How do most people achieve tall tasks? Little by little… A baseball game isn’t won by hitting a bunch of home runs. It’s won by several single hits or doubles. And a company doesn’t reach $1 million in annual revenue with one huge sale. It reaches $1 million with consistent sales at smaller amounts throughout the year. It’s the same thing when we talk about getting out of debt. Although it may be pretty easy to get into it, it’s not usually very easy to get out of it. In my last letter, I shared that I racked up $20,000 in debt… in one year. And nearly half of that I accumulated in a month’s time. (You’re welcome to read my story here, if you missed it.) It practically took me no time at all to do. But it wasn’t like that the other way around. It took me three years to pay that off. Whether that’s a short or long amount of time in your eyes, my main point today is that it wouldn’t have gotten paid , if I were only focusing on the bigger picture.
The Bigger Picture “Focus on the bigger picture,” is usually something I hear from someone giving some words of encouragement. But sometimes (especially when it comes to our debt), you need to flip it and not focus on the bigger picture. In my case, the bigger picture was $20,000. And that’s not even counting the mortgage or anything else floating around. Hypothetically speaking, if you had $20,000 of debt you wanted to pay off in two years, that means you’d need to put more than $800 toward it every month. For me, after getting two paychecks a month and paying all the other bills, that sounded impossible. Thinking about the smaller picture was way easier to manage. That is, “What’s the smallest debt I have out of this?” After I asked myself this question, I got my answer. And then, instead of focusing on paying off $20,000, I focused on paying about half, first. Had I been stuck on the much bigger picture (credit card debt, loans, mortgage), not much would’ve really changed.
The Smaller Picture This goes back to what I mentioned before: we achieve tall tasks little by little. Rome wasn’t built in a day. Neither is financial freedom achieved in a day. Ask yourself: What’s the smaller picture? Then go from there. If you want to get out of debt, first sit down and write down how much you owe and to whom. And don’t be afraid! Because, guess what… There are other people walking in shoes just like yours, too. Data by the Pew Research Center shows that 80% of people living in the U.S. are living in debt. Don’t allow yourself to feel like you’re the only one struggling. Next, find out how much you earn and spend every month and make your debt list. Then, save up for an emergency. Save up at least $1,000, because, even if an unexpected expense comes out to be more than that, $1,000 will help. Then, begin with the first thing that’s on that list (the smallest debt) and start chipping away at it. How to Pay Off Debt Don’t be disappointed if you see that you spend more than you earn every month, or that you have nothing left over to start paying off your smallest debt. For one, spending more than you earn is exactly what debt is. And again, that’s 80% of us—practically everybody to your left and right. And two, just because you have nothing left over right now, it doesn’t mean that’s how it has to stay. Can you cut back on some things (eating out, expensive grocery stores, name brands, insurance)? Can you sell some things you never use? Can you shop for clothes less often or buy them at a discount? Can you make more money by getting a side job or by asking for a raise? Don’t be discouraged if your smallest debt is still a pretty large amount. For you, maybe your smallest debt is the $20,000 I mentioned earlier, or maybe it’s $50,000. Just because you don’t see the light at the end of the tunnel, it doesn’t mean you should never try to reach it. Start by telling yourself: Pay off $1,000 by the end of the year. And don’t be fooled! According to Debt.org, the wealthier you are, the more likely you are to have debt. So, don’t think more money will automatically solve your problems. Choosing to live a life free of debt starts with your mindset. Yes, it is normal to live above our means. Yes, it is normal to want to keep up with the Joneses. Yes, it is normal to want more. And, yes! It is normal to have debt. But none of these things has to be your normal. Don’t think that you have to live with your debt forever. And don’t think that debt is the only way you will ever be able to get the things you want—or need—in life.
Did You Know? The reason why most of us believe we need to build credit is because many lenders use the FICO score. But lenders that perform what is called "manual underwriting" don't need a credit score, even when it comes down to getting approved for a mortgage. It may take some good organization and more time on your end, but if it means less chances of putting yourself in debt with credit cards and other loans, it may be worth your while.
Don’t think about your debt with a big-picture lens… whether you are $10,000 in debt or $1 million in debt.
Instead, think about what you can do right now. And then, get started.
We’re living in a world of instant gratification. Everyone tells us we can have what we want, when we want it. But most things in life that are worth having don’t just take a second to acquire.
Our mindset should be based on doing things little by little, slowly but surely.
So, take everything one day at a time, one step at a time, and one cent at a time.
With gratitude,
Melody C. Kerr, MS
Writer, Editor, Financial Coach
P.S. If you have any questions about how to get out of debt, remember, you can always reach out to me right here.
