How to Get Started with Debt Payoff

To put it lightly, taking control of your finances and beginning your journey to financial independence is not easy.  It can be daunting and overwhelming, but believe me when I say that it is one of the most rewarding things you can do for yourself.

For those of you who are exploring how to begin your financial independence journey, congratulations!  You have already taken your first step by reading articles from those of us who have traversed the path before.  You will find advice and strategies that may wildly differ from person to person or blog to blog.  There truly is no right or wrong way to approach financial independence as long as you reach your goals.  I know that sounds cliché, but it’s important to educate yourself, do your research, and identify the mesh of strategies that works best for you.  I promise you that once you begin seeing debt balances decrease and savings account and investment values increase, you will feel the reward of your sacrifices.  This is an extremely personal effort, so don’t let someone send you on a guilt trip for giving up or cutting back on something that ultimately is best for you in the long run.

I should add a disclaimer – the tips in this article are designed to apply to whatever your financial goal is currently, not necessarily only paying off debt (however, if you have outstanding debt, you should make it a priority to pay it off as it is virtually impossible to leverage your income and control where your money goes if you possess a lot of debt and are forced to allocate your funds to these payments).

I have coined the term “the rule of ones” for how I recommend approaching debt payoff:

  • Track every expenditure, even if only for ONE month.  I mentioned in a previous post that when I decided to get serious about paying off my student loans, I began by tracking every single penny I earned and spent for a month.  I found it so helpful that I still do it to this day!  I love spreadsheets and am generally a very organized person, so this method works well for me, but I get that everyone is different.  Just dedicate 30 days to trying it.  You can’t gain control of your finances without first having a truly clear picture of where your money is going.  There are a lot of tracking tools out there you can buy or download to accomplish this, but honestly, spending an hour setting up a simple Microsoft Excel spreadsheet would do the trick, too.  After your one month is up and you decide you don’t want to track every single penny, you should still utilize some sort of budget to plan out how your income will work for you.
  • Find ONE way to increase your income.  Seriously, anything.   Pet sit, house sit, babysit, whatever interests you.  Complete surveys through Swagbucks (when you build up enough points, you can exchange them for gift cards; I can personally attest that this is a legitimate site and I’ve received about $85 in gift cards in six months from spending an hour completing surveys a couple times per week).  One of my favorite things to do every spring is clear out my clutter and have a garage sale.  This year, I spent $30 on an ad in the local newspaper, about $2 in poster supplies at Walmart, and made about $400!  I thought it was well worth my time.  Even better if you can find a friend or family member or two to do the sale with and split the cost of the ad.  You also have the option of “formally” obtaining a part-time job.  I am convinced that waiting tables is one of the best ways to make the most amount of money in a short period of time.  As someone who is a part-time waitress, I have SO MUCH I could write about this topic specifically, so I’ll save it for a separate post.  If that doesn’t interest you, there always seems to be plenty of places looking for part-time help in a variety of industries.  An equally critical step that goes hand-in-hand with an increasing income – do not fall victim to “lifestyle inflation.”  Let’s say you manage to land a few house-sitting gigs and are bringing in an average of $300 extra per month.  Great!  Now, if you decide to increase your budget for going out to eat and randomly shopping by that much every month…  Hey, it’s your money to do what you want with; however, this isn’t bringing you closer to your goals of retiring early or paying off $75,000 in student loans.  You don’t need to completely restrict yourself from any enjoyment or “pleasure purchases” – just be more mindful of them.
  • Identify ONE person you can check in with regarding your financial goals.  I’ve read many pieces from people who originally did not talk about their financial goals with anyone because they were nervous or felt the people around them just wouldn’t understand their efforts.  There are also several bloggers out there who are anonymous for similar reasons, which is really disheartening to me.  I don’t go around broadcasting my journey (well, until now with this blog!) but I can honestly say I’ve never had anyone try to belittle me for this.  For me personally, I have two people I go to regularly to check-in.  My friend Rachael was the first person I told about my blog.  She’s been so supportive and is always willing to talk about finances with me.  She’s also understanding and accommodating when we want to get together and catch up but I don’t want to drop $40 on a meal and drinks.  My boyfriend, Mike, is also wonderful and supportive, and I’ve even convinced him to hop on the financial independence bandwagon!  He uses the spreadsheet template I made for his budget and has begun tracking his expenditures.  I’m so proud of him!  The person you confide in doesn’t need to implement the same changes as you, although it’s certainly an added bonus if they do.  They just need to be a supportive ear and a cheerleader!
  • Determine ONE item/service/expense you can go without for one month.  Obviously some expenses are unavoidable, but take an honestly critical eye to your expenditures and see what could be scaled back.  Instead of going out for dinner and drinks and seeing a movie with your friends every Friday, could you save money by taking turns hosting a BYOB dinner and movie night at home?  Instead of buying a drink from the vending machine at work every day, could you buy a 12-pack of pop or sparkling water from the grocery store and drink that instead?  Do you have a monthly subscription you rarely use and could cut out, whether it be a magazine, beauty care box, or streaming service?  I’m not saying this one purchase is making or breaking your budget, but by purposefully implementing such changes, becoming increasingly mindful and conscientious about your spending will be second nature which WILL make a major difference.  Additionally, you should take that money you saved by not going out to eat/buying coffee/driving/getting a manicure/whatever and immediately put it towards your financial goal (transfer it to savings, make a loan payment with it, etc.), no matter how tiny it is, so it doesn’t end up being spent on something else.

What do you think about getting started with debt payoff?  Are there any important steps you would add?  Did I miss the mark completely?  Let me know in the comments!



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