The Get Out of Debt Strategies that You Need to Know
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Chloe Elise on How to Become Debt-Free without Sacrificing Everything You Enjoy
Ever feel like you’re constantly working, only to still have no money and be in debt? That’s exactly how money coach and Deeper Than Money podcast host, Chloe Elise felt when she couldn’t find any financial advice aimed at millennials. In this episode, we’re chatting about Chloe’s advice and best strategies for how to get out of debt quickly, but without sacrificing everything you love.
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Her Entrepreneur Journey
Chloe was your typical college student - working several jobs to pay for college, but not really having an understanding of her finances. She felt constantly in fear of her money because it was so stressful to manage. She started doing research to try to figure out how to make more money, and ended up frustrated that none of the advice she found resonated with a college student with no mortgage or credit. She took money certification programs, read books, listened to podcasts, and tried anything she thought would help her learn to manage her money.
Chloe ended up paying off over $36k in debt in only 18 months, mostly while still in college, and it completely changed her life and the way she looked at money. She finally had the freedom of making her money work for her, and started helping her friends learn to manage their money, too. She knew she had to teach millennials this information, so she created Deeper Than Money and has been successfully running it and hosting the Deeper Than Money podcast ever since!
Why is the mindset part important to our money and how do we change it?
There’s two sides to getting ahead with money. The first is the practical - the tools you need, the processes, where to put the money, etc. On the other side, there’s so much of it that has to do with your mindset and your money blocks. You’ll hit so many roadblocks without the mindset piece. If all you think about is losing your job, not being able to pay bills, or never having enough money, then that’s where your focus will be and that will be your reality. To move forward and get ahead with money, you have to look at the situation like money is all around you and always flowing to you.
You have to look at it through the lens that money is all around you, so how can you make money in this situation?
To move forward and get ahead with money, you have to look at the situation like money is all around you and always flowing to you. Once you shift your perspective to that and then follow it up with the practical action steps, everything changes.
What is step 1 of getting out of debt? Where do we start?
The biggest thing is that you have to know where you’re at. If you wanted to book a flight to Paris, the first thing you have to know is what airport you need to leave from. You have to know where you’re starting and how much debt you actually have. Allow yourself to take that look while also being detached from it. You are not your debt. Know your numbers but don’t let it consume your way of thinking about yourself. Know your specifics: how much debt you have, how that debt is split up, what is your interest on each debt, what is your income, and so on. Prioritize what you need to pay off first based on where you’re at in your life right now.
Step 1 is making sure that you’re okay right now. Can you pay your bills and put food on the table? How can you make some more money in the moment to get by right now? Once you’ve checked that box, you can move on to step 2 which is making sure that you have a savings buffer between you and step 1. Make sure that you have a savings of 1-3 months of expenses to keep you from falling back into step 1 in the event of an emergency. If you pay off a bunch of debt, but then your car breaks down and you have no savings so it has to go on your credit card, then you’re right back in debt.
Once you’re making the income you need to live on and have a savings buffer, it’s time for step 3. Figure out what your highest priority debt is (consider basing it on your highest interest rate), and put your focus on that debt. For millennials, it’s probably going to be your credit cards. Put all your debts in order based on your priorities. Just remember that you still have to live your life in between this. Plan for your vacations or entertainment or whatever else in between paying off these debts, because this is one of the biggest mistakes people make when trying to get out of debt. Remember that your debt plan has to be sustainable, otherwise you’ll get burnt out quickly.
What if we feel like we have no extra money to put toward debt?
There’s only ever been one time that I looked at someone’s budgets and couldn’t find places to improve on this. Everyone thinks that they’re the exception. If you really feel like you’re backed in a corner and don’t have extra, you have two options: bring in more money or decrease your spending. For you it may be about bringing in more money because you really love those things you spend money on (like buying organic or taking that yoga class), and that’s okay. You don’t have to give things up, but you have to know that leaves you with making more money.
There’s really 3 good ways that you can go about this. The first is negotiation. Negotiate everything: car insurance, internet, etc. Call around or look for quotes and see what deals you can get or where you can get companies to come down on your bill. The second is cut cable. You don’t have to give up your shows or sports or movies. Just find streaming apps that have the things you want and then only pay for those services. It’s still going to be cheaper than having cable and you’re still getting everything you want. The third is cash back apps. There are cash back apps for everything, so find a few that you like to use that will give you cash back on the things you’re already spending money on.
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