Between my own unwillingness to talk about money and shame around my debt, there are few things that impress me more than a woman who is bold enough to open up about her finances. (Some people would rather discuss details of their sex life.)
I recently hosted a boot camp for more than 100 women who committed to facing their less-than-perfect financial situations. The women were smart, successful, and, like so many others, in debt — mostly because they followed their dreams to start their own businesses.
This shouldn’t be a surprise. In a sea of online biz courses, from how to get more customers to optimizing social media, where’s the one about paying down debt?
Over six months, the women in the boot camp paid off more than $100,000. Here's how to do it.
1. Be honest about the number.
Entrepreneurs juggle so much that it's easy to push the things we don't want to deal with out of mind. I have a close friend who used to keep her unopened credit card bills in the microwave. Getting debt out in the open is key.
All the women in the boot camp started by writing out each debt amount and posting it somewhere they would see it every single day. Seeing what they were working toward made it harder to spend on purchases that didn't get them closer to their goal of paying it down.
2. Visualize your life free of debt.
A clear picture of what your life will look like without debt will motivate you to stay on track. What new freedoms will you have? The ability to launch your next product line? A sounder night’s sleep knowing the money you make from your business can go toward supporting your family?
Take Lori, for example, who paid off more than $25,000. She said that she could see the trip she and her son could take together once she was debt free, and could feel the sense of pride she would have knowing that she paid for the trip in full. This vision is what kept her going.
3. Use the snowball method.
The snowball method is very effective. Here's how it works:
- Put as much money as you can toward your debt with the smallest balance, while still paying the minimum on other debts.
- When that first debt is paid off, move that allocated money toward the next debt in line.
- Gradually proceed until all your debts are squashed.
It’s much more motivating to pay off one debt entirely than to try to chip away at multiple accounts.
4. Automate, automate, automate.
You've got a million things you would rather focus on than paying down your debt, so put it on cruise control. Once you've got your snowball plan in place, automation is your best friend. One of my favorite apps for automating debt payments is Ready for Zero, which syncs with your bank accounts and tracks all your debt, including credit cards, student loans, and auto loans.
Note: If you’re using automation with the snowball method, don’t forget to move that money toward the next debt on the list once each balance is paid.
5. Get an occasional kick in the pants.
Success loves company. The women I know who kissed their debt good-bye all have someone supporting them along the way, whether that’s a mentor, another business owner, a partner, or a support group.
Sandra Hanna is the CEO of Smart Cookies, which provides daily tips, products, and inspiration to live a sweet life, debt free. Learn more here.