Getting Your Financial Ducks In A Row Rotating Header Image

6 Steps to Start Paying Off Personal Debt Today

Today’s post is brought to you by my colleague Robyn over at A Dime Saved.

Wiping debt way with a sponge

‘A man in debt is caught in a net’ – wrote John Ray.

Molehills of personal debt build mountains of worry.

Debt is a problem. Living in debt is stressful and tiring. Constantly paying off creditors and having years of debt repayments makes many people unable to live their life fully or even celebrate significant life events. It makes them desperate for money and angry.

Debt has caused a third of all millennials, or 34 percent, to hold off on buying a home and 31 percent to delay saving for retirement. It has also affected millennials’ family structure. Fourteen percent of millennials have delayed getting married due to debt, and 16 percent have delayed having children. (Source: Poll: Majority of millennials are in debt, hitting pause on major life events (

If you are one of the many people who are struggling with mountains of debt, then you may want to start paying some of it off and starting to climb out from under the crushing pressure.

The solution is to come up with a repayment pattern that accommodates your regular savings as well as your repayment. I have compiled the following steps for you so that the road to the repayment of your debt will not be a boring one.

These tips can also be used to save money or to start changing your financial future- whether you are or are not in extreme debt.

So, here it is:…


6 Steps to Start Paying Off Personal Debt Today

Motivate Yourself

It can be very dull and depressing, waking up every morning and working hard with the sole aim of repaying the personal debt. So you need something positive to brighten your thought and instill meaning in your schedules.

If all you do is pay up your debt and mortgage, month in and month out, then all that preoccupies your mind is debt. You tend to think about nothing else. Doing that will depress you, and start focusing on the negatives of your money situation. Being depressed and stuck is not the right frame of mind to take practical and actionable steps towards paying off personal debt.

Visualize how you want your life to look and imagine what your life will be like once you get rid of your debt. Picture that and focus on that to get you motivated to start this difficult journey. Extreme frugal living is easier when you are motivated to succeed.

Pay Yourself First

Paying yourself first is essential and crucial to your financial success.  For a successful debt-payoff plan to work, you need to make sure that you won’t get back into debt. How do you do this? By ensuring that you won’t get into debt again. There is no point in paying off debt to find yourself back in the same position in a few years. Set yourself up for success by saving some money and putting money away for emergencies and for the future. Let your money start to work for you now, so you don’t fall back into debt.

This is a classic approach that I honestly urge you to adopt; you should absolutely start a savings program. Why would I start saving while I still owe others? Because if you don’t start saving for yourself and putting yourself first, then you will never get ahead. You will always be stuck in the quagmire of debt and obligation.

Create a Budget

Of the 100% that constitute your income:

You pay yourself the first 10%; this is your savings plan

55% will go to buying things you need

5% will go into your play account

20% will go to repaying your loan

10% will go for charity, or tithe, or whatever you believe it’s a right course

I know 10% to charity sound awkward to some people in debt, but believe me, it works wonders.

Make Lists and Plans

Another crucial step towards repaying your personal debt is to make a comprehensive list of all the people and organizations you owe. Then, decide who and what should get paid first. There are different theories and thoughts of which debts make the most sense to be paid off first.

Two of the most common theories are the Debt Snowball and the Debt Avalanche. It really does not matter which one you pick as long as you pick one and stick to it! If you have a particularly predatory debt or if you have a debt that particularly weighs upon you, then you should pay that one off first.

The main point is to have a clear point and guidelines of how you are attacking your debt. Know how much you owe, to whom you owe it, and in what order you are paying them back. The most basic way to succeed is to have a plan.

Make Contact

If you owe money to individuals, then at this point, you will need to talk to each of them after you have carefully mapped out the repayment pattern. Be very honest and considerate with yourself and with them. You will need to be prepared as some of them may welcome your plans and thoughtfulness, while a few others may be disagreeable and needier. You must be friendly but stick to your project.

Tell each of them to the effect that, ‘this much I can repay you each month, but no more.’ give them a timeline of when you think you will be able to repay. Write it down for them, so they know you are taking this seriously. they will respect the fact that you are attempting to pay them back clearly and logically.

Suppose you have very large loans to companies that are old or way too large ever to repay; maybe consider talking to them to discuss a settlement or an alternative payment plan. Please discuss this with a  certified financial planner in advance, as there are tax implications that you should be aware of. Many companies are willing to settle large amounts as they are willing to get some money instead of the risk of none.

Create Good Habits

Now comes the hard part. Stick to your budget and payment plan. Make sure that you never spend more than you budgeted for and always make good choices with your money. You can look for ways to make extra money that you can use to speed up your repayment plan or to cover unexpected expenses. Keep your eye on the goal: to get rid of your debt. Each dollar you save and each penny that you earn is one step closer to freedom from debt. So keep working on the program and sticking to the plan. You can do it!

Using a cash budget is an extremely effective way to stop overspending and to help you stick to your budget. Using cash makes it harder for you to overspend and helps you get in the habit of sticking to a clear budget. Try it and see if it works for you. Please don’t get too caught up in rewards and coupons and hacks: stick to the plan and work it.

The Bottom Line

Confucius said, “He who will not economize will have to agonize.” the choices we make with our money today affect our tomorrows. When we rack up extra spending today, then we are hurting our future selves. The actions we take today will have very significant ramifications on our future. Debt only grows and grows. Not taking care of debt will only hurt you later on- this is not a problem that will just disappear! Use these tips to help you get out of debt today!



Get involved!

Discover more from Getting Your Financial Ducks In A Row

Subscribe now to keep reading and get access to the full archive.

Continue reading