Let’s talk about debt. Whether you feel suffocated under an unending pile of payments, or you’re just ready to stick those monthly payments into your wallet instead of someone else’s, you’ve come to the right place. This list of 27 ways to pay off debt is here for you on your journey to reclaim your income in 2021.
How to Pay Off Debt: The Debt Snowball Method
Before we jump into those practical tips to pay off your debt faster, let’s talk about how to tackle your debt overall. You’ll want to follow the 7 Baby Steps to make this happen. First, make sure you’ve got $1,000 in a starter emergency fund. (We call this Baby Step 1.) Then go all in with Baby Step 2—paying off all your debt (except the house) using a method called the debt snowball. Here’s how that works:
- List your debts from smallest to largest regardless of interest rate.
- Attack the smallest debt with a vengeance while making minimum payments on the rest of your debts.
- Once you pay off the smallest debt, take that payment and apply it to your next-smallest debt.
- Repeat this method as you plow your way through debt.
Look, Baby Step 2 takes a few months to finish for some people and a few years for others. So, if you’re on this step and laser-focused on paying off that last debt, it’s possible the grind is starting to become . . . well, a grind. Maybe you’re exhausted and feel like it’s going to take forever to become debt-free. But you can do this! Now it’s time for those tips on how.
How to Get Out of Debt With Frugal Living and Smart Shopping
1. Start couponing.
You’ve probably heard this a thousand times—but are you doing it? You can save a ton of money just by showing a coupon to the cashier. Just be sure you’re using coupons for products you already buy, otherwise you could end up overspending on items you’ll never even use. That’s how you end up with 10 bottles of spicy mustard sitting in your pantry.
2. Try consignment shopping.
Kids grow out of clothes at the speed of light (or so it seems). And let’s be real: It’s not worth it to go into debt for your two-year-old’s ever-changing wardrobe. Check out your local consignment stores that sell pre-loved outfits in good condition. If you’d rather shop online, no problem. Sites like thredUP and Swap.com are great resources to get adult and children’s clothing at a fraction of the cost.
3. Cut the cable.
Welcome to this millennium, where you can watch most of your favorite shows online. If you haven’t cut the cord yet, do it! Put that $100 cable bill toward your debt each month and watch just how quickly your debt snowball starts rolling.
4. Stop going out to eat.
We get it. Going to a restaurant or hitting up the drive-thru is so much easier than making meals at home. But while you’re enjoying the freedom of not having to cook for those picky eaters, you’re spending way more eating out than you would by eating in. Want a creative way to socialize and share a meal? Invite friends over for taco night instead of meeting up at a restaurant. And hey—if you want to splurge for guac, we’re not judging.
5. Meal plan.
Okay, practically speaking, if you take restaurants off the table, how can you do this “meals at home” thing without super stressing out? Start meal planning! You’ll drop the amount of money you spend on food each month. That means more of your hard-earned income can go toward paying off your debt.
6. Break up with your barista.
If you don’t know where all your money’s going each month, we’re pretty sure your favorite coffee shop can find it for you. Brewing your own coffee at home is a simple way to save money fast.
7. Visit the library.
Remember libraries? They have plenty of books and movies you can check out—for free! Your wallet has never loved movie night more than it does now.
8. Plan your grocery trips.
Make a list and stick to it! Use the calculator app on your phone while you browse the aisles to make sure you’re sticking to your budget. Do impulse items always end up in your cart? Try ordering your groceries online and then picking them up curbside at the store. Oh, and don’t ever shop on an empty stomach!
9. Avoid expensive hobbies.
Do you really have $200 a month to spend on golf? Are you serious? But it’s not just the golfers out there who need to rethink their club dues. Do you spend a ton at craft stores but never get around to starting your project? Home improvement stores can also cost you several Benjamins in one visit.
10. Ditch the gym membership.
You can still go for a run outside—for free. Gather some friends and start a running club. Or do those fancy HIIT workouts at your local park. You can get fit and healthy without spending a ton of money. Then move everything you save to your debt-free goal.
11. Find free entertainment.
Put a spending freeze on your entertainment costs for a little while. This means no going out to the movies, concerts, mini golf, bowling or whatever you do for fun that costs money. Instead, challenge yourself to find free ways to stay entertained. Take the kids to the park, go for a walk or a hike, enjoy a free concert, or look for a free event in your community.
Dave Ramsey’s Basic Tips for Getting Out of Debt
12. Make a budget!
You can’t make any money goal a reality without a budget! And with our all-access membership, Ramsey+, you’ll learn the ins and outs of budgeting in our digital courses and put it all into practice with the premium version of our EveryDollar budgeting tool. Listen: You can dream about being debt-free all you want, but without a budget, you’ll just keep dreaming.
13. Start a side gig.
Starting your own business has never been easier! Do you have a knack for making things? Sell your products online. Are you an animal lover? Take up dog walking or pet sitting. Do you have a good eye and a nice camera? Start taking on clients for photo sessions. Christy Wright’s Business Boutique is a great resource to show you how you can turn that hobby into a serious money-making machine!
14. Get a part-time job.
Not into starting your own business? Then consider a different side hustle. Become a driver for Lyft or Uber. Or deliver pizzas at night to bring in extra money. You can even deliver other types of food in your spare time by working for places like Uber Eats or Grubhub. Sure, you’ll have to put aside your pride and give up some nights and weekends of downtime. But that’s a small sacrifice for extra cash in your pocket.
15. Sell the car!
The average monthly payment for a new car is $554.1 That’s just outrageous! Think about how much faster your debt snowball could move if you threw that $550 at it every single month.
16. Cut up your credit cards.
17. Use the envelope system.
When you pay with cash, you actually feel your money leaving your hands. Ouch! Nobody likes that. People tend to spend less when paying in cold, hard cash. With the envelope system, you'll see that cash going down so you can keep track of how much you’re spending.
18. Stop investing.
Yep, you read that right. And yes, we even mean stop contributing to your 401(k). Right now, you want all your income to go toward getting out of debt. Once you’re debt-free and have saved three to six months of expenses in an emergency fund, then you can resume your contributions. By then you’ll be on Baby Step 4 and can start putting 15% of your income toward retirement.
19. Quit the comparison game.
You know who wins at the comparison game? No. One. Stop trying to keep up with the Joneses! Remember, you’re living like no one else now so that later you can live and give like no one else. In 20 years, you won’t have a financial worry in the world while everyone else will still have car loans, mortgages and credit card bills.
20. Tell the kids you’re on a budget.
When it comes to money, the kids can be a worse guide than your stomach. Be open with them about what you do and don’t have room for in the budget. And remember: Never be afraid to use that magic word no.
21. Listen to The Ramsey Show.
Listening to the show will encourage you when you feel like you aren’t making progress. Every day, our team helps millions of people across the country find hope and make a plan for their money. Those successes will inspire you to keep moving forward.
Other Creative Ideas to Get Out of Debt
22. Ask for a raise.
What do you have to lose? Michael Jordan always says, “You miss 100% of the shots you don’t take.” Thanks, Mike.
23. Learn to say no.
Make it a new part of your vocabulary. Love it. Embrace it. Because when it comes to spending money, you’ll say it quite often.
24. Sell items on Facebook Marketplace or Craigslist.
One person’s trash is another person’s treasure. Dig through your kids’ rooms and the abyss of your closet to find things you can part with to make some quick cash.
25. Go on a spending freeze.
Challenge yourself with a “nothing but the essentials” month, aka a spending freeze. This is a great way save some extra money—so you can chuck it at that month’s debt payoff goal.
26. Give more.
Wait a minute—give? Yes! Giving changes you. It changes your spirit. Make giving a priority in your budget, no matter what your income is, and you’ll feel like a million bucks.
27. Take control of your money with Ramsey+.
So, we talked about how Ramsey+ helps you budget—but there are even more ways it can help you pay off your debt faster. You’ll get our interactive BabySteps app that makes it fun to track your debt-payoff progress. Plus, you’ll learn how to walk our step-by-step financial plan. And it actually works. In the first 90 days of working the plan, the average household pays off $5,300 of debt. And right now, you can try it all with a free trial of Ramsey+!
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There you have it—25 ways to get out of debt even faster. Remember, your future is worth the work you’ll put in today. You can do this. You will do this.