Debt comes in all shapes and sizes, and it can stem from a wide variety of reasons. But no matter how you got debt or how much you’re carrying, you need to pay it off eventually. Here’s how six debt experts think you should approach debt.
How you choose to pay off your debt can make a huge difference in the amount you owe and how long it takes you to get out of debt. Founder of MoneyManifesto, Lance Cothern, says people should look at how making additional payments can affect their payoff plan.
Sometimes, when you see exactly what it’ll take to pay off your debt in a certain amount of time, it can motivate you to make positive changes to reach that goal—like budgeting to free up more money, then funneling those “savings” into more aggressive debt repayment.
Kevin O’Leary is known for being one of the toughest sharks on the hit TV show “Shark Tank.” But he didn’t get on TV by being a fool with his money. He has some great insights into how people should approach their debt.
One idea O’Leary tells people is that they should aim to be debt free by the time they’re 45. He reasons that by this time, you’re about halfway through your career, and need to start accumulating capital for later in life. Following this advice can do huge things for helping people who want to start preparing for retirement.
Many people fixate too much on the idea of getting out of debt itself. This can lead to burnout when making efforts to pay down that debt. Financial coach Cait Howerton suggests you take time to determine your “why.”
What does this mean? Paying off debt can seem like an endless slog if you’re just doing it because you feel it’s what you have to do. On the other hand, you can inspire yourself to get out of debt when you have concrete reasons for it. Maybe you want to travel or enjoy an early retirement. Whatever it is, finding the why will help you beat debt.
Co-founder of Freedom Financial Network, Andrew Housser is a knowledgeable voice on debt today. He has some great tips to avoid digging deeper into debt during the holiday season, which is notorious for fueling credit card debt in particular. These are a few of his top tips for holiday saving:
- Sell hobby supplies if you haven’t used them in more than a year.
- Don’t indulge too much with drinking, eating, and other things—both at home and while out shopping.
- If you need a storage unit for things you already have, downsize instead of getting more.
- Look at whatever you’ve “saved” at the bottom of a store receipt, then transfer that amount into your actual savings account.
- Evaluate your subscriptions and memberships, then pare down your least-used ones.
As one of the most-followed financial gurus out there, when Dave Ramsey talks, people listen. He espouses the idea that debt is bad, and you need to get out of it.
Of all his various financial advice, Ramsey is probably best known for being a proponent of the snowball method of debt repayment. This is where you target your smallest balances first, while paying only the minimum on the rest of your accounts. Then you move up to the next one, like a snowball gathering mass and momentum as it rolls. Doing this has actually been shown to be the most effect debt repayment strategy because those early wins build the momentum you need to keep going until you’ve paid off all your debts.
Popular financial expert Suze Orman doesn’t just believe debt is bad for you from a financial perspective. She believes it holds you back in all areas of your life.
The way she describes it, debt keeps you in a situation where you need to do things and feel powerless. Once you get out of debt, you build confidence. This mental shift can actually help you make money.
Everyone has a slightly different perspective on debt. Advice from these experts can help you decide how to best address your own debt.