7 Actually Promising Steps to Finally Payoff Your Debt

Let’s talk about debt.

For starters, it’s absolutely the worst. If you have debt — especially like I used to have it — then you know just how terrible it feels to be weighed down by it. It’s so easy to build up, and so hard to get rid of! Sometimes it would feel like literally all of my money was going toward paying off debt. No fun, no bueno.

To make matters worse, “opportunities” for debt present themselves from the moment you start college. Present a $1,000 spending limit to a broke college student and it’s a recipe for disaster.

And if you feel like you’re one of the few people dealing with this mess, don’t. The truth is, nearly half of the U.S. population doesn’t even have enough money to cover as little as a $300 emergency, and even more are living paycheck to paycheck. It’s no secret: debt is a menace to the majority of society.

But don’t throw in the towel so soon — there’s still hope. Sure, it’s not always easy to come out of debt — it’s actually hard as hell — but it’s absolutely worth every bit of your effort. Just think about all the possibilities that lie on the other side of debt: saving more, traveling more, buying your first home, being able to buy your family gifts for the holidays, or simply waking up every morning guilt-free and knowing you’re in control.

Having been through the debt cycle and paying off nearly $30,000 of debt in one year, I know you can do it… and I’m here to help. Here are seven steps to get out of debt and fix your finances — and your future. This 7-step guide is a no-fluff, no-bullsh*t approach.

#1: Evaluate your current income.

Just how much money do you actually have flowing your way? Start with your job, of course, but be mindful of any other sources of income you may have. A second job, freelance work, a business, and even child support are all sources of income that you should list here. List them all on a spreadsheet and add up the numbers to get your total monthly income.

#2: Add up your expenses.

7 actually promising steps to finally payoff your debt
Photo by Tara Winstead

Next, evaluate just how much money is leaving your bank account every month. Start by making a list of all your fixed expenses, such as:

  • Rent
  • Car notes
  • Utilities
  • Phone bill
  • Car insurance
  • Credit cards
  • Student loans
  • Medical bills
  • Subscription services (such as Netflix, Spotify, Youtube Red, etc.)

Once you’ve listed all these, add up all your variable expenses as well. These expenses are the ones that change in dollar amount from month to month, such as gas, food, going to the movies, buying your favorite latte, you name it. When doing this, remember to include every little expense. Even if you buy a $1 Snickers bar (who eats those anymore?) every morning on your way to work, that should go on this list.

Add your fixed and variable expenses together to come to your overall total monthly spending amount. Next, subtract your spending amount from your income amount to see whether you spend more than you earn. For most of us, that ends up being the case.

#3: Cut back where you can.

It’s now time to see where you can cut back on your spending — as much as possible. With your earning and spending info in hand, it’s much easier to see where you might be spending too loosely. However, I recommend taking an unconventional approach, which is as follows:

Instead of depriving yourself of that morning latte that you enjoy so much, see if there are ways to reduce the amount you spend on fixed expenses first. Here are some examples of ways to do just that:

  • Shop around to see if you can find a cheaper cell phone plan
  • Cancel unused subscriptions (are you really using that SiriusXM anyway?)
  • Refinance your home or auto loan for a lower rate and monthly payment
  • Apply for income-driven repayment plans on your student loans
  • Shop around for cheaper car insurance options.

Once you’ve done that, analyze your variable spending with a strict mindset of cutting back. The goal is to create a monthly budget that allows you to improve your finances while still enjoying life, so it’s important to not cut back on everything. Instead, think about which of these variable expenses mean the most to you, and which expenses are mindless and unnecessary.

If you absolutely love your morning coffee but could go without getting fast food on the way home, cut out the fast food. If you absolutely love to go to the movies with your family every Friday night but could care less about the ten beers that you mindlessly buy at the bar with your buds, forgo the ten beers. It’s all about making a conscious decision to be more mindful about where your money is going and why.

#4: Pay yourself first.

I hear so many people saying, “Why would I even think about saving when I have so much debt to pay off?” The truth is, it’s absolutely essential to have a financial cushion for WHEN (not if) emergencies come about. When you set aside money for an emergency fund, it can make the world of difference between falling deeper into debt and being prepared and in charge.

For example, let’s just say your car suddenly gives out on you and it will cost $800 to fix it. Without emergency savings, you’d simply pull out your credit card and swipe for the amount — which results in a load of interest to pay as well. With emergency savings, however, you can simply pay for the repair and be on your merry way.

To start, you should have anywhere between three to six months’ worth of living expenses saved up. If that’s too hard to manage on your current income, start with $1,000. If that’s still too hard, try saving at least $10 a week. This is much better than nothing, and will still add up over time.

#5: Utilize the snowball method to pay off your debt.

There are two popular methods of paying off your debt: the avalanche method and the snowball method. I recommend the snowball method hands down. Here’s how the snowball method works, as told by the great Dave Ramsey:

Step 1: List your debts from smallest to largest, regardless of the interest rate.
Step 2: Make minimum monthly payments on all debts except for the smallest.
Step 3: Pay as much as possible on your smallest debt (after paying monthly expenses and putting money in your emergency savings).
Step 4: Repeat this process until each debt is paid in full.

Step 5: Be financially free and start living your life.

Okay so I added in that last step, but it’s true: it really does feel like life is on the other side of debt. So buckle down, get serious about this, and make it happen. Don’t make this another decade of saying you will but it never happens.

#6: Find ways to generate more income.

Once you’ve mastered all the above steps and you have a solid budget plan in place, it’s time to start thinking about ways to generate more income for yourself. This extra income can help you with paying off your debt even quicker while having a little more wiggle room each month to still enjoy life.

Especially in today’s internet-driven world, there are so many ways to rake in some extra income each month. Here are a few ideas to help you get started (I’ve actually done many of these, so I know they work):

  • Know how to write, use Photoshop, code, or do marketing really well? Try listing your skills/services on Fiverr. I still make anywhere between $1,000 and $2,000 a month on Fiverr.
  • Sell things around your home on eBay (just be mindful of fees).
  • Pick up a night job as a waiter/waitress at your local restaurant.
  • Search Facebook for people needing a babysitter.
  • Have a large or engaged social media following? Try affiliate marketing.
  • Sell your plasma at a local plasma center.
  • Find free items on Craigslist and resell them for a fair price.
  • Go old-school and offer to cut people’s lawns for a fee.

The thing is, there are so many ways to make some additional income. Even if you only make an extra $100 a month, every bit counts toward getting you closer to financial freedom.

#7: Stick to the plan.

Now that you’ve analyzed your money, established a sustainable budget, and found new ways to make more money, how do you go about sticking to it? The truth is, there is no surefire, one-size-fits-all solution to this. The only thing I can tell you is that it takes discipline — and a good amount of it.

If you don’t feel like you have what it takes to do it on your own, consider asking a loved one to help. He/she can keep you in check if and when they see you falling off track. But no matter what, sticking to the plan is the name of the game. And if you play the game long enough and live within the rules (aka the steps listed above), you’ll eventually land on financial stability and freedom.

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