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Inside: These 10 debt pay off tips will help you get started and reduce the overwhelm around knowing how to pay off debt.
Paying off debt can be overwhelming when you don’t know where or how to start.
Especially if you are already drowning in bills and behind on payments.
These 10 debt pay off tips will help you get started and reduce the overwhelm around knowing how to do it.
Just remember that as long as you start and keep moving in the right direction, you will get there.
These simple tips will help you get started and moving in the right direction so you can get there.
10 Need-to-Know Debt Pay Off Tips To Attack your debt once and for all
1. Determine your big reason why.
I know you may want to just jump right in and get started BUT it won’t always be easy.
You have to figure out a big reason why you want or need to start this journey to help motivate you when times get tough.
It won’t always be fun and exciting but I promise it will be worth it.
It’s important to determine your reason and remind yourself of why you started in the first place.
It needs to be a big reason that will keep you moving when you are ready to give up.
2. Determine your total debt amount
In order to start paying off debt, you need to know how much debt you have.
If you are normal, you likely have a lot more debt than you realize.
I know that was certainly true for me. I “only” had one credit car, one car, and one student loan and it was $45,000!!
I didn’t know I had that much debt until I totaled it all up!
So, total up your debt, including medical bills, car payments, collections, and anything you owe anyone.
Even if you consider it “good” debt, it’s still debt and goes in your total.
For these purposes you can leave out your primary mortgage, but include any second mortgages and HELOC loans you have.
3. Plan out specific and measurable goals
Once you have your total debt amount figured out, I want you to set some goals for paying it off.
Now, when you set these goals, they need to be specific and measurable. I also want them to be relatively soon. I don’t want you to be debt-free in 10 years. I want you debt-free in less than 3.
For example, let’s say you have $50,000 in debt that we want paid off in 3 years. That is specific and measurable.
It can’t be a general goal like “I want to be debt-free”. If that is your goal, you won’t do it.
Then you need to break the goal down even further.
“I want to be debt free in 3 years.”
$50,000 in 3 years is roughly $16,666 a year.
So now your yearly goals is $16,000 in debt paid off a year.
But we really need to break it down even more.
That is roughly an extra $1,400 a month that you need to pay on your debt every month.
For this exercise, I want you to break down your goals into this month, 3 months, 6 months, 1 year, 2 years, and 3 years.
4. Tracking Your Goals
Once you have your goals laid out and your total debt amount, it’s time to figure out how to get out of it.
The very first thing to do is figure out where you money has been going. This will show you how you got in this situation and show you your way out.
It’s important to do this step because it will help you change your mindset and make real changes.
This is one of the most important steps when you want to change your financial situation. So, don’t skip over this.
5. Making Your Plan
Now that you know where your money is going and where you want it to go, it’s time to make your plan to get there.
This includes making your zero-based budget so you can plan every dollar that you earn. This will make your plan for paying off debt easier and more effective.
Once you plan for your monthly and non-monthly expenses, then what is leftover goes toward your goals.
Related: Which debt should I pay off first?
10 Need-to-Know Debt Pay Off Tips To Attack your debt once and for all
6. Use The Debt Snowball
Now it’s time to start using the debt snowball method. The debt snowball is incredibly effective because you get quick wins that motivate you to keep making progress.
The debt snowball method focuses on paying off the smallest balance first regardless of the interest rates.
This helps you get a quick win. You focus on one debt at a time and start with the smallest balances.
If you were to focus on interest rates instead, it could take longer to pay off the first debt and it is easier to give up.
Using this method helps you see and feel the progress you are making quicker which also motivates you to go faster and faster.
Debt Pay Off Tips
So now that you have your plan for paying off debt, we need to find ways to do it fast.
7. Sell Everything
When I was paying off debt, I sold everything I could. I even sold pictures off my walls! It looked like I just moved in.
Even if you don’t think you have much to sell, you could easily sell things at a yardsale and make a couple hundred dollars.
8. Use Cash Envelopes
Using cash envelopes saves you a ton of money if you do it right. It’s important when using cash that you don’t overspend and stop spending when you run out of money.
Sometimes this can be hard if you aren’t tracking what you are spending while you are shopping. So, I recommend using a calculator while you are shopping so you know how much you have spent.
This makes it easier to put things back that you really don’t need before you check out.
If you are new to cash envelopes or struggling to make them work for you, here is a complete guide to using them.
9. Use Visuals
A great way to keep yourself motivated is to see your actual progress. When you are doing anything, it can feel like you aren’t making much progress day-today.
However, you are making progress even when it doesn’t feel that way.
So, make a visual of your progress so you can see the big picture and see how far you have come.
You can do this a couple different ways.
You can make visuals for:
- Individual debt
- Overall debt
- Habit tracking
- Savings
You can also make visuals centered around your reason for starting. Make a vision board of what you are working towards to help keep you motivated.
Here are color pages you can use to track your debt pay off progress and savings goals with the spaces all marked!
10. Stay Motivated
In addition to making visuals, it’s important to find ways to stay motivated while you are on this journey.
Some of the ways I stay motivated include:
- Listening to Podcasts
- Joining like-minded Facebook groups
- Having a mentor
- Having an accountability partner
- Making visuals of my progress
- Reading debt pay off stories
- Celebrate wins along the way
Related: The best secrets to pay off debt fast and get on with your life
When I was paying off debt I would read debt payoff success stories every night. It helped keep me going knowing other people had been there also and succeeded.
It’s also important to celebrate milestones and wins along your journey.
Remind yourself where you started and how far you have come even if the finish line seems far away.
Find What Works Best For You
It’s important to find a system that works for you. Everyone processes information differently so the exact system that works for someone else may not work for you.
So get creative and combine systems or methods until you find what does work for you.
You can do this if you want it badly enough. It may take you longer than others but the important thing is that you are moving in the right direction.
As long as you are moving forward and not backwards, you will get there.
Believe in yourself like I believe in you. I know you can do this!
Ashley Patrick is a Ramsey Solutions Master Financial Coach and owner of Budgets Made Easy. She helps families eliminate debt using simple strategies so they can stress less and live the life they want. She has been featured on Fox Business, USA Today, Yahoo! Finance, CNBC, MSN, and many others.
