To hear analysts tell it, a whopping 80 percent of adults today are carrying debt.
At an average of $38,000 in outstanding debt per person and increasing steadily year-by-year, it is clear the problem is getting worse instead of better.
But does this mean you can’t pay off nagging debt or even do so quickly? No it doesn’t!
If your debt has been a source of serious stress for you, it’s time to get serious.
These ten tricks can help you pay down that nagging debt until you are debt-free!
1. Pick a strategy and stick to it.
Lots of debt repayment strategies exist today. Two of the most popular are the debt snowball method and the debt avalanche method. Here, one method isn’t unilaterally better than the other method, although many people advocate for one over the other. The key is to pick whichever one you prefer and stick to it!
Debt Snowball Method.
The debt snowball method is attributed to financial expert Dave Ramsey. With this method, you focus on paying at least the minimum required on each debt you hold.
Then you use any extra funds to pay down the smallest debt balance to zero, moving from one debt to the next until all are repaid in full.
Debt Avalanche Method.
The debt avalanche method takes a different approach in focusing on paying down your debts that carry the highest interest penalties first. Again, you make sure to pay the minimum required on each debt every single month. Then you devote extra funds to paying off the balance with the highest interest rate.
Once you have paid off one debt, you add the minimum required from that debt to the next unpaid debt plus you devote extra cash to paying down that debt and so forth until all of your debts are repaid.
2. Evaluate all unnecessary expenses and get rid of them.
When you are trying to sort out debt that feels overwhelming, every expense can feel both necessary and unnecessary! The truth is, what is necessary to one person may be unnecessary to another person.
If you find it difficult to categrorixe your expenses this way, try using the priority method instead. Rank all of your expenses in order of their priority (for example, keeping the lights on probably ranks ahead of getting a pedicure).
Agree with yourself that the lowest-ranked expenses will get axed and the extra funds used to repay your debt.
Keep in mind, this doesn’t have to be forever. It’s just until you pay off your debt!
3. Cut out all impulse spending.
Boy, this is an obvious one but also a tough one! After all, just because you are currently struggling with some debt doesn’t mean you don’t still need to see friends, let off steam, get away from it all sometimes.
Yet the simple fact is the less you spend impulsively the more cash you have each month to pay down that stressful ball of debt.
Luckily there are strategies you can adopt to make it less easy for you to spend impulsively. Some popular tricks include leaving your cash and credit cards at home and only carrying your debit card that is linked to your checking account. You can also write down your priority spending and keep the list with you and make yourself review it before plunking down any money impulsively.
Allowing yourself to have one “fun” outing each week and setting your own budget for that can also help curb impulse-spending. Some people even tape their credit card debt statements to the ceiling so that is the first thing they see each day – talk about motivation not to spend impulsively!
4. Put things off by a day, a week or a month.
Another great way to curb impulsive spending and accumulate some extra debt-repayment cash is to take up the habit of putting each errand off by a day, and then another, and then another.
Here’s an example. Let’s say you always visit the spa for a haircut and manicure once per month. But now, you move this visit back to every month and a half. This trims one spa visit from your calendar each year and you can use that money towards repaying your debt.
5. Pick a week where you eat what’s in your house already.
Just as going shopping in your own closet can help you rediscover clothing, shoes and accessories you had forgotten you even owned, so too can browsing in your own refrigerator, freezer and pantry help you rustle up perfectly yummy meals and snacks without having to spend money at the grocery store or on takeout.
Plus, by eating what you already have, you make sure good food doesn’t go to waste.
6. Sell things around your house that you don’t use.
The rise of e-commerce has made earning a bit of extra cash here and there almost ridiculously easy. From social media to online marketplaces and specialty e-retailers, if you have something you don’t need or want or never use, chances are good someone out there would love to buy it from you.
Not only does this trick give you extra incentive to de-clutter your space, which always feels great, but you can use the proceeds to repay your debt faster.
7. Pay unexpected money towards debt.
You just never know when a bit of extra cash may come your way. But when that windfall shows up in your mailbox or your wallet, don’t wait. Send it right over to pay down your debt.
8. Give yourself a deadline and figure out what you need to do to achieve your goal by your deadline.
Some people don’t realize what it will take to pay off their debt. Figure out an end date of when you want your debt paid off. Then, work backwards, to reverse engineer what you need to do between now and then to have that debt paid off. This can be quite eye-opening.
Once you’ve done that, one of the best ways to make sure you stick to a deadline you set for yourself is to attach something fun to milestones along the way. This will keep you motivated and on-task. You want to be disciplined about paying off your debt, of course, but it is great to celebrate and rewards yourself when you meet this challenging goal.
So set your deadline, and then decide what you need to do to meet that dealine and how you will celebrate along the way. Post it somewhere you can see it daily.
9. Write it down.
Goal-setting is a great discipline, but writing down the goals you set for yourself is even better. Some people like to use a dry erase board or a tack board to write down their debt balances by account, steadily crossing them out with the new numbers as they pay each balance down further.
Find a system that works for you to write down your goals and your progress reports.
10. Log into your bank account every single day.
Finally, it is vital to begin making friends with your bank account. After all, not knowing exactly what was going on in your account may be part of what caused your debt.
By familiarizing yourself with the daily ebbs and flows of your finances, you start to feel more confident, informed, competent and motivated to take charge of your money and not the other way around.
Don’t let this list overwhelm you to the point where you read it but feel too paralyzed to take action. Even if you pick just one trick to get started, you will be on your way to slaying that nagging debt. Little by little, day by day, you can and will get rid of that debt!