How to Pay Off Debt Fast on Your Financial Journey to Early Retirement

hey guys it’s Tasha and Joseph with one big
happy guess how much we paid off $30,000 in five months and in this video we’re
gonna be sharing our tips to help you pay off debt fast so before we get into
the tips we’re gonna just throw a couple caveats out there
because we know that you see all the time about people paying off you know
$100,000 worth of debt in two days and some you know other crazy extreme
stories like that and so the first thing that we want you to realize is you can
only pay off debt as fast as your income allows so when you see people paying off
giant amounts of debt in a short period of time it’s really highly likely it’s
actually you know it’s definitely that they have very big income to help
facilitate that rapid debt payoff or they’re tricking you and they got an
inheritance or it did something like sell their house and they include paying
off the mortgage as oh we paid off debt well but then you also lost an
equivalent asset and that’s how you paid it off so that doesn’t really count and
then in that case we’ve paid off $300,000 in one day because you know
we’ve sold the house in the past so just take all of those stories with kind of
with a grain of salt and don’t let that make you feel bad about your progress
because your progress is right sized for your life in your situation so
number one you have to stop using your credit cards if you keep using your
credit cards the balances will only get bigger and bigger and it’s not to say
that you it’s impossible to use credit cards responsibly or that you won’t be
able to slowly start using your credit cards in the future when you feel
confident that you can pay them off and full every month but the idea is to stop
using them get used to sticking to a budget build good financial
habits so that when you pay down that debt if you do decide to use credit
cards in the future for rewards or something like that you won’t build up
the debt again and end up back in debt that’s right so you’ll start using your
cash or your checkbook and start really getting to know your online banking
because you want to check that balance you want to make sure that you’re not
spending too much money you want to make sure that there’s nothing unexpected
coming out of your account that you need to cancel that happens from time to time
also all right step two you want to get to know your debt yes and so that means
you want to get to know the terms you need to know the interest rates what the
minimum payments are when they’re due I’m just the more information that you
know about the debt the better you can structure the plan to pay it off yeah so
you’ll want to get a piece of paper use microsoft use Word or Excel, Google sheets whatever to list
out all of your debts list out the due dates for all of your debts because
you’re gonna make sure that you’re paying your minimum payments on time so
you’re not wasting money on fees you’ll list the interest rate for all of your
debts the minimum payment and I also think that it’s a great idea to know how
long it’s going to take you to pay those debts off and you might have to use an
online calculator I like is undebt dot IT I believe
because it will calculate it for you and it’s a free tool and then also look at
how much interest you’ll pay over time and I think all of those numbers are
really important because they’ll motivate you you’ll know exactly what is
at stake and how much money you’re going to be saving yourself if you pay your
debt off quickly on the other hand if you actually have low interest debt it’ll
show you you know that maybe you’d be better off saving but yeah let’s assume
you have really high like double-digit you know 20% interest rate which is you
know kind of typical on your credit cards okay so the other thing that you
want to do is make a budget so we’ve done videos on our bare-bones budget
that we’ve been following and kind of what kind of what we’re doing now but
it’s very very important if you don’t have a budget to go ahead and get that
budget done so you understand where… how your cash is coming in where it’s going
out and it helps box in any overspending areas and it is the basis for the next
few steps yes so step four four its to look for places in your budget to trim
the fat so we usually have you know a generous fun money budget which was $200
each a month or I think it’s gone up as high as $300 each a month when we were
doing really well I feel like yeah like when we were before we had a baby right
when we were living in an apartment in Philadelphia it was closer to $300 each
a month we were living it up but we knocked that down to $100 each a month
which is still not absolutely super bare-bones but we could have go down to
zero and we have gone down to zero in the past just kind of depending on what
what’s going on things like cutting our cellphone bill we actually have a video
where we talked about some of the frugal habits that we’ve adopted over time to
help us stay on track with our money goals so on the other side Instead of cutting expenses step
five you want to increase your income okay so this could be a side hustle you
might be able to make something to sell might be able to take a part-time job, mow lawns, babysit
walk dogs, house sit there are lots of opportunities out there like mystery
shopping Amazon Turk I mean there there are so many freelance opportunities do
some freelance writing what is it Fiver or something fiver yeah I mean I’ve done
things like um so we took the LSAT to go to law school so I actually did an
online LSAT tutoring um side gig for a little bit and that was interesting but
you know it just it just goes to show you showing their SAT tutors online high
school tutoring high school kids there are all sorts of things side hustles
that you can do to pad your income to make those balance
go down quickly okay so other two parts of that you definitely have to do it you
gotta think about it getting a raise at work if you never ask for it you’re
not going to get it you’re only gonna get a small raise if that everybody gets
you know so show that you’re an outstanding outstanding performer
differentiate yourself from others and then ask your supervisor hey I think I’m
thinking deserving a raise then you know worst things can happen is no and you
haven’t lost anything the other more more important and more substantial is
if you find another job if you’re ready to take the next step up you can get a
10 to 20 percent raise from switching jobs so do not just think oh I’m stuck
where I am I’m never even getting any better
oh well don’t don’t do that to yourself take the look see what you can do
consider refinancing your debt now caveat flash warning here if you’re the
kind of person if you’re a stick kind of person where you need to feel like a bad
you need to be upset about having to pay all this interest every month and that’s
what you need to do to help you stay focused to paying off that debt
then don’t refinance your debt at a lower interest rate if you know that
because it’s 0% you’ll go back to paying the minimum payment don’t do this
right this is for people who are motivated enough by their future
financial goals by not wanting to be limited by these current debts it
absolutely makes sense to pay the least the absolute least amount of interest
that you can pay because that puts more money back in your pocket so if you are
able to refinance your debt at a lower interest rate and you have to also look
at the fees for refinancing that debt and make sure that the numbers shake out
actually better you should do that because that will get you out of debt
faster determine the strategy to paying off the debt so there are kind of two
approaches so there’s your kind of debt snowball approach where you take your
smallest balance and then pay that off first and then kind of move to the next smallest balance you get this momentum it makes you feel
good that you’re that you’re paying off something there’s like well you have one
less payment and so so that can certainly work and give you this mental
benefit of success that is going on but it might not mathematically save you as
much money and so depending on what your debt looks like you might be better off
taking the highest interest rate first and paying that and then the next
highest interest rate and then going down there now
another alternative which is actually what we did which it depends on the
reason why you’re paying off debt so for us we decided to pay off two of our
debts very quickly our window loan and our credit card debt because we wanted
to have a larger monthly surplus because I took a pay cut and so because I took a
pay cut we said we looked at the numbers and things started being a bit tighter
than we were comfortable with and so we attacked the two debts that actually had
the biggest impact on our finances in light of their interest rate so we
actually paid off the these two debts that had 0% interest rates but
collectively the payments were relatively high right and so those
payments together you know since we could take out that huge chunk we didn’t
want our monthly and operational surplus to to be so constricted and so that’s
kind of neither of these but but it’s important to crunch the numbers and
really figure out not just what’s gonna save you in paying off the debt but also
what preserves your financial stability and in your comfort peace of mind and
you know maybe you have one debt that you really don’t like because oh you you
financed a car and the car is not really working out and you really are upset about
it well you can get that off the books or it’s like you divorce debt or something like you know the washer
and dryer that you brought with your ex-spouse and every time you make that
payment it just errr you know yeah you can get rid of those nobody but if you’re
trying to do whatever’s the most mathematically sound again is
great for that because you can put in all you put in all of your debts you put
in all of your interest rates and then it you it has like six or seven
different repayment options that it considered including the debt avalanche
and the debt snowball and it shows you which one will benefit you the most
financially so that’s it seven quick and dirty tips to paying down debt super
fast absolutely so pay down your debt build well your future counts on it
hi guys see you next time

19 thoughts on “How to Pay Off Debt Fast on Your Financial Journey to Early Retirement

  1. Another of your videos that I love & adore! ❤️ It is the clarity, intelligence & positivity of your messages that is really helping me. I think we are incredibly fortunate to gave two such highly educated & wonderful people sharing their insight & experience with us… I do not have any credit card or consumer debt, but I am TERRIBLE with money. This is difficult for me to say, acknowledge, or even understand. I have a BA, a high IQ, I'm good at maths, & I can make websites by coding/programming them directly… YET: I have absolutely NO IDEA how much my student debt is. And about 5 years ago I got a windfall of about USD $150,000 and that money is ALL GONE!… I do not own a home. In fact I have been living the #vanlife for about 6 months, which is not easy at my (older) age… About 3 months ago I received another windfall – someone gave me a beautiful block of land (complete with an oak tree & fruit trees) that is worth about USD $230,000. I am SO scared that I will waste this opportunity I've been given. There are quite a few ways it could go wrong. I have some serious health issues & no partner so the pressure is on for me to rise to the occasion. I have some huge & complex financial decisions to make. I'm learning SO much from your videos & also am just so inspired by your overall approach. Thank you, thank you, THANK YOU! ❤️

  2. Love your financial videos! My husband and I too are tackling our debt. Love watching these types of videos to stay motivated.

  3. I like that you mentioned you can only pay off as much as your income allows. It's awesome you paid off 30k in 5 months but 6k monthly is more than we bring home. As a viewer and someone on my debt free journey I need to be aware of the income to debt ratio of my favorite YouTubers because it can make my progress feel inadequate when in reality it is not.

  4. How do you tackle debt when a person is drastically under employed? I am currently in this situation. I hope to move forward….fingers crossed!

  5. This channel is great I am surprised you dont have more subscribers!The contents are great.Keep going in no time you ll have a hundreds thousands subscribers.

  6. My payment plan is “I’m tired of see you every month”. Which comes down to highest interest/utilization first lol

  7. Hello, I would love to see a tutorial with un-debit. I watch Wendy Valencia tutorial but I am still not comfortable with it. My big hang up is how to enter my income portion, should I include just the extra income amount toward the debt or the money from my daily household bills and extra together. I am just confuse about this tool. Any suggestion with be great. I am find Vertex42 to be simplistic but really would like to figure out undebt-it. Thanks and congratulations!

  8. YES…stop using credit cards!!!!  No need to have them if you have a budget and an emergency fund! I get the rewards thing, but we cut them from our life period, years ago…it is just easier on us financially

  9. But you're still massively in debt, so $30,000 is barely hitting a dent.
    Why not downsize, start paying off your student loans and live more modestly?

  10. I was fortunate enough to pay off 24k in debt in 2 months! Like they say, depends on what your income allows! Luckily I was working 7 12s for those 2 months and got a good annual bonus! It happens you just have to work hard to make it happen the best you can and with the budget you have! Good luck to everyone out there trying to get their finances straight!

  11. I'm a year from graduating college and starting to pay off my student loans. Thank You for this informational video.

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