Need a Debt Payoff Strategy? One of These 5 Methods Could Work for You
Your reasons for being in debt are as unique as you are.
Whether it’s due to a student loan, mortgage, credit card or combination thereof, debt can happen to the best of us.
The good news: The way you pull yourself out can be just as unique (and a lot more rewarding).
Yes, there are well-known debt paydown strategies out there like the snowball and avalanche methods, but some of our favorites have come from Penny Hoarders who’ve created their own.
Debt Payoff Strategies
Debt paydown strategies come in all sizes — from ultra-focused intensive to “every little bit helps” methods. Fortunately for us, Penny Hoarders are generous about sharing their ideas. Here are five innovative debt paydown strategies to inspire you.
1. Find a Money Buddy
Just because you’re getting out of debt doesn’t mean you have to do it alone.
Friends Sau-Sha Hill and Sha’Kreshia Terrell decided to work together to pay off their combined $70,000 in credit card debt.
They started by writing down goals they wanted to achieve each month, then holding the other’s credit cards to prevent the temptation of impulse purchases.
Holding each other accountable paid off for them: In just one year they paid off $27,000 of their combined debt. They continue to encourage each other’s new, healthier spending habits.
Check out how an accountability partner can help you pay down debt.
2. Get a Side Hustle
Eventually you run out of ways to cut costs and then either resign yourself to a sad life of eating dried beans in an empty room or you find more money.
When former Penny Hoarder staff writer Lisa Rowan added up her total debt, she faced a daunting total of $51,679. But instead of burying her head (or going on the dried-bean diet), she looked for ways to make extra money to pay off her debt. At her busiest point, Rowan juggling two 20-hour per week positions, her own shop, a gig packaging stationery and multiple freelance assignments.
Combining the extra money with strategies like using a balance transfer card and cutting expenses, she side-hustled her way to paying off $30,435 in 18 months.
Find out how a side hustle can help you pay down debt with these tips.
3. Round Off Numbers
All those Type A cleaning tendencies could pay off when you tidy up your account balances to nice, round figures.
TPH Community member Marlena Montalvo posted that she’s half way to her goal of paying off her mortgage in eight years. Her secret? A combination of rounding up payments, making double monthly payments when possible and using the 00.00 concept.
So if her checks her balance and it’s $1,581.64, she makes a payment of $81.64 to get the balance to an even $1,500.00.
“Little things like that make a huge difference,” Montalvo wrote.
Join the discussion about rounding off payments to reduce your debt in The Penny Hoarder Community. The Community is all about giving people the space to discuss a difficult situation they’re facing or offer up advice if they’ve been there before. Sign up to become a member so you can chime in on the matter!
4. Write What You Spend
Post-It Notes have stuck around for a reason: It’s easier to remind yourself when you see it right there in front of you. The same goes for financial goals.
Tyler and Ashley Philbrook have paid off $6,000 of the $25,000-plus they had in credit card and student loan debt and have put away over $10,000 in savings.
Although they thought they were sticking to their budget every month, it wasn’t until Tyler created an Excel spreadsheet to track every expense that they realized they were overspending every month. They started a budgeting journal to track daily expenses, which helped them see they saved a lot more money by cooking at home.
Find out how hitting rock bottom helped this couple get serious about tracking their expenses to get out of debt.
5. Automate With Apps
Paying off debt doesn’t have to be a massive undertaking — sometimes all it takes to help is some common cents. (Sorry, couldn’t help myself.)
When TPH Community member Shara Freeman made it her goal to pay off student loans, she decided to automate the payoff with apps. Freeman shared four apps that round up the change from everyday transactions and apply it toward her debts: Chipper, Qoins, Snowball and Changed.
“Since I use a separate bank for my bills and separate bank for my spending, I have two of these apps rounding up spare change from bills account and one app rounding up spare change from my spending account,” Freeman wrote in a Community post. “They each charge a small processing fee each month, but it is worth it.”
Find out more details about the apps in this Community discussion.
Tiffany Wendeln Connors is a staff writer at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.
