8 Ways to Pay Off Debt

Debt can be a heavy burden, leaving people feeling overwhelmed and resentful. If you find yourself in debt, rest assured that you’re not alone. Millions of people face debt-related challenges, and many successfully overcome them. It might seem like an intimidating journey, but with some small yet powerful moves, you can pave the way to becoming debt-free.

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1. Create a budget and stick to it

Taking control of your finances begins with creating a budget and, most importantly, sticking to it. By carefully examining your income and expenses, you can develop a practical plan to pay off debt and achieve your financial goals. Let’s break down the process step by step.

@financialflippers

First thing to say here is that you are not alone In feeling this way. Most people don’t budget. According to a CNBC article put out last year, 73% of the country doesn’t budget. So give yourself some credit for even trying to budget. Now, that being said, these are five of the top reasons that I find people aren’t able to stick with a budget (don’t worry – I’ll give you some tips on what to do for each at the end)… 1. Lack of Discipline: a lot of people are going to find It hard to stick with a budget due to habits of impulse spending or “indulgences.” This could also be due to not having any accountability. 2. Unforeseen Expenses: ever heard the term “blow the budget?” Typically, these expenses are what cause that. These would be things like medical bills, car repairs, or even your child’s gymnastics membership. 3. Inconsistent Income: I’ve heard people say, “We never know how much we’re going to make, so budgeting doesn’t/won’t work for us.” The fluctuating Income can make it really difficult to plan your money effectively. 4. Underestimating Expenses: when we are first creating our budgets, we have a tendency to underestimate how much each line Item will cost; or, they may forget to add in all variable costs (utilities, entertainment, toiletries, subscriptions, etc.). 5. Lack of Motivation: 🙋‍♂️ This was me for the longest time. What’s the point in budgeting if…(and you fill In the blank)…I’m bad with money; my career doesn’t pay me enough to budget; I’m living paycheck to paycheck and don’t see the point…the list goes on and on. I’M CURIOUS … LET ME KNOW IN THE COMMENTS WHICH NUMBER YOU ARE! I was mostly number 5, but a mess of all of them: No budget. Always unforeseen expenses. An irregular income. Always underestimating costs (esp going out). No financial goals. Remember when I told you that you are not alone? I meant It. So … what can we do about it? Well, here are some actionable tips for each of these scenarios: 1. If you’re feeling a lack of discipline…try tracking all of your expenses. Seeing the numbers unlocks a different perspective In your brain and may give you the gentle (but firm) kick in the rear. You can also try using cash envelopes and/or a budgeting app. If tracking expenses sounds like something you’ll never do, then maybe opt for the premium version of the app so it will make sure you don’t miss any transactions. 2. If you have unforeseen expenses…one of the best things you can do is play a little bit of defense and build up an emergency fund. I’d also suggest a miscellaneous line Item on your budget for handling these. 3. If you have inconsistent Income…you need to be even more on top of your money, so setting up a budget based on your “base budget” and having a hills & valleys account are what I would recommend. In the low months, pull from the account, but in the high months, fill It up. This Isn’t an emergency fund – but it’s a separate savings bucket which helps you create some financial stability. 4. If you are underestimating expenses…then getting more focused on your numbers Is going to help a lot. When you’re building your budget, make sure you’re looking at all expenses that might come up. And if you go over during the month, make sure that you adjust your budget for the next months to allow for those line Items needing more money allocated to them. 5. If you have a lack of motivation…then you need to dial In your “why.” This Is so incredibly Important because It’s what reminds you why you’re doing what you’re doing. Eventually, the habit of budgeting will become a life skill and habit. But until then, having clear financial goals and being able to identify your “why” is going to help you stay committed to your budget – because your budget Is essentially your goals and why on paper. I hope this was helpful! Stay Curious, Flippers! ✌️ #financialflippers #sticktothebudget #sticktoyourbudget #budgetingtips #budgeting101 #budgetingtiktok #budgeting

♬ original sound – Kyle | Debt Free Coach

Analyze income and expenses

Start by thoroughly assessing your income sources, including your salary, side gigs, or additional earnings. Once you have a clear picture of your total monthly income, it’s time to track your expenses. Make a comprehensive list of all your regular and occasional expenses, such as rent or mortgage payments, utilities, groceries, transportation, entertainment, and any other necessary costs.

Identify unnecessary expenses

With your expenses laid out, take a closer look at your spending patterns to identify areas where you can cut back or eliminate unnecessary expenses. For example, reducing dining out or limiting impulse purchases can make a significant difference in your budget.

Allocate funds toward debt repayment

Now that you’ve identified potential savings, allocate a portion of that money to debt repayment. By prioritizing debt reduction, you’ll make steady progress toward becoming debt-free. Even small contributions add up over time and can expedite your journey to financial freedom.

Tip: Use a spreadsheet, budgeting app, or good old pen and paper to organize your data. This will give you a clear snapshot of where your money is going each month and help you identify any patterns or trends in your spending habits.

With the Moneylion app you could link your accounts and see your finances in one convenient place for better financial management.

2. Reduce unnecessary expenses

Here are a few ways you can reduce unnecessary expenses:

Cut back on dining out

While indulging in occasional meals at restaurants is enjoyable, frequent dining out can quickly drain your finances. Consider cooking more at home and preparing your lunches for work. Not only is this more cost-effective, but it can also be healthier and allow you to explore your culinary skills.

Cancel unused subscriptions

Have a stack of subscriptions you rarely use? It’s time for spring cleaning! Review your streaming services, gym memberships, and other subscriptions. Cancel the ones you seldom use and redirect those funds to paying off your debt or investing in experiences that truly matter to you.

Find cost-effective alternatives

Rather than splurging on premium products or services, explore more budget-friendly alternatives. Look for sales, discounts, or generic brands for items you regularly purchase. You might be surprised at how much you can save without sacrificing quality or satisfaction.

3. Increase income

Sometimes, the secret to tackling debt lies in boosting your income. Consider exploring side gigs or freelance opportunities that align with your skills and interests. Not only can they bring in extra cash, but they might also open up exciting new doors for you. And why not muster up the courage to ask for that raise or promotion you deserve at work? 

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4. Prioritize debt repayment

@grace_lemire

You cannot develop a solid debt payoff strategy if you dont know your numbers! #debtpayoff #debtpayoffplan #studentdebt #studentloandebt #studentdebtpayoff

♬ original sound – grace

When you’re working on paying off debt, it’s important to prioritize your efforts. One way to do that is by using the debt snowball method. Here’s how it works: First, make the minimum payments on all your debts. Then, focus on paying off the smallest debt first. Once that’s done, take the money you were using for that debt and use it to tackle the next smallest debt. Keep going like this, and you’ll see your debts disappear one by one. 

Another way to prioritize debt repayment is by focusing on higher-interest debts first. Check which of your debts have the highest interest rates. Those are the ones that are costing you more in the long run. Put your efforts into paying off the high-interest debts before the others. This way, you’ll end up paying less overall interest.

Consider consolidating or refinancing your debts. Consolidating means combining multiple debts into one loan with a lower interest rate. It can make your repayment process more straightforward and may even save you some money. Refinancing is when you replace a high-interest loan with a lower-rate loan. By doing this, you can reduce your monthly payments, giving you more money to put toward paying off your debt.

MoneyLion can help you find personal loan offers to help with debt consolidation:

5. Negotiate with creditors

Negotiating with your debt collectors or creditors can be a game-changer when it comes to managing your debt. Don’t be afraid to reach out to them and talk about the possibility of getting lower interest rates. 

If you’re finding it tough to keep up with your debt obligations, give some thought to discussing debt settlement options with your creditors. It’s all about negotiating to pay a lump sum that’s less than what you owe. It could help you clear your debts quicker, but be warned — it might have a little impact on your credit score.

6. Stay motivated and track progress

Staying motivated and tracking your progress are key aspects of your debt repayment journey. Below are some practical steps to keep you on track.

Set milestones and celebrate achievements

Break down your debt repayment goals into smaller milestones. Whether it’s paying off a specific debt or saving a certain amount, recognizing your progress will keep you motivated to keep going.

Keep a debt repayment journal or spreadsheet

Tracking your debt repayment progress is crucial for staying focused. Consider keeping a debt repayment journal or using a simple spreadsheet to record your payments and updates. Seeing your progress on paper can be inspiring and help you stay committed to your financial goals.

Find support and accountability

Share your debt repayment goals with friends or family members who can offer support and encouragement. Having someone to hold you accountable can be a game-changer. 

7. Avoid accumulating more debt

Living within your means is key. It’s all about being mindful of your spending and making sure your expenses don’t exceed your income. 

Another smart move is to ditch the credit cards, or at least limit their use, and opt for cash or debit instead. Using cash or debit for your purchases ensures you’re spending money you actually have. It can help you steer clear of the temptation to overspend and rack up more credit card debt. Plus, you’ll have a clearer picture of your finances when you see the money physically leaving your wallet or account.

You’ll also want to work on building an emergency fund. It’s a stash of money set aside for unexpected expenses or emergencies — basically a financial safety net. Start small and gradually build it up over time. Having an emergency fund can help you handle unforeseen financial challenges without resorting to more debt. 

8. Consider seeking professional help

If you’re feeling overwhelmed or confused about the whole debt thing, don’t hesitate to get some backup. Credit counselors and debt management services are ready to give you the guidance and support you need. They’ll work with you to create a plan tailored to your situation, so you can tackle your debt head-on and take charge of your financial life. Seeking help can help you smash your financial goals, so go for it!

Smart moves for a debt-free future

These eight tips can be your secret weapon to break free from the shackles of debt. Persistence is the name of the game. It’s OK to start small — every journey begins with a single step. You might not see immediate results overnight, but taking action today is what counts.

By creating a budget, reducing unnecessary expenses, increasing your income, and prioritizing debt repayment, you’re already well on your way. Negotiating with creditors, staying motivated, and avoiding additional debt are essential pieces of the puzzle. 

Don’t let the weight of debt hold you back any longer. Go ahead, and take that first step.

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