The definition of debt has always been intriguing to me, and it caught my attention again while I was researching for this article. Debt in this context is money that one owes and is required and obligated to pay generally as a result of a loan or other transaction.
The word obligated is what caught my attention. Being obligated is to be bound or constrained and you would agree with me that no one ever wants to feel that way willingly.
No one wants to be bound or constrained and this is exactly what debt does to you. If you are the type that is used to being constantly monetarily indebted, this is your cue to change because you are constantly bound and constrained.
In the same vein, some people are not comfortable with getting into debt. Some become insomniacs and even depressed until they can settle their debts, but despite how terrible they feel about it they often feel they have no other choice, as such, they keep running into debts over and over.
However, none of the people in the above categories are excused from the constraining effect of being in debt.
Before the end of this article, you would be knowledgeable on how to pay off your debt but before delving into that I have to establish the effect of debt, especially when you get to a point that you believe you cannot do without it.
Do not ever let yourself get comfortable with being in debt. It starts with making a small purchase you can’t afford on your credit card and before you know it, you’re swimming in thousands of debts. Again, never let yourself get comfortable with being in debt.
The crux of this article is to show you quick and not-so-easy hacks on how to pay off debt quickly. I said not-so-easy because it is not some scientific formula or magic that you just apply and suddenly you are out of debt.
These are practical steps to get out of debt that you must apply with discipline, determination, and dedication if you want them to work. These debt pay-off strategies would not only help you pay off debts quickly, but they would also help you develop financial stability and discipline.
Most importantly, to pay off debt means to give back all of the money that you owe. And in this article, I will show you practical ways on how to pay off debt in a year or even less; depending on how fast you want to pay off your debt. Here are some ways on how to pay off debt quickly;
1. Track How Much Debt You Really Have
Tracking how much debt you have is the first and foundational step on how to pay off debt. It takes courage to do this because adding and collating all your debt can become overwhelming, but when you choose to face your fear and calculate how much debt you owe, it creates a sense of urgency in you and gives you enough motivation to pay off your debt.
If you use a credit card, add up your total minimum payment per month so that you would equally be able to allocate a measurable portion of your income into paying off your debts.
Likewise, if you have taken a loan or you are required to pay your debts in installments, calculate the total amount you owe and if there is an agreement on the stipulated amount you should pay in installment, set aside a portion of your income for that purpose. Where your debt is the type that accumulates interest with time, the faster you pay off the principal, the lesser the interest.
There are varieties of applications online that would help you track your debt and you should check them out. You can also create a spreadsheet on your computer that would comprise of how you plan on paying off your debt. A practical example of things you can include in your spreadsheet to track how much debt you have are;
- The creditor’s column: That is, who you are paying the debt to or what the debt is for.
- The actual amount you actually have
- A collation of how much you owe
- How much you plan to allocate out of your income to your debt
This would help you in effectively tracking your debt and using a spreadsheet would make it easier for you to edit monthly. But alternatively, you can choose to write in a book.
2. Approach Your Debt With A Strategic Plan
If you want to know how to pay off debt quickly, you must come to an understanding that a debt is not any other bill and should not be treated as such.
At the beginning of this article, I wrote about the constraining effect that debt has on a person and how this sometimes pushes some people to treat debt as a horrible monster that they want to immediately terminate.
Now, while that may seem like a good decision at first, it is actually counterproductive. When you approach debt with a mindset like that, you may want to divert virtually all your earnings into paying off the debt and this will consequentially become emotionally draining.
This can also be known as debt fatigue. Understandably, you do not want to remain in debt. You just want to pay it all and get over with it.
But it is wiser to approach your debt payment with a strategic plan in place or you may fall short of your payments or even end up paying nothing at all. This is in fact one of the most effective ways to know how to pay off debt fast with low income.
Create a viable plan on how to pay off your debt in a way that your life would not have to revolve around your debt payment. Your debts should not have too much of a supervening effect on you.
You call the shots! This might seem impracticable as you may feel that once you are in debt you are in some kind of cage and you are eager to get out.
While it is true that you should be eager to get out you must do this with a strategic plan so you do not end up creating unhealthy habits and routines for yourself. In subsequent points, I will further explain how to create a strategic plan for your debts.
3. Create A Monthly Budget
It has been established that to know how to get out of debt is to have a strategic plan for your debt payment. A way of creating a strategic plan for your debt payment is creating a monthly budget for your income.
A mistake people make is thinking they do not need some space in their budget for their debts. As a matter of fact, that is financial freedom. I mentioned earlier that when some people are in debt, they feel like they are in a cage and cannot wait to get out.
You would only get to this stage when you do not have in your monthly budget, an amount that goes into your debt payment. The idea behind creating a budget for your income is to avoid giving every penny to one particular expense.
If you cannot control your income, it would control you and the latter has ugly consequences. So if you already have a budget, include the amount you wish to allocate to your debt payment in it.
When you have your debt payment fixed in your monthly payment, you would not need to worry too much about your debt because you know there is a plan already in place for it. An interesting hack to this is also enrolling in automatic payments for your debts so you do not have to worry about falling short.
4. Set Your Financial Goals, Long-Term As Well As Short Term
Financial goals are milestones that you want to achieve with your money at a specific time or period. Having a plan keeps you organized and prepared.
If you do not set financial goals for yourself, you are likely to spend recklessly and you might not be aware. Another thing to note is, when you do not have financial goals, you tend to not know what and what not to prioritize.
Your financial goals should naturally include how much debt you owe, how you plan to offset these debts, and how soon you want to do that. Trust me, when you have your financial goals in place, it naturally excites you.
Another advantage of having financial goals, both long-term and short-term is being motivated by visualizing. Preparing your financial goals would go a long way in helping you review your debts and even pay them faster than you have planned.
Your financial goals should include why you are setting the goals in the first place, how much you currently have and what you want to achieve, habits you need to eliminate to reach your goals, and most importantly, steps to take to achieve these goals.
It may be creating a new source of income, investing in self-development for promotion at your job, or investing in a new degree amongst others. All these would generally make you financially disciplined and consequentially help you pay off your debt faster and in a healthier condition.
5. Freeze Further Credit Card Debt
It all starts with one credit card debt, just one, and in a split second, you begin to wonder how it accumulated into thousands. Credit card debts can be avoided as long as you can maintain healthy spending and payment habits.
Credit card debts can be overwhelming especially when you have debts on multiple cards. Credit card debt also cause a major effect on your financial life and your credit scores.
When your debt accumulates beyond your control, it may impact your credit scores. You should know that to maintain good credit, you should keep your credit card debts as low as possible.
It is general knowledge that credit card debts carry really high interests and if you keep accumulating them, it may take forever to pay off your debts. This is your cue to freeze further credit debts.
If you need more money, there are several other ways to go about it than continuing to accumulate debt. It is easy to just make purchases using your credit cards but like my teacher used to say, “you are just postponing your evil day”.
The tricks to paying off credit card debts are the same as the points stated in this article. Create a viable plan and set aside a measurable amount of your income that would go into offsetting your bills.
While you are trying to pay off your credit card debts, freeze further credit card debts. You don’t want to spend a big chunk of your time on earth paying debt.
6. Tap Into The Hidden Potentials Of A Side Hustle
A side hustle is something you do asides your full-time job that brings you money. A side hustle is usually known for its flexibility, in the sense that it is something that you are passionate about and it still brings in money.
I strongly dissuade having a side if the sole reason is the fact that you want more money and not because you are passionate about it. Of course, you may need to work more than one job because you need to meet up with your outstanding bills but that is a different case and I believe people don’t work 2-4 jobs for a long time.
If you are currently in search of the best side hustle you can adopt and are passionate about, I have written a blog post on 200 side hustles you can start from your convenience and earn thousands of dollars every month.
It’s usually for a short while to achieve a particular goal. This is fundamentally different from a side hustle. A side hustle should come from your talent or something you are passionate about that you don’t get to pursue in your main job and it may even go on for a lifetime.
If money is the sole reason driving you to start something as a side hustle, it may not go as planned. And when that happens, you would get frustrated and may even run into debt.
Make sure your side hustle is something that you enjoy doing. Naturally, the passion to do it would follow and thereafter financial rewards.
Sometimes, the amount you put aside for paying your debts from your monthly income may not be sufficient, this is where a side hustle comes in handy.
You must also understand that for your side hustle to yield the results that you hope for, you must be serious about it. The fact that it is called “side” does not mean you should treat it with levity. This is why passion and interest are very vital when starting a side hustle.
7. Live A Frugal Life No Matter What
Living a frugal life is living economically and avoiding unnecessary expenditure. Someone who is used to spending lavishly might see living frugally as bondage but in fact, mastering the art of frugal living is a way of attaining financial freedom.
All through this article, I’ve emphasized that while allocating the amount to be put into your debt, it must be measurable. This means that this amount must be of significant importance.
You cannot do this if a chunk of your income goes into reckless spending. This is why it is important to develop a frugal lifestyle. Cut down on unnecessary spending, avoid impulse buying, develop a cashless policy, find alternative options to ridiculous expenses, cook in bulk, check out coupons, all these and more are ways of living frugally.
Here is a proper frugal living guide that will enable you to live a comfortable life without spending thousands of dollars.
8. Learn To Say No
Saying no in this context is being in control of your income and expenses. I tell myself regularly, “I call the shots”. Mastering the art of financial discipline is one easy way to know how to pay off debt quickly.
You should have financial priorities and not give in to impulse purchases. If you do not learn to say no, even the measurable amount you have set aside for your debt payment would be spent on something else. Use your strategic plan and monthly budget to keep yourself strictly on track.
If you want to know how to pay off debt quickly, you must know when to say no. You do not always have to give in to your cravings and spend recklessly. Remember that you need to pay your debt and it would not miraculously go away until you are disciplined enough to make it work.
9. Increase Your Income
An effective way to know how to pay off debt quickly is to look for ways to increase your current income. It can be hard to pay off debt when you are not financially stable.
There are many ways on how to increase your income. You can start a side hustle using your talents, passion, and skill set. It is important to mention that at some point in your life especially when you are still trying to organize your life and be settled, it may be overwhelming to take on a side hustle.
And this might affect your main source of income. If you can handle it, that’s okay but if not, you can also increase your income by being the best at your main job.
You can get a higher degree, take professional courses, and invest in your personal development. (P.S Here is a guide if you are wondering how to radically invest in yourself) This way, you are likely to get promoted or find a higher-paying job.
It is not compulsory to immediately start a side hustle especially when you are not yet well-balanced on your main career.
Take time to decipher what works best for you. Either starting a side hustle or carving a niche for yourself in your main career. When your income increases, inevitably, it would be a lot easier and quicker to offset your debt.
10. Stop Obsessing Over What Your Pals Are Doing
” He who wears the shoes knows where it pinches.”
The truth is with all the awareness on the dangers of comparing people, as a result of the internet, a considerable number of people are still letting the standard of living of others dictate their own pace.
You should not let the standard of living of others dictate your own. Comparison is a trigger of negative thinking and belief. You know quite well that you have outstanding debt there is, therefore, no need comparing yourself to someone who probably has a lot of investment. Comparisons will fuel your insecurities.
Do you want to know how to pay off debt quickly? Stop obsessing over what others are doing. You should focus only on your strategic plans and monthly budget and delete every avenue of comparison from your life.
11. Live Within Your Means
Living within your means cannot be overemphasized. This is most of the time what pushes people to run into debt. If you have to borrow to maintain your standard of living, you are honestly in bondage.
Living within your means will also aid you in paying off your debt quickly. This is why excessive use of credit cards is frowned at. Credit cards allow you to purchase things more than your income would ordinarily allow.
And this is against the principle of living within your means. If you already have credit card debts, start living strictly within your income, freeze all credit cards and pay off all outstanding bills.
12. Build An Emergency Fund
Building an emergency fund is a very effective way to know how to pay off debt quickly. When you already have an emergency fund in place, you would not easily be caught unaware by sudden expenses.
Sometimes, you may have allocated your measurable amount to pay debt but emergency situations arise and you have to spend the money for such situations.
When you already have an emergency fund, you would not need to worry about skipping your debt payment. To make things easier, it is advisable that you include in your monthly budget, a specific amount that would go into your emergency fund.
Save this for later!
