best way to knock out your debt
- why those 5 steps to reach your debt-free date faster I shared last week work so well
Hope you enjoy!
Want to hear from a couple who's pay off a massive amount of debt? Check out my interview with Brian. He and his family knocked out over $100,000!
Resources to Pay Off Your Debt Faster
If you two are ready to get out of living paycheck to paycheck and knock out your debt, here are a few of my favorite resources.
- Jumpstart Your Marriage and Your Money: My book is a four-week guide to help you two stop fighting about money, dump your debt faster, and build wealth together.
- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
- The Great Debt Dump: Running Toward Financial Freedom with the Power of Community
- Escape Living Paycheck to Paycheck
- Pay Off Your Car Loan Early
5 Steps to Paying Off Debt
The first question from this past episode was focused on how I chose the steps to pay off your debts faster.
Just a reminder, the five steps I mentioned last week were:
- Know How Deep Your Debt Is
- Review Debt Methods as a Couple
- Choose the Method that is Easiest to Keep
- Build Up Your Debt Payments
- Make It Automatic
When I was choosing the steps I was considering a few things. I wanted to get the essentials done and I wanted to make each step a manageable bite.
When changing habits, I want to make it as easy for you to succeed. (If you're familiar with Tim Ferriss' book, The Four Hour Chef, you may remember him discussing deconstruction and selection in the meta-learning section.)
It's my hope that cutting it down to only what is absolutely vital will get you over the hurdle and out of debt.
The second question:
Looking at the numbers, the debt avalanche the faster method of paying off debt. Why would you put the debt snowball as an equal option to it?
I love this because it gets into the purpose and intentions of this podcast. My goal for Couple Money is to help you two develop an effective financial system that fits within your personalities.
Going back to the Four Hour Chef for a second, Tim shared how he worked through analyzing different methods of learning a new language and eventual new skills.
It boiled down to two questions:
- Is this method effective?
- Is this method sustainable?
Is this method effective?
Both the debt snowball and the debt avalanche/stack have helped people become debt free.
Dave Ramsey has been hosting a highly popular personal finance radio show and one of the highlights is when people call in to announce they are debt free.
The vast majority that I've seen swear by the debt snowball.
Is this method sustainable?
Put simply – how likely you are you going to keep at using the method?Dave Ramsey likes to say that ‘Personal finance is 20% head knowledge and 80% behavior.’
I agree – most people get into financial trouble, not because they don’t understand numbers, but they’ve developed habits that have made it easy for them to slip into debt.
If that’s you, then one of the major hurdles you have to overcome is to change your behavior.
Easier said than done. Am I right?
How many times have we said you’re going to get better with the budget, get in shape, or pick up a new hobby?
One of the best motivations to help you change a habit is to have quick and real wins.
That’s how the debt snowball works – you get rid of your smaller debts upfront and the momentum works in your favor as you keep going until your debts are paid off.
And that’s really the goal – paying off your debt. I want the two of you to become debt free so you can focus on more important (and fulfilling) goals.
The debt snowball and the debt avalanche both offer effective and sustainable ways to do that so I recommend both.
You choose which is a better fit for you.
Thank you again for the questions. I hope my answers help. If you have anything else you’d like to ask me, please email me or leave a comment here.