This post is by our regular contributor, Erin.
Have you ever found yourself overwhelmed by the amount of debt you have? So much so, you have no idea what to do about it, and would rather bury your head in the sand?
Trying to run away from your debt isn’t going to solve anything, which is why I want to provide a few solutions you can use to work your way towards debt freedom.
While I can’t promise you the trip will be easy, I can promise you there’s at least one thing in this list you can do today that will help you make a dent in your debt.
If you can start with that one thing, you might be amazed at the progress you’ll be able to make once you get going. Hopefully one of these actions will give you the push you need to tackle your debt once and for all!
Let’s take a look at 10 actions you can take to pay off your debt.
1) Declutter and Sell What You Don’t Need
Clutter in your home can often lead to stress, and you don’t need more stress on top of the financial stress you’re already experiencing from your debt.
If decluttering seems like a mission, start with one room or closet at first. Dedicate one or two hours to getting through as much as you can.
For each item, decide whether you want to keep it or sell it (of course, only if it’s in good condition!). Be critical – if you haven’t used or worn something within the last year, make it a rule that you must get rid of it.
Don’t let “just in case” get in the way of cleaning your closets out!
After you’re done, take everything from your “sell” pile and figure out what will net you the most cash. List those items for sale online (via eBay, Craigslist, or perhaps a local Facebook group), or have a yard sale.
Take the cash earned from selling these items and apply it toward your debt.
2) Ask Yourself if You Can Use Part of Your Emergency Fund
Hold on now – I’m not advocating you completely deplete your emergency fund. I’m merely suggesting you take a look at your emergency fund, and ask yourself if you have too much in there.
I include this tip because it’s something I’m actually guilty of. Saving has always been a priority for me, even back before I had student loan debt.
As a result, I had a rather large emergency fund I was afraid to use for debt.
While it’s come in handy plenty of times, I’ve thankfully never had to use more than $1,000 at a time. I started wondering if it would be worth it to take at least that much out, and put it toward my debt.
After a lot of wrestling, I pulled the trigger. I still have enough in there to cover me should something serious happen, which is key!
Don’t be a cash hoarder – you’ll get a better return on paying down your debt, even if you hate depleting your savings like I do.
There are also a number of people who argue that having debt is an emergency, especially when you have higher interest rates, so you should throw every penny at it. Do what will make you sleep better at night.
3) Apply Your Savings Toward Your Debt
I’ve seen this trick recommended for saving money, but you can do the same with paying off debt.
Any time you walk away from a purchase, or any time you experience savings at a store (your receipt will tell you), put that amount toward your debt.
I know, it might seem like a small amount, but these small payments have the potential to add up over the months.
4) Use the Snowflake Method of Paying Off Debt
The snowflake method is an interesting way to pay off debt. We’ve all likely heard of the snowball and avalanche methods of paying off debt, but if you haven’t heard of the snowflake method, you should look into it.
You take any extra money that comes your way, and toss it at your debt. Even if that means you find a dollar bill laying around.
It’s the same concept as the tip above – smaller payments will eventually add up, and it also gets you into the habit of putting extra money toward your debt.
If you’re someone who wants to spend any extra money you come across, whether it’s a bonus or side hustle income, then this might give you the discipline to put that money toward debt instead.
5) Motivate Yourself to Pay Off Debt
Are you in a bit of a slump when it comes to debt payoff? It happens to the best of us.
If you need some motivation, here are a few tips you can use:
- Calculate how much daily interest you’re paying on your debt. Seeing that number can do wonders as far as getting you motivated to kick your debt to the curb.
- Think about all the ways you could be using the money you’re paying toward debt. You would have an easier time meeting your savings goals if you didn’t have that nasty debt, wouldn’t you?
- Celebrate your wins, no matter how small. Give yourself rewards, even if they’re free or under a certain dollar amount. Of course, don’t go too crazy, but paying off debt is difficult. Treat yourself a bit when you hit a milestone, and you’ll be looking forward to the next one.
6) Create a Debt Payoff Plan
If you’re starting at square one with your debt, then you’ll benefit from taking this action.
I’ve written before about how to balance saving and paying off debt, and that post touches upon how you can create a plan to pay off your debt.
In short, you need to decide how you’ll pay it off, and you’ll also need to figure out if you can afford to put anything extra toward your debt each month.
Get strategic with paying down your debt! Creating a plan will give you goals and guidelines, which can be helpful if you have a tendency to fall off the wagon.
7) Commit to Staying Away from Debt
If you’re in consumer debt, do yourself a favor and commit to developing good financial habits so you can stay away from incurring any new debt.
Do whatever you have to do to accomplish this. Cut up your credit cards, put them in a block of ice in the freezer, or get an accountability buddy to help you stay away from shopping temptations.
If you do nothing else in this list, committing to not getting further into debt will at least help you make more progress, as your balances won’t be growing!
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Debt doesn’t have to be completely overwhelming. There’s a way out, even if you can’t see it right now. It might require some lifestyle adjustments, or it might require that you get yourself motivated enough to power through the rough times. Whatever you do, don’t give up hope! This journey will make you stronger.
What actions have you taken to pay off your debt? Any advice to others out there who are overwhelmed with their debt situation?
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I did all of these things to get out of debt many years ago! They work. I still do some of them from time to time, but I stash the extra money away since we have been debt-free for a long time.
I think I did most, if not all, of these when I was in the middle of paying off debt. I believe a multi-pronged approach to paying off debt can help really maximize your efforts in the long run. I still do some of these things today to help make our money work for us more.
I also did all these in order to get out of debt. You might not have to do all of them, but doing just some will help you get out of debt for sure. It might take some time but it can be done. It took me two years, but now I’m debt free and loving it.
Selling unused things around the house and putting that money towards debt is a great tip. I would bet that most households have a good amount of things they don’t use, so check out craigslist or ebay and see what you can get. It’s always nice to free up space too.
Come up with a Debt Payment Plan, Get Motivated about It, Follow Debt Repayment Plan, Repeat as necessary.
Holly at ClubThrifty Being able to stash extra money away is one of my main motivations for getting out of debt quicker. =)
FrugalRules Agreed – there’s no reason not to! Taking one approach works well when you’re just getting started, but you’ll definitely see more results when you take more action.
Aldo @ MDN Glad to hear it, Aldo! It does take some time, but it’s totally worth it.
thebrokeprof I would, too! I unfortunately don’t have much of value laying around, but I also haven’t had years to accumulate things. When my parents moved, they were able to sell a good bit of stuff just with a garage sale!
EvenStevenMoney Nice job keeping it simple! ;)
These are all great actions to help a person pay off debt. I am all about paying off debt early by looking for ways to make extra money and cutting your budget.
I have a box of things that I put together when we moved that I was going to sell. I still haven’t done it but I really should get on it. Everyday I waste, some of that stuff will probably become less valuable! In any case, #7 is very important for many in debt. My co-workers struggle with this sometimes…they work to get out of it but it isn’t much use when you get back into it by racking up the debt again.
I’ve done a couple of these methods to pay of debt. Selling extra items has helped speed the progress up. One of my credit cards is nearly paid off which is great.
I love the snowflake method! I’ll work on this myself. I’m currently doing the snowball method and have paid off quite a bit with that.
SenseofCents Those are two of the easiest actions anyone can take!
Andrew LivingRichCheaply Yes, get to it! =) You never know what you may be able to get for things. Not getting yourself into further debt is definitely important. You want to focus on moving in the right direction, not backpedaling.
Jason @ The Butler Journal That’s awesome, Jason! I hope it’s only a few more months before it’s gone.
ReneeWrote That’s great to hear! I’m all for paying off your debt however you can, as long as it works for you.
Getting rid of and making some money from clutter is a great way to get started with debt repayment. It costs nothing other than effort and it’s amazing what people will actually give you money for.
Eyesonthedollar Exactly! Especially if you’re a parent – you can probably get a decent amount of cash if you can sell children’s toys, books, and clothing.
I’m sitting on a fair amount of savings, I could deplete 80% of it and have one car paid off but still have over $100,000 in student loans to take down. With only one year left of law school I’m going to hang on to the savings make incremental payments until then and take the snowball method at the larger part of the debt left after school. It’s a long road ahead.