Debt Free or Just Free of Bad Debt?

I read a shocking statistic the other day. While only about 27% of Americans carry credit card debt, more than half of lower-income households have more debt than they make in a year.

Whether your goal is being debt free or just free of bad debt, this process will help you get there.

Good Debt, Bad Debt and being debt free

Debt is like any tool and you can use it to help us make great things. It can be used to put a roof over your head and to get an education that helps you break your own reliance on credit.

My Process for Being Free of Bad Debt

Once you have a better idea exactly how much debt and what kinds you owe, you can start planning to get free of the burden.

1) Define Bad Debt and Don’t Stray

Ask any real estate agent how much house you can afford and they’ll start with how much money you can get from a mortgage. Don’t start there! Ask yourself how many bedrooms and bathrooms you need for your family.

2) Budgets

Instead of starting your budget with your expenses, only to find that you’ve got no money to save at the end of the month, start by budgeting how much you want to save. 

3) Earning a little extra

Earning a little extra may be a quick way to get out on top of your bad debt or a way towards longer-term goals. Consider freelancing for a little while to make extra cash or starting a side hustle to pay off your debt faster.

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