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Pay Off Your Debt and Achieve Financial Freedom at the Same Time

​Debt can be overwhelming, more so if it’s in the double or triple-digits. Many experts and gurus in the domain have some particular ways of dealing with debt, and Tiffany Aliche is one of them. ‘The Budgetista’ had around $300,000 in debt after the last recession, but managed to get rid of it and started to help others do the same. 

“The first step really is forgiving yourself because almost everyone who has a lot of debt is already beating themselves up. We underestimate how important the emotional component of debt is. It weighs a heavy burden,” Aliche says.

After the last recession, she built up triple-digit debt from a $220,000 mortgage, $52,000 in student loans, and $35,000 from credit cards. Although she didn’t pay her mortgage and ended up foreclosing on the home, she did pay off her student loans and credit card debt in full.

How to Approach Paying Off Debt

Although there is no best way to get rid of debt, there are some guidelines you can follow to make this process less expensive.

Aliche says the number one mistake people make the obsessing over the wrong debt, such as student loans, since they usually have single-digit interest rates.

“Focus on that credit card debt. That’s the one that’s costing you an arm, a leg, a toe, and a foot,” Aliche recommends.

She advises you to get serious with the double-digit credit card debt since it is so costly. Once you pay off the credit card debt, get to single-digit debt, such as student loans, and divide your money up between savings, earning or investing, and paying off debt.

While it might seem odd to not focus on paying off debt 100 percent, Aliche encourages people to see the bigger picture: “Debt-free is a goal, not the goal,” she says. “The goal is financial freedom.”

“If you just focus on being debt-free, that’s all you get. If you focus on learning to grow wealth, you get that freedom and the money,” Aliche says.

Some Debt Payoff Options you Have

There are many methods to use when paying off debt, so here are a few options that might be right for you.

Use a balance transfer credit card

Completing a balance transfer can aid in moving the debt from a high-interest card to a card with an introductory 0.5 percent APR period up to 20 months. Balance transfer credit cards, such as the U.S. Bank Visa® Platinum Card, makes it possible to save on interest payments and use what you would have paid on interest to get rid of your debt.

Consolidate debt with a personal loan

Personal loans are a decent alternative to balance transfers if you have a huge debt that won’t be transferable to a credit card. Via a personal loan, you get a fixed amount of money can you can use to pay off your cards.

You’ll repay it throughout between 12 to 72 months, and at a fixed interest rate. This can aid in consolidating debt that’s spread across multiple credit cards. Still, Aliche says that studies have demonstrated that people who pay off their credit card debt with a personal loan usually end up overspending on their card again. So the best option is to cut up your cards n order to avoid falling into that trap again.

Borrow money from family 

If you have rather bad credit – scored below 580 – or you have a hard time getting approved for a new or affordable financial product, you may want to consider asking someone in your family for a loan. This option is not possible for everyone, but it can be an alternative for you.

You can then save money on interest by borrowing money from someone close to you. However, before you accept the money, set up a repayment plan and keep it religiously, so you don’t risk damaging your relationship.

Find New Ways to Make Money

Because balance transfer offers are currently difficult to find, you should consider alternative methods to increase your income.

“These days, I feel like people have to really be open to side-hustles,” Aliche says. “Everyone’s not going to start a business, but ask yourself,’ Are there ways to monetize some of my skill sets? Are there things that I can do to bring income?”

For instance, Aliche made almost $5,000 to $6,000 extra a year by tutoring and babysitting while she was also teaching preschool. She says that a side-hustle can be a temporary method of making an extra income that can help you get rid of your debt faster.

Remember You’re Not Alone

It is easy to beat yourself out and get overwhelmed by the amount of debt you have. But Aliche motivates you to remember that you’re not the only one in debt.

“There are people who make a ton of money who have a ton of debt. There are people who make a little bit of money who have a ton of debt,” she says. “What you’re experiencing is something millions of people are experiencing. Focus on the solution, not what you did wrong.”

If you have a debt, take a moment to ponder upon what caused it, then start working towards paying it off.

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