5 Tips To Pay Off MAJOR Debt In One Year
Paying off debt is an essential part of a financial freedom journey.
You cannot build a wealthy life or future if you’re strapped with high-interest loans or a negative net worth.
Here are five strategies you can adopt to pay off major debt in just one year.
Create a sustainable budget that you will stick to
There are a variety of budgeting methods out there. In my humble opinion, the one I created, The Money Momentum Method, is the best. I created it because I was sick of cash envelopes, tracking every single expense every single day, apps I had to refresh every time I logged in, and unrealistic percentage-based budgets.
I’ve found that The Money Momentum Method also works better for people experiencing mental health disorders or ADHD.
Even if you don’t use my method, which you can ask questions about when you click here, the most important thing about the budgeting method that you use is that it works for you.
Knowing where your money is coming from and where it is going is key to paying off large sums of debt because you can’t expect to know how much money you can pay off unless you know the patterns of your income and spending.
Make extra money with a side hustle
Once you create a budget that you like and keep up with, you may find that you need more money each month to pay off debt. Don’t worry, you’re not alone in this.
When I was paying off $30,000, I got a job I didn’t like because I knew it was a short-term sacrifice for a long-term gain.
Many people decide to get side gigs or hustles, work overtime, or get a second job while they are aggressively paying down debt.
This is a top-notch strategy in my book and can really speed up the process. Just make sure that you aren’t burning yourself out. The key to debt payoff is sustainability, not regression and resentment.
Learn how to love your own cooking
The three big categories that most people spend on are housing, transportation, and food. Groceries and restaurants eat a large portion of income for most Americans. Pun intended.
One of the best and most effective ways to save money is to learn how to cook and learn how to enjoy what you create in the kitchen.
There is no shortage of places to learn how to make simple, tasty, and easy meals that will feed the entire family. You have Google, Pinterest, YouTube, Instagram, and more.
Once you learn how to cook, you can meal plan each week and save even more money at the grocery store by preparing your food in advance.
Focus on paying off one debt at a time
In my experience as a financial coach, people are often overwhelmed by debt payoff because they’re not sure where to start.
There are a few tried and true debt payoff methods. The Debt Avalanche Method suggests tackling the debt with the highest interest rate first. The Debt Snowball Method suggests starting with the debt with the lowest total owed. Then there’s the Most Hated Method, which suggest paying off the debt you hate the most first.
The important thing to note here is that each of these methods strongly advises you pay off one debt at a time.
Diluting your “firepower,” or your extra debt payoff money, weakens the impact it can make on a single debt.
Trust me when I say, pick a method and pay one debt off at a time. You’ll see results much quicker than if you’re trying to put extra payments on multiple debts at the same time.
Gamify the process
One of my favorite pieces of advice when it comes to debt payoff is to make it fun! Since I have ADHD, I want to keep things very visual. That means I created debt payoff charts. Each time I paid off a specific amount of debt, I got to color in a line on my debt payoff chart.
I have seen many people do this, among debt payoff paper chains, marble jars, and more.
I also rewarded myself each time I hit a milestone. For example, I’d go out to a nice dinner when I paid off $5,000. I would purchase a small item I’d really wanted when I paid off a debt I’d been working on
Both of these things kept me motivated to move forward.
Have you used any of these tips during your debt payoff journey in the past year? If so, please comment and let me know which ones have been most effective for you!
