Whether you have a hefty credit card balance or owe several thousand dollars in student loans, it’s easy to think you might never be debt free. Don’t despair. It might take some time, patience and commitment to fully pay off the money you owe, but there are several strategic steps you can take now to quickly pay down debt.
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See whether you’re on track to pay off your debt in five years with this quiz developed by GOBankingRates. Pick from three multiple-choice answers, tally your responses and take a look at the results to find out whether you’ll be able to pay off your massive debt in five years.
Do You Know How Much Debt You Owe and the Interest Rates?
A) No.
B) I have a vague idea.
C) Yes.
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How Do You Plan To Repay Your Debt?
A) I’ll be honest: I don’t know where to start.
B) The snowball method. I need those early wins (paying off my small debt first and moving up to the bigger amounts) to keep me going.
C) The avalanche method. It’s challenging, but I want my debt with the highest interest paid in full first.
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Can You Cut Back on Any Expenses in Your Budget?
A) I don’t have a budget. They’re too restrictive.
B) Yes, but I hesitate to give up the things I enjoy.
C) Yes, even just for a little while.
Would You Ever Withdraw From Your Retirement Savings To Pay Off Debt?
A) Yes.
B) Maybe.
C) Never.
Would You Work a Side Hustle To Pay Off Debt Faster?
A) No. My full-time job keeps me busy as it is.
B) Maybe. It depends on what the gig is and how much it pays.
C) Yes. I have a few side gigs!
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Are There Any Lifestyle Changes You Can Make To Repay Your Debt?
A) I doubt it. The cost of living is already expensive enough.
B) I’m making smaller changes like cooking more instead of eating out.
C) I’m making drastic changes to save more money. I got a roommate to cut back on living expenses.
If You’re Getting a Bonus This Year, What Will You Do With It?
A) Put it into my vacation fund.
B) Set half of it into savings and use the other half to pay off debt.
C) Put every dollar toward paying off debt.
Are You Speaking to Someone About Your Debt?
A) No. Taking this quiz is embarrassing enough.
B) My friends and family are aware of some things, but not all the details.
C) Yes. I have a financial advisor I’ve been meeting with and an accountability partner I’ve been leaning on for support.
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Your Results
If you answered mostly A’s … You’re unlikely to be out of debt in the next five years. However, this doesn’t mean you’ll carry your debt forever. Start getting familiar now with how much debt you owe, repayment plans that might make sense for you (personal finance expert Dave Ramsey highly recommends debt snowball) and small expenses you can eliminate from your budget.
If you answered mostly B’s … You’re taking smaller steps toward repaying your balance, which is good. Stick with it! If you want to be debt free sooner, consider working one of these seven side hustles recommended by Rachel Cruze where you can earn upwards of $1,000 a month.
If you answered mostly C’s … You’re right on track to being debt free in five years. Once you’re fully out of debt, focus on staying out for good and prioritize building your wealth by saving for retirement.
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This article originally appeared on GOBankingRates.com: Are You Smart Enough To Pay Off Your Massive Debt in 5 Years? Take This Quiz To Find Out
