How To Pay Off Your Debt

Most of us live in dread of being in debt, but it’s quite a common condition. Most of us have been in debt or are going to be in debt at least once in our adult lives. There’s no shame in being in debt, what’s shameful is staying in debt, so here are a few simple tips on how you can become debt-free.

 

Save money by shopping smarter at the grocery store

You can’t cut grocery shopping altogether, but you can save on grocery shopping to save up money to pay off your debt. Keep an eye out for sales and stockpile or buy in bulk when they happen. Stockpile enough groceries on sale and you should be able to skip, and save, on another grocery trip. Skipping a trip to the grocery each month can bring down your annual grocery bill by 25%.

Pay something

Even if you don’t have the cash to pay everything at once, you should at least pay something. This is especially important for stuff like credit cards, mortgages or loans which may penalize you with a late fee or accrued interest. If you don’t regularly pay the minimum or more, the penalties will just keep piling up and your debt will keep growing.

Pay off the most expensive debts first

If you have more than one source of debt, pay off the most expensive one first. Take a look at your debts and choose one that you will pay off ASAP. Don’t forget to account for interest rates. The debt with the highest interest rate with be the more expensive on in the long run so it’s the one that should be paid quickly. But don’t forget to at least pay the minimum on your other debts.

Use a sidehustle

If your regular day job isn’t bringing you enough to pay for your daily needs AND pay off your debt, try and find an extra source of income and use what you earn there to pay your debt.

Create a budget and stick to it

A good budget plan to stick to if you want to pay off your debt is the zero-sum budget. In a zero-sum budget, you “spend” all your money right away. Make a list of all your monthly expenses and add them all up. Now, when your monthly salary comes in, immediately put aside how much you will need to meet your expenses. Take whatever sum is left and pay off a debt.  By sticking to this type of budget, you make sure your money only goes to the essentials.

Use unexpected money to pay debt

Unexpected money is money that you get outside your regular income stream. This could be a raise or bonus, a tax refund, rebates, or money received as a gift. Exercise self-control and use this to pay your debts. After all, the relief of being debt-free will last longer than the joy you will get from a new gadget.

 

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