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Kelly Blodgett launched Money Gal Coaching with a goal of serving people who, like her, were burdened by debt. You can get her tips for paying down debt on a regular basis at Bring Me The News, in addition to the Money Gal Coaching website and Facebook page. Here is her latest story:

New year, new you, right? That’s right! What better time than a new year to refocus on what is most important in life. If paying off debt and reducing money stress it on your list of things to-do, then follow these four steps to help you make progress on your goals without the stress.

Decide what to pay off

This may sound obvious but in order to tackle debt and be able to scream ‘I’m debt free!!’ you’ll actually need to know what you're paying off. To get started, make a list of all of your debts, anyone that you owe money to (yes the car counts). Next to each debt, write the monthly payment and the interest rate. You may decide to pay off your high interest debt first, to reduce the total amount you pay. Maybe you go after those pesky smaller debts that you can pay off today. Emotion might also come into play. Maybe there is a debt that you have had forever and you just need to see it go. That’s OK too!

Align your budget with debt payments

To eliminate debt you’ll want to pay extra on top of the minimum monthly payment. In order to know how much extra you can afford, you will have to look at what else is fighting for your money. A budget can help align your priorities, if you don’t have one yet, get started here with this three-part series.

Determining how much extra you can afford to pay each month will depend on how much of a priority paying off your debt is at this time in your life. It might come before extravagant vacations, eating out excessively or that new jacket. And maybe not. That’s a personal choice and your budget will allow you to figure out what you can, and want to, afford.

Calculate your debt free date

Once you know how much your new and improved monthly payment will be, you’ll be able to calculate when you will become debt free! Make things easier on yourself and use a tool to help you calculate your debt free date (it will also help you adjust your plan as life happens). I love the Vertex 42 spreadsheet, it allows you to adjust your monthly payments as you pay extra or rearrange the order of what you would like to pay off first. Check out this YouTube video to walk you through it as you get started.

If your extra monthly payment isn’t getting you debt free soon enough, you’ll have to go back to your budget and look at how you can bump up that payment. Are there any expenses that you can reduce or cut out completely? Is there a way to increase your income? Play around with your budget and your debt payment amount until you find a debt free date that works for you.

Break large or irregular expenses into sinking funds

After you have done all the hard work in determining how much money you can afford to pay towards debt, don’t let the ‘little’ things in life ruin your entire plan. For larger expenses like Christmas, or mysterious ones like personal hygiene products, do the math to see how much it’s costing you.

I love to use mini budgets to break down larger expenses. Here’s a video to walk you through the steps. As you break down your larger expenses into amounts you need to save each month – we call these sinking funds – be sure to include them in your budget so you are always saving for larger or mysterious expenses.

By following these four steps, you can ensure that you are able to make progress in paying down your debt while reducing your stress. The key to real change is by creating habits and making your budget and your debt payment a part of your routine.

If you are ready for some accountability and to see changes in 2022, join my 8-week program, Living Large By Keeping It Simple.

Ready to learn more or get started with Money Gal Coaching? Book a free call with me and let’s put financial clarity on top of your priority list this year.

Sponsored: Money Gal Coaching special offer for friends of Bring Me The News.

Disclaimer: Bring Me The News will receive a portion of the proceeds from readers who purchase a service from Money Gal Coaching via our articles.

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