Serious About Smashing Your Debt? The Super Aggressive Debt Reduction Technique You Should Totally Use

There are a lot of articles out there that promise to give you the secret to being debt-free. They insist that there’s a “key” or “magic trick” to spontaneously ridding yourself of your debts so that you can live a glorious life where you no longer have to worry about money ever again. Guess what: the only way to do that is to win the lottery. Even then, you’re more likely to wind up bankrupt than you are to be financially solvent for the rest of your life.

Here’s the real honest truth: the only way to get rid of your debt is to pay it off. 

That’s kind of a bummer, right? And besides, you already know that. You’ve already got the basic framework for debt reduction in place. You’ve made a budget. You’ve figured out how much you’re earning and how much more you need to bring in if you want to be able to pay off your debt and, like, buy food. What else is there to know?

A lot…

Having a sensible plan in place for paying off your debt at a slow (but ultimately responsible) rate is great! But if you want to be debt-free sooner rather than later? You have to be willing to get aggressive. And you have to be willing to get incredibly and uncomfortably honest with yourself. 

Identify Your Priorities

What matters the most to you? What can you absolutely not go without? If you’re not exactly sure what you actually need to live healthfully while you’re paying off your debt, try some mindfulness and meditation exercises. The experts at Hotel California by the Sea Cincinnati chapter say that “The goal of mindfulness meditation is to increase awareness of thoughts, feelings, and bodily sensations for relapse prevention.” In this case, they’re talking about drug and alcohol addiction relapse, but mindfulness meditation is helpful for all sorts of issues, including financial insecurity and the tendency to overspend. 

Tinker With Your Budget

When we talked about setting up your budget, we talked about variable costs. Our goal right now is to get those variable costs as close to zero as humanly possible. This is where you’re going to have to think outside the box a little bit. This is more than just brown-bagging your lunch and brewing your coffee at home (though those are important steps). 

This is where you get serious with coupons, decide if you can go a year or two without an expensive haircut (or a haircut at all), think about selling your car and using a bicycle or public transportation instead (which, incidentally cancel out your need for a gym membership), etc. 

Making Payments

By now you’ve figured out that the goal is to have as much room in your budget for your debt as possible. When you know how much you’ll be able to send to your creditors and lenders, it’s game time. Here’s what you do:

1. Figure out your real minimum payment. Here’s the formula:

Minimum payment they say you owe + monthly interest charge = real minimum payment.

This way you will actually be paying down your balance over time. 

2. Pay only your real minimum payment toward all of your debts except the debt with the smallest balance. Pay that debt’s real minimum balance plus however much else you’ve set aside for your debt for the month. Repeat this until that balance is paid off.

Wait, what? Yes, you read that right. The goal is to get the smallest balance taken care of as quickly as possible. This will help you raise your credit score while also giving you some much-needed momentum to keep going with this plan. 

3. Lather, rinse, repeat until your debts are paid in full. 

We can’t give you an exact time frame on how long this will take to pay off your debt because we don’t know how much you owe. But by taking this approach for even a year, you’ll dramatically reduce the amount of time you’ll need and the money it will cost you to finally be debt-free. Good luck!

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