Whether you have a tight budget or some room in your budget, here are some tips to help pay off that debt as quick as possible!
1. Pay off the highest interest rates first
High interest rates will kill you in the long run! You end up paying back so much more money than you spent in the first place! Generally, credit cards will have the highest interest rates, followed by student loans. Do yourself a favor to save money in the long run and get those credit cards paid off first!
2. Pay the minimum payment plus the interest rate.
If you have room in your budget, then try adding a little extra to your regular monthly payments. It will help to beat that debt down a little quicker. Any extra amount you can add each month will help to get that debt paid off that much quicker, even if it’s only $5, it’ll be worth it! Make a goal to pay your monthly payment plus the interest and spend a little less in another area! We’re trying to do this with my car payment right now. Last month we were able to, but the month before we ended up going over our budget in certain areas and couldn’t pay the whole interest payment. However, we were still able to pay a little extra toward the car, just not our goal.
3. Use extra money to help pay down debt.
Don’t splurge all your tax return, Christmas bonus, or Christmas money! Anytime you get a little extra money, put it towards your debt! When my husband and I got married, we actually used the money we received from our wedding to pay off his car! A lot of people may have spent the money on things to decorate the house, but we made a commitment to pay off debt as quickly as possible. Our tax return last year, went to pay extra toward my car. We weren’t able to pay it off completely, but any money going toward your debt counts!
4. Round your everyday purchases up to the nearest dollar and pay debt down with that amount.
Now this takes some discipline when keeping track of your budget. At the beginning of this year, my husband and I added a section to our google spreadsheet budget, where we round our everyday purchases up to the nearest dollar. We keep track of that amount of money and use it to pay a little extra toward some of our debt. Usually by the end of the month we have anywhere from $12-$20 each month that we are adding to our car payment. It’s not much, but remember, we’re talking the long run!
5. When you do pay off a debt, add that monthly amount to another debt to pay off all debt faster.
I am a huge fan of Dave Ramsey, who is a Christian financial advisor. He came up with the amazing idea called snowball payments. That amazing moment when you do pay something off, is a pretty satisfying feeling! It makes you want to keep going! So! Take that monthly amount you just paid off and add it to another payment! You already have that amount figured into your budget, so it’s not going to cause any change! Each time you pay off a debt keep adding it to the next payment, hence the snowball payment! That debt will start to go down even quicker!
6. Discipline your extra spending on certain months and use that money to pay toward a debt.
My husband and I travel to visit family A LOT. Like seriously, all the time. Last year we were either travelling to Virginia to see family or family was travelling for us each month from July-December. That’s right, each month we were travelling! During those months when we know we’ll be travelling, we’ll make sure to budget our going out money a bit higher. Well this year our travelling has slowed down a bit, so those months that we’re not travelling, we’ve decided to cut back our going out budget and pay extra toward paying off my car! I’m planning on putting in a garden this year, which hopefully means we’ll be saving some grocery money. Certain months we may be able increase our car payment even more. You can do the same with some of your spending categories!
When it comes to paying off debt, it’s about your attitude, prioritizing, and discipline. If you have a tight budget, then you really need to get creative and discipline your spending, but you can do it! Stay focused and prioritize your spending. You know the things you need and the things you want. Make smart choices and try to put as much as you can toward paying off that debt! Do you have any other tips for paying that debt down quicker? Leave it in the comments below!