September 27, 2022

Free Debt Advice Tips from Personal Finance Experts

Paying off debt can be a tedious and painful process. But it is possible, and there are ways to speed things up and sometimes make it a little fun (really).

We’ve collected and organized free debt advice from a variety of personal finance experts who have been through the process and helped thousands of others progress in their debt-free journey.

  1. Know your why

In order to maintain the daily motivation to implement micro-behavioral changes, one must understand the kindling of why. Skip this step, and you might lose steam within a few months. If you’re having trouble finding a why, consider thinking about what will change once you’ve paid off your debts. We suggest people create a ‘debt-free dream list’ of things they will have, or do, or accomplish when they’re debt-free.

  1. Organize your debts

Knowing how much money you owe to whom, and the interest rate, total balance, and monthly payments on each debt can help you strategize a pay-off plan.

For example, you could start by targeting the debts with the lowest balance (the snowball method) to build momentum as you cross off one debt after another. Alternatively, focusing on paying down the debt with the highest interest rate first (the avalanche method) can save you the most money in interest overall.

  1. Track your money

You can’t fix a problem you don’t understand, the only way to get to the core of your issue is figuring out where your money is actually going.

Yes, that’s another way of saying create a budget. But even if you don’t want to go all-out with software and spreadsheets to track every penny you earn and spend, taking a few hours to review your past expenses could be enlightening. Having a budget also gives you more control over balancing your spending. Knowing what’s coming in and going out can help you identify savings opportunities. You can then put more money towards your debt.

  1. Adjust your budget to meet your needs

There’s no one-size-fits-all budgeting answer. Its okay to play with your budget until you find something that works for you and helps you pay down debts faster.

  1. See how extra payments can help

If you’re looking for motivation to make additional loan payments, we suggest creating a spreadsheet that shows how extra payments impact your debts. If you’re not inclined to do the calculations yourself, you can use an online calculator to see how extra payments can affect your total cost and repayment time.

  1. Visualize the result

Debt payoff can seem like a slow and boring journey because you don’t get to witness the money stacking up in your own accounts, creating visual reminders of your progress can be a great motivator to keep pushing ahead!

It’s up to you to decide what to use. Some people enjoy watching the changes in their spreadsheet or budgeting software. Others create elaborate pictures that they color in piece-by-piece as they pay down their debts.

  1. Increase your income and build savings

Get real about how much you earn and spend then look for ways to make extra money and throw 90 percent of it at your debt and put the other 10 percent into savings this way, you clear the debt quickly, but also have a little buffer once your debt is gone to prevent you falling back into debt.

Earning extra money, either through changing jobs, asking for a raise, or taking on extra work can be especially important if you already live a frugal lifestyle. Building savings can also be important, though.

  1. Keep ownership of your finances

Whether you’re single, in a relationship, or have a family, you may also want to maintain control and input over your finances.

  1. Personalize your plan

No two debtors are the same, it’s like a fingerprint, so you don’t believe in one size fits all debt payoff. Take what you learn from others’ experiences, do your own research, and customize your plan. Sometimes paying off the highest-interest loan or lowest-balance credit card might not make sense.

Debt is emotional, so we recommend people pay off the debt that will help them sleep at night or a debt that makes them angry, such as credit card debt from a failed relationship.

Also, be flexible with yourself, knowing that works today might not make sense in a year. Our priorities change… The best advice is to know your needs and what will work for you.

  1. Don’t wait – start now

This last piece of advice is just as important as the first. Knowing what and how to do something is good, but you’ll need to act if you want to make a change.

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