Inspired by a recent tweet, I wanted to write about a topic that I rarely mention:
• Paying off debt
I've been fortunate enough to avoid significant debt through my 20s and I always try to write from experience, so these are a few strategies that I've successfully used with clients in my financial planning business:
Minimum payments + every extra dollar - depending how much money you left over each month, you might only be able to make the minimum payments right now. But if you have a higher-earning month or get extra cash, ALL of it goes towards debt until it's gone. This way you're not limiting your current lifestyle, but you're prioritizing your financial health over other spending in the meantime.
Consolidation - if you have multiple types of high-interest debt, consolidating can be one of the most effective options out there.
Increasing income - this is the most enjoyable option. If you're able to take on more work or offer an additional service, you can use the extra funds to pay down debt quick and most importantly, start to build savings to avoid future debt.
Avalanche vs snowball - two classic strategies. With the avalanche method, you pay as much as possible towards the highest interest debt while making minimum payments on everything else. Once the highest interest debt is paid off, move onto the next until they're all gone. With the snowball method, you pay off the smallest balance first to gain momentum and then work your way towards paying off the biggest balance.
If you want to read more about paying off debt, click here:
Friendly money & business reminders for self-employed creatives
✅ Remember what you're pursuing
You don't need a million followers or dollars to be successful.
✅ Catch up on bookkeeping
Why? We're a third of the way through the year. If you don't regularly categorize transactions & review the business' finances, you won't have accurate numbers to base decisions off of. You're also creating more work for your future self (or hired bookkeeper) by putting it off.
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Thanks for reading 🖤