How to Pay Off Debt: 10 Do’s and Don’ts

A guest post by Sami from Eat Pray Budget

First and foremost, a BIG thank you to Kim for allowing me to share my two cents on her incredible corner of the internet. I’m truly honored to be here! I’m Sami from over at Eat Pray Budget. My husband and I just became 100% debt free on July 28th, having paid off close to $195,000 in debt 18 months! Woot, woot! That said, I thought I’d share some of our experiences, and the 10 do's and don'ts of paying off debt! 

This post may contain affiliate disclosures. Please see my disclosure policy for more information. 

Want to know how to pay off debt? Check out these 10 debt payoff tips.

Do – Set a Budget

Y'all this is a big one.  You have got to set a budget and tell your money where to go.  Setting a budget isn't about limiting your spending, it's about naming each cent of your income. Having a plan with your money is critical if you want to get serious with any financial goal, and paying off debt is certainly no different. We complete a zero-based budget every month, and this has been the single biggest tool in us achieving our goals. 

Head over to my Budgeting 101 blog post if you'd like to learn more about how we budget and to get my free Excel Budgeting Templates.

Do – Start Now!

Seriously, start like yesterday!! It doesn’t matter if you’re only able to pay an extra $10 a month toward debt.  Every extra penny you pay toward debt is one cent closer to debt freedom. In the last 18 months, I've made multiple payments toward debt that were less than $10. If we had extra money, we paid it to debt, period. This method has helped us keep our eye on the prize and not waste money on frivolous coffee (or in my case, ice cream) purchases!

Don't – Get Overwhelmed

We started with nearly $200k in debt. That's $200,000! For a newly married couple under 35, that's a big chunk of money.  Talk about an elephant in the room! But you know the saying, "the best way to eat an elephant is one bite at a time!" This saying is so true with paying off debt. Don't let those debt balances overwhelm you. Stay motivated by setting realistic goals and sticking to your budget. Also, try celebrating the small victories! These steps will keep that overwhelming feeling at bay and keep you focused and on track. Also, try to surround yourself with folks on a similar journey. Those friendships are invaluable to keep you sane in the process. 

Do – Get a Side Hustle

There are some lucrative side hustles out there. With a plethora of options, there is bound to be something that will not only catch your interest but will increase your income. More income (with a budget), equals slaying debt faster! Almost every person I know has taken on a side hustle to achieve their financial goals. 

To help you brainstorm your side hustle potential, head over to my Side Hustle blog post and get started today!

Don't – Wait! 

Ok, this one is kinda like the “Do – Start Now” one, but it's imperative.  I hear from folks all the time, "I can't start paying off debt, I don't have time this year." Or "I have a vacation planned, so I'll start paying off debt after that." First off, we cash flowed two vacations while paying off debt. Yes, it delayed our debt payoff, but we went into it eyes wide open, knowing the consequences of our actions. You know what a great vacation is, one you paid for in cash!! As for the "I don't have time" excuse, I'd argue that you don't have time to wait! Debt is stealing from you each month. Every cent you pay toward debt is a cent that you could be using to build your wealth. How about line your pockets instead of your banks! Run from debt, fast!!

Do – Create a Debt Snowball

Full disclosure, this part was the most difficult exercise for me. Not because writing our debt down from the smallest to the largest balance is a painstaking process. But because I had to face the massive amount of debt we had to pay off and the guilt that most of it was mine. Don't get me wrong, my husband is amazing and accepted that debt as his own when we got married, but the guilt was still real. It still is, to be honest. But the debt snowball method allowed us to have early wins paying off small loans quickly. It also enabled us to create a chunk of money to throw at debt each month to help us slay it quicker. 

What is the debt snowball? Order your debt from smallest to largest. Once you set a budget, put every extra cent to the smallest balance until it is paid in full. Once the smallest is paid off, take the money you were using on that debt and roll it into the second smallest. You'll do this with each debt, growing the amount you pay toward that debt with each payoff. We found this method very useful and rewarding. 

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Don't – Compare Yourself to Others

The comparison game is a losing game, let me tell ya! You're either comparing yourself to your neighbor who has a nicer house or car or, you're comparing yourself to some stranger on the internet who paid off their debt quicker than you have. Either way, it’s a lose, lose. Just stay focused on you and your goals. Work hard toward those and celebrate when you have victories. There will always be someone better or achieving more. Your journey is uniquely yours, don’t waste your time and energy focusing on others.  

Don’t – Keep Living the Same Way

I'm not going to lie, paying off debt requires a lot of sacrifice and dedication. Don't think you can keep living the way you are now and pay off debt. You are going to have to compromise to meet your goals. Consider cutting some expenses to gain some traction on your debt pay off. Cancel the cable, evaluate your insurance coverage and shop around and don't eat out as often. In the last 18 months, we even shopped at thrift stores for clothes when needed. Just remember, this is temporary pain for permanent gain.

Do – Sell Some Stuff!

Look around your home. My guess is that you could find five items in five minutes to sell. We sold A LOT of things during our journey including our home (yes, we rent now), a motorcycle, motorcycle parts, purses and clothing to name a few. Selling junk is a great way to shave plenty of money off the top of your debt and will jump start your journey! If we had car loans, we would have downgraded there too. Consider the opportunity cost of keeping some of your stuff. You can pay cash for stuff later, pay off the debt now.

Do – Start Paying with Cash

Along with the budget and debt snowball, paying with cash has been an incredible tool to keep us on track. We pay cash for our groceries, fun money, clothing, auto repairs and more. One of the areas we were hemorrhaging money was at the grocery store.  Now we go in with cash with no option to go over budget. Paying cash has helped us stay on track and avoid all the extra's the stores so hopes that you just "can't live without"! Cash is king!! 

Whether you're on a debt free journey or are considering getting serious about your debt, remember, it's a marathon, not a sprint. There are millions of folks that have taken a journey similar, so you are not alone. You can slay that debt and attain financial freedom. Kim and I believe in you; you should too!  

There is hope in a debt free life! 

Until next time, spend safely!

Thank you so much, Sami, for taking the time to share these actionable tips on how to pay off debt! I'm so proud of you two for becoming debt free and can't wait to see what comes next! 

Everyone, be sure to visit her blog, Eat Pray Budget and connect with her on Instagram and Facebook @eatpraybudget!