After years of being in debt, Rachel Kramer Bussel came to a realization: “If I don’t become proactive about it, I will be in debt for the rest of my life.” For Bussel, a freelance writer near Atlantic City, New Jersey, that meant scaling back spending and putting any available money toward the debt principal.
“Starting to see it go in the right direction helped me amp it up,” she says. “I felt like, maybe there is light at the end of the tunnel.” Bussel, whose debt came from credit cards, student loans and back taxes, finally paid off all of her debt, which at one point exceeded $100,000, in 2020.
Look Back, Then Forward
Elaine Grogan Luttrull, a financial educator and counselor in Dublin, Ohio, says that before making a plan to pay off the debt, it helps to reflect on how it came to be in the first place. “Was it pressure? Excitement? Habits? Explore what triggers led to this debt, and sit with the emotion for a moment,” she says.Get Organized
Listing all of your debt with the accompanying interest rates helps you get organized and decide what to pay off first, Luttrull says. She suggests starting with the debt that carries the highest interest rate, also known as the debt avalanche method, but other people prefer to use the debt snowball method, where you start with the smallest debts first.Next, look for money in your budget to redirect toward the debt payments. Luttrull says that if your student loan payments are paused, you could use that money to pay down credit card debt, for example. You can also look for lower-cost ways to socialize with friends, such as hosting game nights or going for a hike.
Earn Extra Money
With budgets so tight amid inflation, earning extra money could be the best option for finding the cash to pay off debt. Cedric Nash, author of “Why Should White Guys Have All the Wealth?” and founder of the nonprofit Black Wealth Summit, says that in our tech-heavy world, options abound: “There’s loads you can do from your living room. If you have technical skills, you could be a computer technician, or if you’re good at math, tutors are getting paid over $100 an hour. Look at your skill set, then use it to tackle a portion of your debt and to grow your wealth.”Consider Consolidating Your Debt
If you can qualify for a credit card with a zero percent introductory annual percentage rate, then transferring your existing credit card debt onto that card can give you more time to pay it off without accruing additional interest, says Matt Elliott, a certified financial planner and the founder of Pulse Financial Planning in Rochester, Minnesota. You could also consider seeking out a personal loan with a lower APR than that of your cards.Build in Rewards and New Traditions
Rewarding yourself as you achieve milestones, such as paying off a credit card, is an essential piece of staying motivated, Nash says. “No one likes to pay bills all the time, so we need a rewards system.” That could mean going on a trip or making a long-awaited purchase (as long as it doesn’t add to your debt).To keep debt at bay as the year progresses, Johnson suggests starting some new traditions: Instead of gifts on Valentine’s Day, for example, she writes her children custom love poems. “It’s really meaningful, and they expect it now. And it’s free.”
