Are you tired of your debt? You can get out of debt. Here’s eleven tips on how to pay off debt fast (even if you have a low income).
How to Pay off Debt Fast
1. Make the decision to pay off debt
Managing money isn’t all about numbers. It’s psychological and behavioral! To pay off debt fast you first need to decide to prioritize paying off debt. Instead of stressing and worrying constantly, develop the mindset, this is something you can and will do.
This means you’ll ditch the status quo. Go into this process knowing you can’t keep managing your money the same. You’re deciding to make changes and unfortunately, change is hard! Acknowledge first this will be a journey with sacrifices.
2. See exactly where you stand
Next to pay off debt fast you need to know your exact numbers. Write out the name of each debt, the current balance (how much you owe), interest rates, and your minimum payments.
3. Set a deadline
It’s easier to make sacrifices if you know there’s an end in sight. I recommend pushing to pay off debt (excluding a mortgage) within 36-months or less. Parkinson’s Law states you’ll complete a task in the timeframe you assign yourself. For example, if you accept debt is part of life, then you can spend an entire lifetime struggling in debt. Or you can decide to focus for three-years and get out of debt.
4. Stop borrowing money
It’s nearly impossible to pay off debt if you keep adding to your debt load. Avoid buy now, pay later options or payment plans (even if they’re zero interest!). If you have credit card debt, then stop making new transactions on your card.
5. Use cash or debit
For your fixed expenses like rent, internet, cell phone, etc. use your debit card or bank account. If you’re paying with a credit card (and you have a balance) you’re paying interest on your necessities.
Physically use cash for your day-to-day spending on purchases people tend to overspend on like groceries, eating out, happy hours, entertainment, clothes, etc. This guarantees you’re only spending money you have.
6. Procrastinate (buying)
If an expense pops up and you don’t have money to pay for it, then procrastinate. Procrastination luckily comes naturally! You can update your wardrobe, buy a new mattress, or go to Bali. Simply wait to buy new items until you can pay for it in full.
7. Become a Spartan
It’s difficult to pay off debt. In history the 300 Spartans fought a much larger Persian army. They were known for their discipline, structure, and endurance. Start paying $300 or more extra to the highest interest debt each month. This is small enough, almost anyone can do it by cutting expenses or increasing their income. It’s large enough to really make traction to pay off debt.
To pay off debt within 36-months, I’ve had Best Money Class Ever students pay $500, $1,000 and even $2,000 plus extra to debt monthly. The key is once the highest interest debt is paid, take your old minimum plus the extra Spartan amount to go to the next highest interest debt.
8. Increase your income
To pay off debt fast, look for ways to increase your income. Take on more hours with your current employer, ask for a raise, sell items, get a side hustle, or transition careers to a higher paid position. Use any bonuses or windfalls like tax refunds or inheritances to pay extra to debt.
If you get paid biweekly (every other week), then two months of the year you’ll get three paychecks. Use these paychecks to pay additional extra lump sums to your debt.
9. Cut your fixed expenses
Do a complete audit of your fixed expenses. I call this the “One and Done” method. You spend time upfront lowering these set monthly costs and continually get savings throughout the year.
Get rid of subscriptions you don’t use like streaming services or gyms. Save the most where you spend the most: lower your rent or mortgage by getting a roommate or renting out a room. Try to bundle your insurance and comparison shop.
10. Prioritize meal planning
Eating out is way more expensive than food prepared at home. The food itself costs less when purchased at a grocery store. Also, there isn’t sales tax or tipping from grocery stores. For example, restaurant food in Texas has 8.25% sales tax and it’s a common expectation to tip around 20%. If you purchase food from a grocery store this is an automatic 28% savings. Food delivery like Uber Eats or Door Dash have even higher service fees.
Plan your meals in advance by writing out what you’ll have for breakfast, lunch, dinner, snacks, and dessert. This can save you thousands of dollars in a year.
11. Grocery shop with a list
After you have your meals planned, grocery shop with a list! Around 60-70% of purchases at a grocery store are impulse buys. Writing your list of items in advance and only buying the items on your list will prevent impulse buys. If you regularly spend $200 a week on groceries, imagine then sticking to your list and only spending $80!
Your current debt situation doesn’t need to last a lifetime. You can turn things around. If you want to pay off debt fast, then try these eleven tips.
Paying off debt isn’t easy. You don’t need to do it alone.
Here’s three resources for you to pay off debt fast:
- Get a complete financial education. The fall session of Best Money Class Ever starts live September 23. Enroll early by August 27th and bring a friend for free. Get the details here.
- Curious what Best Money Class Ever is like? You can take the introduction for free (save your spot here).
- Start a plan to pay off debt and invest. Download the free guide here.
❤️ Carly
