Paying Down Debt in 6 Steps

Is paying down debt one of your top goals in life? Debt isn’t anything anyone of us plans for. It’s not like I was sitting around thinking I should rack up a bunch of debt and then figure out how to get out of it. It just happens. Life just happens.

For me, it was going to college in another state because I wanted independence. My freshman year in college was pretty easy because I lived in a dorm and had a meal plan. I had a work study but no bills so that money I earned was just for fun. But I had hated dorm living so much. I wasn’t the let’s go out and party type and preferred the quiet. So I was desperate to live off campus my sophomore year. Desperate and unprepared!

It took a while for my friend and I to find an apartment we could afford, we were looking in the State’s Capital after all, with a plethora of college students. Not sure why we didn’t think it would take time. But eventually we did find one and I didn’t even have a job yet. I had also purchased my first car that summer adding a car payment to my jobless self. Again, I’m not sure how I was able to buy a car with no credit and no job, but that was a different time.

I found a job in a call center- don’t hate me I just really needed a job!  It helped but it wasn’t enough. I started applying for credit cards to supplement. They were all such low credit limits that I maxed them all out right away. My struggle continued after graduation but now I got to add student loans to my monthly bills.

I never really did learn about money management and credit scores. Defaulting on my payments just didn’t seem like that big of a deal. Who cared if a payment was late, they would get paid when I could. All of this changed when I decided I wanted to buy a house. What was my first step in that process? Taking on my debt so that I could tackle my credit score.

It doesn’t matter if you have a past of bad debts and credit scores. You can fix all this. It just takes wanting to make a change and more importantly knowing what to change. You can get a start on paying down debt with these 6 steps.

Step 1:

Have a “WHY”. What is your reason for being debt free? What is going to drive you to be disciplined with yourself?

Step 2:

In order to tackle debt you really need to know what you have. It is no surprise that a lot of people don’t truly know the extent of their debt. They just make their payments every month and call it good. Here is a free printable debt tracker to help you get started. Take the time to see exactly what you owe and to who. Take it one step forward and include interest rates if you can. This will help you with your big picture repayment plan.

Step 3:

A budget is going to help you see where your money should go. But before you can create a budget you need to see where you are spending your money. This may take a little time but I promise it will be worth it. Take the time to go through the last 30 days of your bank account and write down what you are spending and where. Do you see money being wasted anywhere that you didn’t realize? This could be going towards paying down debt. How you react to this information and what you choose to do with it will really depend on how bad you want to pay off or down debt.

Step 4:

Now that you know what you are spending you should make a budget. I won’t bore you with the details in this post but if you would like to read how to create a budget you can find it on this budget post.

Step 5:

Did you find extra money in Step 3? You can start by applying that. Can you find ways to cut some of your expenses? For us, we joined the club and cut our cable. We were paying almost $200 a month for cable and internet and had exhausted all of our threats to cancel or other savings we were receiving. Now we can put that $200 towards paying down debt.

To be honest I didn’t want to get rid of it. Sure I didn’t want to pay for it, but I liked the convenience of it. But I found something I wanted more than cable. I wanted a new house and so to meet that goal I was willing to get rid of cable. This is the reason your why is so important. Now we Pay $55 a month for internet. Otherwise, we use Netflix, Hulu, and the Amazon Firestick. All of such together are still a ton cheaper than $200 a month. We honestly do not miss it. There are a lot of affordable alternatives to cable.

I know I expanded a bit on cable but there are more examples, can you lower your phone bill, do you have a subscription you didn’t realize you were paying? For me, I was paying continuously for my gym membership even though I wasn’t going just because it was easier than canceling.

Step 6:

If you don’t think you found enough extra money to put towards your debt, you always have the option to make more money. If possible start with the job you already have. Can you get a raise? Maybe work some extra hours? If not, that is ok too. There are ways to make money on the side. I am not one to tell you to do surveys. They are on my list of time wasters! There are high paid ones out there, but so far I have only found ones that make me jump through hoops for $0.50. My time is worth so much more than that!

Maybe you have some stuff in your house you can sell. I prefer sights like Varage Sell and Let Go vs. Craigslist. In my opinion, they are less shady because you can see the buyer and sellers profiles. This can help earn you some extra money and help get rid of stuff you are no longer using.

• Sell items online
• Usertesting. This is a site where you can test websites and get paid directly to your PayPal account. I personally use this site all the time!
• Petsit/ Babysit
• Sell on Etsy
• Create a course to sell on Teachable

Be a Goal Digger and You Will Pay Down Debt in No Time!

You can do this, just take it one step at a time. You do not have to do everything at once. Find your “WHY”, find some extra money, and start at your pace. If you want it string enough you will make it happen! Not sure where to start or what you should pay first? You can read about how to decide what to pay first here.  I would love to hear if you have other ideas to add to help others! And I really would love to know if you have any experience with some decent paying surveys!