{"id":120223,"date":"2019-12-18T14:30:24","date_gmt":"2019-12-18T21:30:24","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=120223"},"modified":"2024-02-24T13:14:23","modified_gmt":"2024-02-24T20:14:23","slug":"8-tips-millennials-ditch-debt-fast","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/8-tips-millennials-ditch-debt-fast","title":{"rendered":"8 Tips for Millennials to Ditch Their Debt Fast"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC1227417855&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n<p>When you\u2019re under the weight of heavy debt, it literally changes the way you think.<\/p>\n<p>You think defensively, feeling pressed in on all sides. Your first focus is simply survival: How do I make all my payments this month?<\/p>\n<p>Once you\u2019ve figured out how to simply survive with that debt, your vision expands to a second goal. How can I start tackling my debt, so I can one day get out from under it?<\/p>\n<p>It&#8217;s a worthy goal\u2014but a defensive one. But after you conquer your high-interest unsecured debts, a funny thing happens. You start thinking differently about money, about your goals. You start thinking offensively and creating a vision of building wealth rather than simply escaping debt.<\/p>\n<p>In a very real sense, your mindset expands and you see the world differently.<\/p>\n<p>First though, you need to defeat your debt. It is absolutely, 100 percent possible to <a href=\"https:\/\/www.biggerpockets.com\/blog\/save-money-median-salary\" target=\"_blank\" rel=\"noopener noreferrer\">save tens of thousands of dollars even on a median salary<\/a>. Whether you\u2019re a millennial or a little further along the path through life, follow these eight tips to get out of debt as quickly as possible and start thinking differently about money.<\/p>\n<h2>How to Get Out of Debt Quickly<\/h2>\n<h3>1. Stop the Bleeding<\/h3>\n<p>The first step to financial healing is to stop the bleeding. You need to stop adding to your debt. Today. Now.<\/p>\n<p>In most cases, this ongoing bleeding comes from credit cards. Take all of your cards and hide them away in a drawer somewhere. If you have to physically cut them up, do so.<\/p>\n<p>The same logic applies digitally. Go to every online store where you blow money and delete your saved credit card information. No exceptions.<\/p>\n<p>The average American\u2019s credit card debt is an ugly $5,673 according to <a href=\"https:\/\/www.creditcards.com\/credit-card-news\/credit-card-debt-statistics-1276.php\" target=\"_blank\" rel=\"noopener noreferrer\">CreditCards.com<\/a>. You\u2019re done being an average sop, playing into credit card companies\u2019 marketing. Before long, you\u2019ll be at a $0 balance.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-118370\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/10\/stop-wasting-money.jpg\" alt=\"Text sign showing Stop Wasting Money. Conceptual photo Organizing Management Schedule lets do it Start Now Clips symbol idea script notice board text capital cardboard design\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/10\/stop-wasting-money.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/10\/stop-wasting-money-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>2. Transfer Your Balance to a 0% APR Card<\/h3>\n<p>Many credit cards offer 0 percent APR for an introductory period for balance transfers. And in some cases, that introductory period is as long as 18 to 24 months\u2014more than enough time for you to pay your balance in full.<\/p>\n<p>Stop paying 20 percent-plus in interest on your credit card balance, so your entire monthly payment goes to principal, not interest.<\/p>\n<p><strong><em>Related:<\/em><\/strong> <em><a href=\"https:\/\/www.biggerpockets.com\/blog\/7-lies-debt\" target=\"_blank\" rel=\"noopener noreferrer\">7 Lies About Debt (&amp; How to Get Out of It for Good)<\/a><\/em><\/p>\n<h3>3. Automate All Debt Payments<\/h3>\n<p>If you have to rely on discipline to pay your debts, you\u2019ll fail. Discipline is a fickle friend, and often it leaves you stranded when you need it most.<\/p>\n<p>Instead, set up automated payments on your credit cards, on your <a href=\"https:\/\/www.biggerpockets.com\/blog\/pay-student-loan-invest-real-estate\" target=\"_blank\" rel=\"noopener noreferrer\">student loans<\/a>, on any other high-interest unsecured debts. And not just monthly recurring payments, either. Schedule your payments to go out on the same day you get paid\u2014every single payday.<\/p>\n<p>That way, the first bills paid out of every paycheck are your debt payments.<\/p>\n<p>But don\u2019t just pay all debts evenly. Instead, pick one to eliminate first.<\/p>\n<h3>4. Use the Debt Snowball or Debt Avalanche Method<\/h3>\n<p>The concept behind both the debt snowball and debt avalanche methods is similar: Choose one debt to focus on at a time. Once you\u2019ve eliminated the first one, take the money you were paying toward it and put it toward the next debt on your list. With each debt you knock out, you\u2019ll have more money to funnel into paying off the next debt, until they\u2019re all gone.<\/p>\n<p>The difference between the two methods is how you prioritize the debts. In the debt snowball method, you start with the smallest debt first, then the next smallest, and keep tackling them in order of size.<\/p>\n<p>In the debt avalanche method, you prioritize your debts in order of interest rate. You start by paying off the debt with the highest interest rate first, then the next highest interest rate, and so on until they\u2019re all paid in full.<\/p>\n<p>Which is the better approach? It depends. Mathematically, the debt avalanche method saves you the most money. But psychologically, most people need the momentum provided by scoring early wins. For a simple breakdown of both the math and the psychology behind the two methods, see Ashley Hendrickson\u2019s examples at <a href=\"https:\/\/www.bloggingawaydebt.com\/getting-out-of-debt-101\/\" target=\"_blank\" rel=\"noopener noreferrer\">Blogging Away Debt<\/a>.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-120631\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/12\/cut-cable-cord.jpg\" alt=\"Scissors cutting through a coaxial RG6 cable - cut the cable tv concept isolated on white background\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/12\/cut-cable-cord.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/12\/cut-cable-cord-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>5. Cut All But Your Favorite Subscription Service<\/h3>\n<p>Quick: how many subscription services do you pay for?<\/p>\n<p>You don\u2019t know off the top of your head. And even if you think you do, you almost certainly forgot a few that you pay annually.<\/p>\n<p>Pick one that you simply can\u2019t live without. It could be Netflix or Amazon Prime or your cable TV subscription or Pandora or something else entirely. But you only get to keep one. Every single one of the rest need to go.<\/p>\n<p>What, you thought there wouldn\u2019t be any sacrifices on the road to becoming debt-free? Get real.<\/p>\n<h3>6. House Hack<\/h3>\n<p>If you really want to get out of debt fast\u2014and supercharge your savings rate to build wealth fast\u2014get rid of your housing payment.<\/p>\n<p>Housing is the number one expense for most people, so it offers the greatest opportunity to save money. The classic house hacking model involves buying a multifamily, moving into one unit, and renting out the others; see this <a href=\"https:\/\/www.biggerpockets.com\/blog\/newbie-house-hack-duplex\" target=\"_blank\" rel=\"noopener noreferrer\">duplex house hacking case study<\/a> as an example.<\/p>\n<p>But that\u2019s not the only way. My co-founder Deni Supplee has <a href=\"https:\/\/www.biggerpockets.com\/blog\/suburban-house-hacker\" target=\"_blank\" rel=\"noopener noreferrer\">house hacked suburban single family homes<\/a> using a variety of ways in her career, from roommates to garage storage space to foreign exchange students. Most recently, she\u2019s house hacking a mixed-use building and lives for free.<\/p>\n<p>But here\u2019s the key: Every single penny of the money you\u2019re saving on housing must go to paying off your debts. And when all your debts are gone (which won\u2019t take long with no housing payment), keep saving the money and investing it to build real wealth fast.<\/p>\n<p><strong><em>Related:<\/em><\/strong> <em><a href=\"https:\/\/www.biggerpockets.com\/blog\/biggest-flaw-dave-ramseys-baby-steps\" target=\"_blank\" rel=\"noopener noreferrer\">Dave Ramsey\u2019s \u201c7 Baby Steps\u201d Are Flawed: Get Rid of Debt Quicker Like THIS<\/a><\/em><\/p>\n<h3>7. Get Rid of Your Car<\/h3>\n<p>Want to create wealth even faster? Choose a home to house hack in a location where you don\u2019t need a car\u2014somewhere you can get around by walking, biking, carpooling or by taking public transportation, ride-sharing services like Uber and Lyft, or car-sharing services like Zipcar.<\/p>\n<p>My wife and I spent four years sharing a car. A few months ago, we moved to a new home where she can walk to work and I can bike to a co-working space, where I telecommute.<\/p>\n<p>We have no housing payment and no car payment. As a result, we\u2019re able to save over 50 percent of our income. Despite neither of us making a massive income, we\u2019re building our wealth quickly.<\/p>\n<p>Most Americans dismiss out of hand the idea of living without a car. They immediately write it off as impossible, never pausing to ask the question, \u201cHow could I make it possible?\u201d<\/p>\n<p>And as all innovators know, the first step to any breakthrough is simply starting with the assumption that the breakthrough is possible and brainstorming ways to make it a reality.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-99383\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/05\/crosswalk-feet-pair-68257.jpg\" alt=\"\" width=\"700\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/05\/crosswalk-feet-pair-68257.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/05\/crosswalk-feet-pair-68257-300x144.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/p>\n<h3>8. Get Even More Creative with Savings<\/h3>\n<p>There are infinite ways to save money. Some are obvious and common, such as packing your own lunch for work rather than paying a premium for someone else to make your food for you.<\/p>\n<p>Other <a href=\"https:\/\/www.biggerpockets.com\/blog\/unusual-savings-tactics-save-thousands\" target=\"_blank\" rel=\"noopener noreferrer\">savings tactics are more unusual<\/a>. For example, another way to save money on food is batching your food and then doing a Tupperware meal exchange with like-minded friends. For example, you make an enormous batch of lasagna. Four of your friends each make their own enormous meal batch. Instead of you eating lasagna for five nights in a row, you swap most of your lasagna batch with your friends, who each give you a meal portion of their enormous batch. You each get five different meals, but you only had to make one meal apiece.<\/p>\n<p>Or you can get even more <a href=\"https:\/\/www.biggerpockets.com\/blog\/extreme-budgeting-tips-save-payment-faster\" target=\"_blank\" rel=\"noopener noreferrer\">extreme with your savings<\/a>. Stay for free when you travel. Get cheap medical care from medical school clinics. Buy everything but consumables used. Cancel your gym membership and work out for free at home. The list goes on.<\/p>\n<h2>Final Thoughts<\/h2>\n<p>Debt keeps you thinking small and defensive. You need to get out of it as quickly as possible, with the exception of cheap secured debts like mortgages.<\/p>\n<p>Without the yoke of debt around your neck, you\u2019re free to start mapping out your own personal perfect life. Want to be <a href=\"https:\/\/www.biggerpockets.com\/blog\/become-financially-free-early\" target=\"_blank\" rel=\"noopener noreferrer\">financially free by 40<\/a>, with your investment income able to cover your living expenses? No sweat. Or want to start your own business? It\u2019s a lot easier with no debt.<\/p>\n<p>Or perhaps you want to be able to work from anywhere? As a landlord, online entrepreneur, and occasional freelance writer, I spend 10 months out of the year living overseas.<\/p>\n<p>But I never would have had the vision to create that life back when I was straddled with massive credit card debt.<\/p>\n<p>Get out of debt. You\u2019ll be amazed at how differently you start seeing the world.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/moneyshow\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-114405\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/money-podcast-ad-v2.jpg\" alt=\"\" width=\"706\" height=\"125\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/money-podcast-ad-v2.jpg 706w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/money-podcast-ad-v2-300x53.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/money-podcast-ad-v2-702x125.jpg 702w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/a><\/p>\n<p><em>What are you currently doing to tackle your debt? What are you planning to do differently to escape from your debt even faster? <\/em><\/p>\n<p><strong>Share your thoughts below!<\/strong><\/p>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you\u2019re under the weight of heavy debt, it literally informs the way you think. Your focus is survival: How do I make all my payments this month? Whether you\u2019re a millennial or further along the path of life, follow these tips to get out of debt as quickly as possible and start thinking differently about money.<\/p>\n","protected":false},"author":158586,"featured_media":116808,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7396],"tags":[],"class_list":["post-120223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budgeting"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/120223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=120223"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/120223\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/116808"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=120223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=120223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=120223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}