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How to Pay Off Debt – 4 Tips

Debt-free living might be the dream, but unfortunately, it may not be the reality for most Americans. While borrowing money can sometimes be a necessary part of life, having a dark cloud of debt hovering over your head can be a stressful existence. And unfortunately, it’s generally not a problem that figures itself out on its own. Without a plan to deal with it, a small debt can turn into a bigger one, and the slow drain on your bank account can become too great a strain to bear if left to fester.

But it’s not all bad news! People have trodden the path you’re on before, and there may be some light at the end of the tunnel. If you’re equipped with the right knowledge and you’re committed to the cause, paying off debt may be something you can do with a little know-how and a lot of motivation.

The first step in this journey is to understand what types of debt you’re dealing with. There are plenty of different kinds out there and they all have unique characteristics. The optimal way of paying one type of debt off may be different from another. You’ll also need to lay all your cards on the table so you can start to prioritize what needs your immediate attention, and what you’ll need to implement a more long-term approach for. The types of debt you might have could be from things like:

Once you know what you’re dealing with, you can start to work towards implementing tactics to pay off debt. While there may not be a single best way to pay off debt – that’s going to come down to your specific financial situation and what you feel comfortable implementing – these tips can give you an effective starting point to build off of. Let’s dive in!

1. Review Your Budget and Work in Your Debt Repayment

Your budget is the key to a lot of things when it comes to your financial standing. It can help you track your income and spending, it can help you save money, and so much more. So, when you find yourself in debt and you’re not exactly sure how you got there, that’s the first place you should look.

Calculator sitting on a budget spreadsheet.

Start by reviewing your budget to see how you got into the situation you’re in. There may be one large source for your debt problems that you can spot fairly easily, or maybe there has been an accumulation of small things that have built up over time. Either way, it’s important to identify where things took a turn.

Next, you’ll want to make sure you incorporate debt repayment into your budget. This might mean that you’ll need to cut back in certain other areas of your spending, but hopefully after reviewing your budget, you’ll have a better idea of the areas you need to reduce your spending in order to make some extra room.

Let’s take a step back for a second. This all sounds well and good if you have a budget, but what if you don’t? If you don’t, don’t panic. It’s never too late to start budgeting! There are plenty of different ways of going about it, so you’ll need to do some research into what method you think would work best for you. If you need some inspiration, these guides can serve as a good starting place:

The key is to find what works for you, cut back spending where you can, and make sure you find a way to pay off debt on a consistent and regular basis.

2. Stop Using Your Credit Cards (At Least for Now)

When you’re trying to pay off debt, it would be a little counterintuitive to start needlessly adding onto the pile. But if you’re used to putting most of your purchases on your credit card, it might be a hard habit to break.

One thing you can do that might help is to take the option of using your credit card out of the equation. If you’re about to leave your house to do some shopping, take your credit cards out of your wallet and leave them at home. While there can definitely be some perks and rewards to be earned by using your credit cards, you may have to put those on hold while you work your way out of debt.

Person holding a credit card and looking up how to pay off debt on their computer.

Putting your credit cards away can be a simple way to stop yourself from building up more debt, but it might not be enough for some people. Maybe you stuff them away into the top drawer of your dresser one minute, just to find yourself going back to your room to retrieve them the next. If this sounds like you, give your cards to a trusted friend or a member of your family until you can trust yourself to use them responsibly.

3. Use Cash Windfalls to Pay Off Debt

Are you counting down the days until your annual bonus finds its way into your bank account? Maybe you’ve just gotten your tax refund, or you’ve just received an inheritance. While these may feel like fun opportunities to splash some cash and enjoy yourself, if you’re looking for ways to pay off debt, any one of the situations we just mentioned is an amazing opportunity to make some big progress in your quest. So, instead of going out and buying a new TV or taking a vacation, use this money wisely and put it towards your debt repayment.

4. Look to Earn Extra Money from Home

While lowering your expenses by trimming down certain areas of your budget can go a long way towards helping you pay off debt, increasing the amount of money you have coming in can do the same. If you’re looking for an extra source of income, give some thought to what type of marketable skills you have. There are plenty of ways to start a side hustle and boost your earnings. If you’re looking for some ideas to get the creative juices flowing, consider doing things like:

  • Tutoring people online
  • Getting into affiliate marketing
  • Creating an online course
  • Selling an ebook
  • Marketing your photography

If you want to earn a little extra income but aren’t necessarily interested in taking on more work, consider selling old clothes or appliances you don’t need anymore, or rent out the extra bedroom in your house if you have one. Want to learn more about some ways to earn money from home that we’ve listed? Take a look at this article.

Focus on Financial Responsibility

Taking a good hard look at the way you manage your finances can be a useful tactic in the present, and in the future. When you make financial responsibility your focus, you can bring all sorts of bad habits to light and find ways to be smarter with your money. This could mean putting an end to pesky spending habits, reorganizing the categories of your budget to find a healthier balance, and more.

By finding ways to spend less and save more, you can work towards paying off debt in the short term, but this can also help you to stay out of debt moving forward. That’s not to say that a lack of attention paid to your finances is always going to be the source of your debt problems. There are times when life throws you a curveball and despite your best efforts, you need to apply for a loan. There’s no shame in that. In fact, a lot of personal loans online are specifically intended to help you handle emergency expenses that pop up out of the blue. And while you might have an emergency fund at the ready, it may not be enough to cover the entire expense.

Person sitting on a floor looking up how to pay off debt.

Having said that, putting a renewed focus on financial responsibility can only ever help you, so it’s probably an exercise worth going through. Start by giving some thought to the things you spend your money on. Consider whether these purchases are all necessary, or if there are adjustments that you could make to cut back. Can you eat out for lunch a few less times a week? Can you make coffee at home instead of going to a coffee shop? While it might not feel like any of these things can make a huge dent in your debt problems, over time, they start to add up.


No one said paying off debt was going to be easy. It can be a long road to travel, and the path of progress is rarely a straight line. But when the alternative is to let your debt grow and hinder your life, it pays to plough ahead!

While it may not be a fun process, if paying off debt starts to feel like a punishment, reaching the finish line might be a slog that’ll be too tough to get through. So, try to set yourself short-term goals, and whenever you reach one, reward yourself! This doesn’t mean you just go out and blow a bunch of cash in celebration, but look for little indulgences to keep you motivated without hindering your progress. Eventually, you’ll start to see the light at the end of the tunnel.

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