5 Simple Steps To Conquer Your Debt Once and for All

Man looking frustrated with his finances.Photo byImage Credit: Tommaso79 via Shutterstock.

Money touches every part of our lives, impacting our decisions, relationships, and mental health. But if you're in debt, you're not alone, and you can turn your finances around. Getting out of debt quickly is possible if you take the proper steps. Many people don't have proper financial education and find themselves unsure of how to properly manage their money and often accumulate substantial debt.

5 Tips To Pay Off Debt Fast

The weight of debt can significantly increase stress levels and profoundly impact your day-to-day life. While debt can have its place in building wealth when used strategically, it's an unwelcome burden for most people.

Working to get out of debt can feel overwhelming. Still, with consistency and focus, you can pay off debt more quickly than you'd imagined. Here are five tips to help you improve your financial position and kick your debt to the curb.

1. Live on a Budget

Maybe you've tried budgeting in the past, and it didn't stick for whatever reason. Suppose you have a large amount of debt or a low income. In that case, you may not earn enough money to cover your monthly bills and basic living costs, making budgeting seem futile and causing you to fail.

However, making the conscious decision not to live on a budget will likely perpetuate the paycheck-to-paycheck cycle you've been living in. Know that it's normal to be scared to budget. A budget can feel limiting and restrictive, but in reality, it's quite the contrary. Living on a budget offers you freedom.

Peace of Mind

Creating a budget provides a plan for spending your money, and better yet, it provides you peace of mind. But the best part about budgeting your money is it allows you to spend guilt-free. If you struggle with overspending, learning to live on a budget will reduce the shame and self-loathing you may experience when you spend money.

2. Keep Yourself Accountable

The journey to debt freedom can be long and arduous, and having someone in your corner to encourage you will be crucial to your success. However, you don’t have to – nor should you – go it alone.

Suppose you're married or in a relationship where you combine finances. In that case, you and your partner should work together to eliminate your debt. Your combined efforts will be exponentially stronger than working alone. If you don't have a partner or they are unwilling to join forces, find an accountability partner you can trust.

What To Look For in an Accountability Partner

Ideally, this person should:

• Have your best interests at heart and genuinely want you to succeed.
• Be a trusted confidant with whom you feel comfortable sharing personal information.
• Be in a better financial situation than yourself.
• Be comfortable speaking up if they see you making choices that don't align with your goals.

Tell your accountability partner about your reasons for wanting to get out of debt and improve your finances. Ask them to check in with you periodically to assess your progress, and reach out to them for advice when you feel discouraged.

3. Stop Using Debt

Taking out home equity loans, student loans, leasing cars, and the most detrimental of all – continuing the use of credit cards – can derail your progress. If you have become dependent on credit cards up until this point, stop using them until you can use them as a tool and not a crutch.

Cut Up Your Cards

While some financial gurus will pressure you to cut up all your credit cards, depending on your financial situation, that may feel unrealistic. Using a large portion of your monthly income to pay off debt only to turn around and incur more debt the next month will keep you from achieving debt freedom.

4. Decrease Your Expenses

Cutting back on your expenses can be challenging, especially if you have already been living below your means. The lines between "wants" and "needs" can easily blur. While working to pay off your debt, a substantial portion of your income will likely be reserved for debt payments each month.

Decreasing your expenses will free up more of your income to throw at your debt, allowing you to gain more momentum.

Increase Disposable Income

Household expenses such as groceries, subscriptions, and entertainment can be drastically reduced (or even cut) to increase your monthly disposable income.

Expenses such as utilities, rent or mortgage, and insurance premiums are "fixed" because they stay the same each month and, in many cases, can be reduced with some effort.

Lower Your Insurance Rates

Contact your insurance companies (auto, home, life) and request a policy review to identify opportunities to lower your rates.

Another option is to contact an insurance broker. A broker represents multiple insurance carriers instead of just one and can offer you various quotes to compare.

Lower Your Utility Rates

You can take the same steps with your utilities such as electricity, natural gas, internet, etc. While these rates tend to fluctuate, in some cases, you can contract specific rates or opt into an annual payment plan.

Switch Cell Phone Plan or Carrier

The cellular market is highly competitive, with companies often offering premiums or large bonuses to attract new customers. Ask your provider if you can switch to a different plan to save money or compare competitor rates.

Be sure not to get sucked into pricier plans, unnecessary bells and whistles, and the most difficult-to-resist upsell – new phones and accessories.

Cut Your Grocery Budget

As groceries and dining out are some of the highest expenses for most families, you're likely spending more than you realize on food. Take the time to track your food costs for an entire month by recording every dollar you spend on trips to the grocery store, take-out, and coffee runs.

Even in this age of record inflation, a budget category with high spending often indicates opportunities to save. So take action and implement some strategies to save money on your groceries.

5. Increase Your Income

Living on a budget, paying off debt, and decreasing your expenses will help you become debt-free more quickly, but concurrently working to increase your income will put you on the fast track to financial freedom.

Sign up for overtime at your current job or find a part-time job to boost your income. Pick your favorite hobby and turn it into a side hustle to create an additional income stream. Don't overcomplicate it – figure out what you love to do in your spare time and monetize it.

Infinite Opportunities

Like to write? Start a blog. Love to bake? Offer to make the cake for your friend's upcoming baby shower. Have an eye for photography? Advertise amateur holiday sessions on your Facebook page. Have a knack for grammar? Become a freelance proofreader.

The internet has afforded our generation infinite opportunities to earn extra cash on the side or even to create a new business if you're entrepreneurial.

One Final Step

By following this 5-step framework, you’re sure to pay off your debt quickly and develop good money habits for life. But if your debt resulted from overspending or other underlying issues, it's equally as important to address them so you don't undo your hard work and find yourself back in debt in the future.

This article first appeared on Cents + Purpose.