If you want to pay off debt fast, start treating it like a business. Ever heard a business plan? Well now you’ve heard of a debt plan!
As you can probably tell, I am in the midst of trying to create a business blogging about personal finance. I’ve spend hundreds of hours doing research to make sure that I am taking the right steps to make this blog a successful business.
While researching, I stumbled on an article about “how to start a business”. I had a light bulb moment. I was being so intentional and calculated about how I was approaching this blogging business. Whyyyyy didn’t I do that with my debt?! If I had taken these same steps, with the same intensity and intentionality, I would have paid off my debt so much faster.
That’s right – if you want to pay off debt fast, you need to treat your debt like a business. In 11 steps, I share how you can pay off debt fast by using the same 11 steps required to start a business.
But first, why should you pay off debt fast?
Debt sucks. You already know that. It’s frustrating that so much of your paycheck goes to debt. Maddening how much you pay in interest each month. Sad to think of how many years you’ve already been in debt…and how many years you’ll still be in debt. It’s stressful, expensive, draining, and affects your relationships. Debt isn’t helping you reach your financial goals.
You need to be pay off your debt. You need to pay off your debt fast.
Step 1: Determine if you are ready
You wouldn’t jump into a business deal without fully assessing if you’re ready to commit. Businesses don’t happen on a whim. Your debt isn’t going to disappear on a whim.
But how do you know if you’re ready to attack your debt? If you’re reading this, you’re certainly taking the right steps towards being ready. Here are some other signs that you might be ready:
- Your debt stresses you out
- You think about money, bills, and debt every day
- Your panicking about your financial future
- You are mad that you let your debt balance get this bad
- You always find yourself daydreaming about being debt free
Be angry at your debt. You have to see paying off debt as the only option to achieving your dreams. You have to want to be debt-free more than anything.
Step 2: Do your research
You would never start a business without doing extensive research. You need to know if your business will be successful so you research your target customer, competition, potential profits, etc.
Similarly, you need to do research on your debt and your debt payoff options.
You need to know everything about your debt: the balance, interest rate, loan terms, loan company, name of co-borrower or co-signer, special terms (like changes to interest rate after a given period), etc. Check your credit score to confirm that you are aware of all your debts.
You need to do your research on your debt payoff options. Should you consolidate or refinance? Should you use the Debt Snowball Method or the Debt Avalanche Method? Can you do a balance transfer? Can you sell the asset to get out of debt?
Knowing your facts and options are paramount to a successful business and a successful debt payoff journey.
Continue to read blogs like this one (and check out some of my favorite financial blogs). Read books. Lots of books. The perfect start (actually, I consider this a necessity) is Dave Ramsey’s The Total Money Makeover book. Order it now – if that doesn’t get you angry about your debt and motivated to pay it off, I don’t know what will.
Step 3: Develop a
business debt plan
A business plan is a roadmap for business success. A debt plan is a roadmap for debt-freedom success. The plan outlines how you are going to achieve success. If you want to be debt free, you need to be intentional, calculated, and believe that it’s feasible – a debt plan will help you with that.
Just like a business plan, your debt plan should have several parts including a description of your debt, strategy to pay it off, and the resources you have available.
Want to create a business plan for your debt? Enter your email below to download a template debt plan to jump-start your journey today.
Step 4: Figure out your finances
Figuring out your finances is a big part of starting a business. It’s obviously a big part of paying off debt.
You already have a lot of information about your debt from the research you did in Step 2. Now you need to better understand your income and expenses.
If you don’t have a budget, create one. If you aren’t tracking your expenses, start. Figure out health insurance and life insurance. Know what you have in the bank – know the balance in your checking account, savings account, emergency fund, retirement account, investment accounts, etc. You should have a complete financial picture of your life.
Step 5: Choose your partners
In business, you can choose to enter a partnership to share the responsibilities of running a business. Or, you can choose to go solo so you don’t have to consult or compromise on your business decisions.
However, debt doesn’t work the same way. If you’re married, your spouse must be your debt partner. It doesn’t matter if the debt was all yours. They need to be on the same page as you because they have the ability to help or sabotage the debt-free journey you are about to embark on. You can’t do it without your spouse.
If you’re single, then this step is easy – you’re a solo debt owner and your debt payoff decisions are all up to you.
Step 6: Choose a business location
In the case of an actual business, this decision is pretty black and white. You may have a home office or a brick-and-mortar store on Main Street.
When paying off debt, there are two “locations” you must consider.
- Where are you going to conduct your debt business? You need a location to pay your bills, create and analyze your budget, and discuss your debt, income, and spending with your business/debt partner. The kitchen table works for most.
- Where are you going to store your debt files? You need to keep your finances organized. Create a folder dedicated to finances on your computer – this will help organize all your electronic files. Purchase an expanding file folder to organize all your bills and other debt documents (this is the expanding file folder I use, but oh this one is so cute).
Step 7: Decide on a business name
Every business needs a name. Your debt journey doesn’t *need* one….but it would sure be cool. What about Debt Smashers or Debt Destroyers or Debt Slayers?
Step 8: Launch marketing campaigns
You need to market your business to find customers. While I don’t think that you need to shout your debt from the rooftops, you may need to inform your friends and family that you are starting on a debt-free journey. It’s going to be intense, you are going to be sacrificing a lot, and there will be less happy hours, restaurants, gift-giving, and vacations.
Step 9: Build your support team
Gather your supportive friends and family members and ask them to be your accountability partner(s). You’ll need all the help and support you can get.
Avoid those friends and family members that won’t bring you closer to your goal. You don’t have time or money for them anymore.
Step 10: Create a maintenance list
It’s not possible to put your debt payoff on cruise control. Just like a business needs regular attention, so does your debt. At a minimum, your maintenance list should include the following:
- Date (like every Sunday) and time (like 8pm) to review your debt and finances. Make sure your debt partner (if you have one) is onboard
- Review your latest debt payments and debt balances
- Review your budget
- Discuss ways to increase income and/or decrease expenses
- Update your files (like a Bill Checklist or Debt Snowball Tracker)
- Recalculate your debt-free date
- Plan for upcoming week/month
Your debt plan isn’t going to magically happen. You need to take actionable steps to pay off debt fast.
Step 11: Set future goals
Setting goals gives you focus, motivation, the ability to measure your progress, and holds you accountable. Goal setting important in business and it’s important in paying off debt. Goals can be short, medium, or long term. Some examples of goals for your debt plan are:
- Short term goals: pay off your first debt in 4 months; don’t take on any new debt; lower expenses by 20%
- Medium term goals: pay off 50% of your debt by this time next year; start a side-hustle to increase income by 10%
- Long term goals: become debt-free by 33 years old; contribute full amount to retirement savings after becoming debt-free; take a vacation after paying off your last debt
Let’s wrap it up…
Debt is expensive. It prevents you from accomplishing your financial goals. It’s stressful.
Debt-freedom is….well, freeing. It’s a glorious, weight-lifting feeling. It’s the opportunity to grow your money and grow your wealth. This is something everyone (yes, even YOU!) deserves. By treating your debt like a business, and by putting in the hard work and intentionality, you’ll be able to pay off your debt fast and live the debt-free life.
Can you see the similarities between starting a business and starting to pay off debt fast? Or am I just crazy…?