The ‘hit list’ strategy to paying off your debt
Drowning in debt? Tactics that will help relieve your financial stress and they go against typical financial advice
From home loans to school fees, bills and personal indulgences, staying on top of your debt can be overwhelming and stressful.
Research from the Australian Bureau of Statistics showed that in 2015-16, 29% of homes were classified as ‘over-indebted’, so there’s clearly a lot we can learn when it comes to managing our money.
TODAY chatted to Canna Campbell from Sugarmamma.TV, — who wrote book ‘The $1,000 Project’ after saving $32,000 in a year to get her financial tips.
She had some advice that might just go against what you’ve been taught about saving and spending.
TODAY: Why is credit card debt so bad?
CAMPBELL: It brings on toxic emotions, guilt, embarrassment, and remorse. Plus, it holds you back in achieving your goals such as building a house or being able to borrow money.
TODAY: Explain what the Hit List Strategy is for paying down debt?
CAMPBELL: My strategy is called The Hit List Strategy. The Hit List Strategy works because it creates the feeling of progress and momentum. You remove the number of debtors fast, and each time one goes, it frees you up to put more energy into the next. By focusing on the smallest debtor first, you are able to progress quickly. And that feeling of success fuels more motivation.
TODAY: How do you recommend people get out of debt quickly?
CAMPBELL: This is not a traditional technique and may even cost more, but it works and works quickly because it creates the feeling of progress. I have helped people get out of as much as $80,000 worth of credit card debt without having to declare bankruptcy.
- Write a list of who you owe money to and how much — with the smallest debt at the top of the list and work down towards the biggest.
- Live off cash and your ATM card/debit card — no more credit allowed. This quarantines the debt.
- Do a budget.
- Set minimum repayment plans for each debt — factor this in to your budget.
- Review your budget to look for things that you can cut out or down to pay off debt — proactively put those savings towards the extra repayments of that debt, so that you pay it off faster.
- Get a ‘side hustle’ — look for ways to bring in extra cash and income that you can use towards the debt.
TODAY: Why does this work?
CAMPBELL: Because when you are juggling lots of debt, especially to different people, it is a lot like juggling balls. If we can quickly take one out of the air, it makes it easier and you more efficient. And each time you cross another person off your list, you see and most importantly feel that you are getting back on track. Kind of like the motivation when you are on a diet, step on the scales and see the weight coming down. It feels great, so you feel inspired to keep going.
- Go to Moneysmart.gov.au for more tips on managing your money.
DISCLAIMER: *Any advice provided in this article is general in nature in that it does not take into account an individual’s particular circumstances or needs. Individuals should consider their own objectives, financial situation or needs, and if in doubt seek appropriate advice, before proceeding.