Paying off all your debt fast by leveraging the community is an unusual way. With about $38k debt owed by American on average, debt is putting us behind and down. Certainly, they are many ways to pay off debt. Yet, leveraging the power of the community is a very effective way to be debt-free if done with people who have your best interest in mind. In this article, you will learn what it takes to make it happen.
What is debt?
Typically debt is described as any money you owed to a person or a business. The keyword here is:
For example, ongoing bills such as electricity, phone bills, insurance, grocery or utility bills aren’t considered as debt yet. They will become as soon as you received the bill.
Nevertheless, we can list as debt the following:
- Student loans
- Credit card
- medical debt
- home equity loans
- payday loans
- personal loans
- IRS and government debt
The first step in paying your debt is being honest with yourself, acknowledging how much money exactly you owe. Do a personal balance sheet. Even though most method existing out there will take you directly into the meat of the process. You should first and foremost start with budgeting and the value of time.
Paying off all your debt fast individually
The snowball method is probably the most effective method. Indeed strictly follow these steps:
- Buy a special notebook dedicated to the exercise
- Take a day off and find a calm place
- On the cover of the notebook labeled it “Debt payment book”
- In the first page write ” My name is…. and this is my debt payment book”
- Skip a page
- On the following page start by drawing 3 columns: Column 1: list all debt you have, column 2: list the amount, column 3: minimum payment required, Column 4: timeline
- Then draw another table to summarize the entire information: start with the least amount and the closest deadline then finish with the maximum amount and the furthest deadline.
- Take a short break of 5 minutes
- On the following page draw a table that lists Column 1: all your source of income, Column 2: the amount, Column 3: timeline ( now vs future)
- Then match debt payment with income sources again starting with the smallest to the maximum.
- If you have just one income stream as most people, distribute your debt by aggressively paying the smallest debt and making minimum payments on the rest. Perhaps you will need to take some harsh decision about your lifestyle and expenses. For example by cutting certain things.
- The remain debts usually the largest make minimum payments
Paying off all your debt fast by leveraging the community
When people come together there is no limit to what they can achieve. Yet, our society has conditioned us to always fight for ourselves. As a result, when we face challenges, we tend to look toward one direction in search of a solution. But a community-oriented approach can help us be debt free fast. So, how can we do that?
Family: If your Dad, mom, sister, brothers, cousins, aunt, grandparents, etc… chip in maybe $50 per month then you & your boyfriend/husband add yours. You will find yourself with more than enough money for your minimum monthly payment. Notwithstanding, The motivation here is to help all family members quickly get out of debt and build sustainable wealth. But if you think $50 per person is high think of how much is spent per month eating out, traveling, coffee, or drinks. It is all about the interest of the family and relatives. A strong family means happy people.
Credit Card Rewards: every time you use it you are accumulating points. Again you can turn out and maximize those options by asking your roommate/family every month to do purchases and accumulate rewards for all with a single card. The credit reward is then redeemed and put towards debt payment. You organize it as a circle with each member of the community waiting for their turn.
Saving accounts: Some savings account can actually yield very high-interest rate if you keep in a certain limit for a minimum duration. For example, Goldman Sack saving account interest rate is 2,25%. Then imagine if you have $50k per month that’s an interesting $1125 per month. The principle here anew with your close circle is to open an account with at least the minimum amount require and use the interest generated to put towards debt and rotate that operation for every member of the circle.
Lending Circles: In some culture, lending circles are a way of life. Every person goes through an initiation phase from childhood. More than an association of individuals, they stand by yourself each time you need them. The bound enables them to get access to financial services at an unbeatable interest rate. Nobody is left behind and aside.
Debt buddy: Find a buddy, a person that is in the same mindset as you are and motivate each other to stay on track and always call each other out. That way you will not feel alone and you will have the support system in place to achieve your financial goal. Some people need that extra push and that constant reminder to be careful with money. That is when a debt buddy comes handy. If you can’t find one you can always join one of numerous money management programs out there.
In conclusion, this method is a very fast and reliable way to be debt-free. But It requires focus and people who share common goals and values. Nevertheless no matter the method that you choose, you will need to work in the long term, as it would require patience, determination and focus to achieve your goals.