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Embrace sacrifice to make debt-shredding strategies effective

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Getting out of debt is a science that involves a handful of standard formulas anyone can apply. The most common debt-dissolving formulas include spending less, saving more, refinancing, getting a second job, and consolidating credit cards to lower interest rates. There’s no doubt many of these strategies work. The problem is, many people quit when they realize they’ll need to give up their lifestyle to make those strategies work.

If you’re struggling with debt, this article is designed to encourage you to start living a stress-free, debt-free life the smart way.

Embrace sacrifice

The attribute that powers all debt-shredding strategies is sacrifice. Unless you win the Powerball jackpot, getting out of debt requires sacrifice; you have to make different choices about where to spend your money.

The Oxford Dictionary defines sacrifice as “an act of giving up something valued for the sake of something else regarded as more important or worthy.” By this definition, being debt-free must be your priority; a goal you hold above all other desires. Otherwise, you’ll prioritize pizza, beer, and movies without realizing it.

When you’re willing to make sacrifices to achieve your debt-free goal, you’ll spot multiple opportunities to free up cash. You may not want to cancel your $150/month cable television, switch from a $100/month smartphone plan to a basic flip phone, or stop going to the movies and eating at restaurants, but that’s what it often takes.

Maintaining your lifestyle to prolong debt payoff is more expensive

Imagine creating a two-year plan to get out of debt, but you’re not willing to make sacrifices to your lifestyle to speed it up. Two years doesn’t seem so bad. Except, when you look at what you’re paying in interest and fees to your debt consolidation company, you’re paying them several thousand dollars more than you would if you buckled down to take care of the debt in a year.

If that’s the decision you make, you’ll be sacrificing thousands of dollars for the privilege of maintaining your lifestyle for an extra 12 months. If you took care of the debt in one year, you’d save thousands in fees, and you’d have the debt paid off faster. At that point, you could resume your cable TV and other amenities.

Pay off small debts with installment loans

You probably know it’s smart to pay off small debts first. The best way to accomplish this is with installment loans. With an installment loan, RISE explains, you get all the money up front and you choose how to distribute it. Since installment loans are paid back over a set period of time with fixed, equal payments, you’re always chipping away at the principal balance, and you know when the loan will be paid off.

It’s not always worth consolidating small debts. Most reputable debt consolidation companies won’t consolidate debt unless the total is more than $5,000. If they do, it’s likely in the form of a consolidation loan, which comes with higher interest than consolidation plans you pay for monthly.

When you have small debts, you’re better off taking out an installment loan to get rid of it immediately. You’ll still need to pay back your loan, but it will be easier to manage, and the interest shouldn’t be as high.

Be cautious when using debt consolidation services

“Debt consolidation” is a blanket term that describes several methods for eliminating debt. For instance, some consolidation companies pay off your credit accounts immediately, but consider it a loan and charge you high interest and fees. Others require a monthly payment, which they distribute to your creditors. This monthly payment includes a service fee premium for the consolidation company. High fees aside, there are some drawbacks.

With consolidation services, your creditors might reject the company’s offer to negotiate your debt. Creditors aren’t required to enter into a settlement agreement. If they think they can still get regular payments from you, they’ll refuse to settle and might even sue you.

Redefine sacrifice to make it easier

The biggest mistake people make is having working strategies in front of them, but not being willing to make sacrifices. If you’re serious about getting out of debt, commit to doing whatever it takes, even if you have to give up your cable television and eat beans and macaroni for a while.

If you’re hesitant to embrace sacrifice, consider that you’re not merely sacrificing pizza, cable TV, and movie nights. You’re sacrificing the crushing feeling of being in debt, and the stress of not being able to get your head above water. Those are horrible feelings. It’s time to give them up and make being debt-free your priority.




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