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Smart Ways to Pay Down Debt

3 Smart Ways to Pay Down Debt - Calculator and coins, learn how to pay down debt and save money with these three tips to pay off and stay out of debt
3 Smart Ways to Pay Down Debt

Are you in debt? This recent study found that 77% of Americans currently have some form of debt. Therefore, finding smart ways to pay down debt is essential for many people.

Growing up, debt was a way of life for our family. Although my parents worked hard, we had bills and were conscientious about money. If I wanted something, I was taught I must save up for it. So around age twelve, I started babysitting at $2.00 per hour. Keep in mind this was back in the ’80s and babysitters make much more today!

It was nice to have my own money, but as I got older and went off to college, I was offered a free T-shirt to sign up for a credit card on spring break. It wasn’t always fun having to save up for things so this sounded like a great idea! As you may know, college students love free stuff, so I quickly filled out the form and my credit card arrived promptly.

Soon I started using it and it felt great to be able to buy what I wanted. Until the next month when the bill came in and I realized I owed money to the credit card company and I was now in debt.

Now that I am older, I pay my credit card bill off every month to score points, but back then, I was making minimum wage working at a daycare and didn’t have the cash flow to pay off my debt every month.

I quickly learned that being in debt is stressful and came up with some tips and tricks to get out of debt the smart way (and you can use these tips to get out of debt too)

This post contains affiliate links. This means if you click a link and make a purchase, I will receive a small commission at no cost to you, so thank you. This site uses cookies for a better user experience. For more information read our disclosure policy here. you are in debt and need some smart ways to pay down your debt here are three main tips to consider:

#1 Find More Money

  • Credit Card Detox – Go ahead and freeze those cards! Some like to freeze credit cards, but you can really just put them away and use cash instead. Life is boring if you don’t have any fun though, so still plan some entertainment, but use cash this month. Once the cash is gone, so is your party time. Wait until the next month to “spend” again.
  • File Taxes Early – By filing your taxes early, you can use your extra money to pay off debt if you are owed a refund. You will get your money quicker and save yourself some interest. Remember this is your money and you can use it wisely. After your debt is paid down, try investing your money to earn, instead of paying interest on the debt.
  • Use Gift Cards – Gift cards are great at helping you budget. If you received gift cards this year for birthdays or Christmas, make sure to use them. Stock up on food, or order out to save on your grocery budget. Don’t let them go to waste. You can even sell them on Cardpool and buy a discount gift card if you can’t use your gift cards. Make sure to double-check old purses and wallets. I just found two Starbuck gift cards that had a balance. Yay! My favorite drink!

#2 Be Strategical About Paying Off Debt

  • Pay bills with the highest interest first – If you use the debt snowball method, that is great too, but you will actually end up paying more. So sit down and write out your debt and interest rates. Next, tackle the credit card or debt with the highest interest rate. Once it is paid off, use the money you were paying to pay off the next highest interest rate. If possible, pay a little less on other lower-interest-rate debts to help you pay off the higher interest rates more quickly.
  • Set realistic goals –  Set goals to pay down your debt. Try using a debt thermometer and keep track of how much you owe and how much you have brought down your balance each month. Although many want to pay off debt quickly, it is best to set a realistic goal for each debt and realize that paying off debt can take time. Be specific about your goals, but make sure you can cover your other expenses first.
  • Stay on schedule – Make sure to pay your bills on time to avoid further debt. I like a visual, so I prefer to jot things down on paper where I can quickly see when bills are due. Yet, if you are more of a digital person, try using a debt payoff app.

#3 Keep Better Track

  • Track spending – Write down spending each month, so you don’t have surprise credit card statements. You can keep a budget on your phone, or try an app like Personal capital.
  • Create a budget – Keep a budget by subtracting your expenses from your take-home pay. Make sure to write out all of y our bills including housing, transportation, childcare, groceries, utilities, and so on.
  • live below your means – Learn to live below your means to save money and stay in check. Use frugal living to keep more money in your pocket and use your extra money to pay off debt and invest.

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3 Smart Ways to Pay Down Debt - Money plant with coins, round circle with money to right, pink background,

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Smart Ways to Pay Down Debt Final Thoughts…

If you are in debt, don’t be discouraged. Use the tips above to help you strategically pay off debt. Make sure to keep track of your bills so you don’t fall behind and learn how to budget better so you can avoid debt in the future.

Do you have any interesting ways you have paid down debt? Leave a comment. We would love to hear from you!

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