Two steps for paying off debt and building financial independence

There is never a bad time to start taking care of your finances. But making this decision seems easier than following through. And I know it!

Many women who wish to have a better relationship with money find getting started when in debt as one of their biggest obstacles.

So if you are facing debt - and obviously, paying interest rates - here are some tips I've already applied to my life when I was also in debt. 

Don't worry if it seems confusing at first. There is no magic solution. This is a journey that you take step-by-step, and it is different for everybody. Let's see how I changed it and how you can too. 

The highest first

First, make a list of all your debts and organize them from the highest to the lowest interest rate. 

The key is to never miss a payment. If you can, prioritize paying the bill with a higher interest above the minimum. 

Also, to avoid late fees, keep paying all the minimum payments. Use any extra money in your budget to pay off the first debt on your list (the one with the highest interest rate).

Keep it up month after month. Yes, it takes time, but it will be worth the effort. In my case, I spent two years paying off all my debts. As you can imagine it wasn't easy, but once it was over, it felt wonderful. I have freedom again!

Once you finish the highest debt, move on to the second one on your list. Take the total payment used to pay the first one and apply it to the second debt.

Never ever play with compound interest. 

Stop spending more than you earn

As I said in my previous article, you must scrutinize how you are spending your money. Review your bank account and credit card statements over the past few months. Check how much of your spending was on needs, fun, and waste. You don't have to cut out all the fun expenses, but be sure they aren't hurting your finances.

I shouldn’t need to say, if you are spending more on fun and waste than paying off your debts, you are heading toward on the wrong pathway. Focus on eliminating your debts before anything. Again, do not play with the power of compound rates. It is the key to investing and debt as well. Make sure you can turn around and change sides as soon as possible. 

After paying off my debt, I realized I didn't need to be a victim of my then-poor finance education. I realized that I could have a goal in life with money. I no longer felt embarrassed about money. 

It does not matter what kind of debt you have. Make sure to pay at least the minimum every month, pay above the minimum as much as you can, and keep on track with your budget. You can do it!