How to Pay Off Debt: 10 Tips That’ll Help You Take Control of Your Debt

Debt can be a very scary thing, and even just thinking about how to get out from underneath it can feel pretty overwhelming.

But if you do want to start digging your way out of debt, then just know that you are not alone. There are so many people who have been able to pay off their credit cards and loans and gained financial freedom. And the fact that you want to start on the same debt-free journey is pretty amazing. A lot of people don’t have the courage to do that!

If you’re ready to take control of your personal finance, then the tips below will teach you how to pay off debt. You’ll learn about creating a plan, getting ahead, and having a better understanding of where you stand with your debt.

So let’s work on paying off what you owe and get you to living a much more freeing life.

Related: 10 Amazing Getting Out of Debt Stories That’ll Keep You Inspired

1. Figure Out How Much You Owe

The first step is to understand how much you owe. I know this can feel pretty uncomfortable, but without taking this step, you won’t be able to create goals and visualize a plan for paying off your debt.

So open up Google Sheets and start listing your debts from biggest to smallest. This will give you complete clarity on where you stand and help you move forward.

And once you’ve done this, then you’ll know how to create a budget that’ll help you pay down your debt a lot faster, and gain control over your finances.

2. Create a Budget and Stick to It

The next step is to look at how much you bring in each month, and where your money is going.

It’s essential that you do this so that you can actually understand what you’re spending on and if it’s a necessity or unessential. Also, there might be places where you’ll want to optimize your spending and save more money.

So go through your bank statements and look at the recurring bills, living expenses, one-off purchases, and repeated purchases. Then create categories for each place you’re spending money.

This will help you create a realistic spending plan that you can stick to.

If you want to learn more, then here’s a helpful article on how to budget.

3. Identify the Areas to Cut Back

Once you’ve started tracking your spending and you have a good understanding of where all your money is going, it’s time to start looking at what you can cut out.

You won’t know how much you can really save unless you do this step.

Here are some things to look for and ask yourself:

• Are there subscriptions or memberships you’re not using (or barely using)?
• Are there daily, weekly, or monthly spending habits you can cut back on until the debt is gone?
• Have you negotiated lower interest rates for your credit cards?
• Are there normal grocery purchases you can cut out or buy generic for?
• Are there other living expenses you can save money on?

Figuring out where you’re overspending and where you can spend more intelligently is going to get you out of this hole so much faster.

4. Pretend That You Make Less

If you’re trying to figure out how to get out of debt, then this is such a helpful tip.

After you’ve determined how much to budget, challenge yourself to spend less than you make.

Pretend that you make a certain amount of money (less than you make now), and spend how you would if you made that amount each month.

It’s a great way to challenge yourself to find ways to save money and cut back on costs.

5. Use the Envelope System

Perfect for budgeting, this system will keep your cash safe in an envelope. Each envelope will have a purpose (ex: groceries, bills, rent, etc.). That way, you know exactly how much you have and there’s no overspending.

And the great thing about the envelope system is that you can literally start it today!

Also, during this time of getting out of debt, I’d suggest only using cash in general and keeping the cards at home. You feel it more when you’re handing over cash, not a card that’s going to be handed back to you.

6. Use Your Bonus and Tax Refund to Pay Off Debt

Before you get the latest gadgets, buy new clothes, or have your dream vacation, put your bonuses and tax refunds towards paying off your debt.

It’ll feel so much better to celebrate hitting zero on your debts, and then you can buy that new outfit or go on that vacation with a lot less stress!

It honestly is a great way to put a dent in your debt.

7. Earn Enough to Get Out of Debt

Getting a second job or taking on a side hustle is such a great way to lift you out of debt so much faster.

So try selling your clothes that you no longer use, or if you’re artsy, sell your crafts online. There’s a lot of websites where you can sell your clothes or crafts online and make good money.

And if you have the time, then definitely think about taking on a part-time job as well. Putting in the extra hours will take down the amount of time you spend paying off debt.

8. No More Borrowing Money

It can be pretty tempting to borrow a ten from a friend because after all that’s what friends do, and you’d do the same for them, right?

But the thing is that if you borrow, you’re gonna have to pay it back. And the same goes with credit cards, payday loans, and anything else.

So give yourself this money boundary: no more borrowing.

You want to start paying off debt fast, so this tip is essential.

9. Compare Grocery Stores

The weekly food run can be a big drain on resources. Even a small family can rack up quite the bill buying food and other essentials.

But the chances are that there are a lot of ways you can cut back on this weekly expense.

So take a look around at different supermarkets and grocery shops. They’re competitors and this means that there are bargains you can take advantage of. 

10. Hold Back on Expensive Vacations

Who says a vacation needs to be expensive all the time when there are so many budget-friendly vacation ideas you can try?

You’ll still have fun, but you won’t be going into debt for just a few memories.

I know it can be tempting, and especially when you see others going on beautiful vacations on your social feed. But the chances are, those people can’t afford it either and are going into debt for it themselves.

So wait until you have your personal finances under control, and keep things low-key.

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