Looking for tips to pay off debt this year? Try implementing any and all of these tips so you can reduce not only your debt but your financial stresses.
It’s a new year and a new decade, so aim high with your financial resolutions by following our top tips to pay off debt. Getting rid of high-interest debt not only gives you peace of mind – but it also sets you up for financial freedom. You’ll have the flexibility to tackle emergency situations proactively, while also saving up for big goals you never thought possible. Here are five tips to pay off debt so you can reduce financial stress in 2020.
In This Article
1. Track Every Dollar in Your Budget
Before you start putting extra money toward debt, figure out exactly how much you can designate to pay it off. Start by figuring out how much you spend every month, starting with fixed expenses like your mortgage or rent and any loan payments.
From there, you can play around with what makes sense for discretionary categories like:
- Going out to eat
Every time you spend money, track it through an app or an Excel spreadsheet and categorize it so you can stay on track. This process illustrates how much you spend in other areas, so you know how much to designate towards your debt.
2. Choose an Area to Scale Back Spending
One of the most effective tips to pay off debt is picking one area in your budget in which to become more frugal. Of course, you want to set parameters and be mindful in all areas, but you’re more likely to fall off the bandwagon if you try to cut back every single living expense. Instead, start by picking one expense to cut back on. Maybe you limit how often you go out to eat or decide to skip your regular beach vacation this year. Simple changes like making coffee at home rather than buying it on-the-go can make a huge difference. Make one significant change and use those saved funds to make extra payments on your debt balances.
3. Tweak Your Budget
It’s perfectly normal to adjust your budget. In fact, it’s better to tweak your spending categories rather than give up on following a budget altogether. Some months may come with more expenses than usual, while others are much calmer. One tip to pay off debt is to make adjustments based on your actual costs. When you have extra money left over at the end of a month, pay a little extra to make up for the times when you’re caught off guard by other expenses.
4. Find a Way to Earn More
Earning money is just as important as saving money when you’re seeking tips to pay off debt. Explore your options based on your current work schedule and other commitments. It could be as simple as asking for a raise at work. However, don’t steer the conversation towards your debt problems. Research negotiation techniques and come up with a solid rationale for why you deserve to earn more. Alternatively, pick up a side hustle or a part-time job to boost your earnings and put even more money towards paying off your debt this year. In fact, 43% of people who currently have a side hustle do it in addition to their full-time job.
5. Automate Your Savings
2020 follows a decade that saw the creation of countless financial, technological innovations to help you manage your money better. You have more opportunities than ever before to track the way your cash goes in and out of your accounts. Even saving is easy and automated with apps that help you set up automatic transfers to savings based on your own parameters.
You could implement any number of tips to pay off debt, but starting with these five gives you a solid foundation for success. Even working on two or three of these suggestions can put you on the path to financial freedom in 2020.