With the new year comes new motivation to make changes and pay off debt. I know I have been renewed with the new year, but it takes more than wanting something to make a difference, you must take action to get it. If you don’t know where to start or feel stuck, try some of these tactics to take your debt pay off to another level. Here are 9 cleverways to boost your debt payoff in 2020.
9 Clever Ways To Boost Your Debt Payoff in 2020
Try these different methods to boost your debt payoff this year. Keep in mind that while not all apply to you, if you string a few of these together, you could see a drastic change in your progress this year.
1. Track Your Debt Payoff
If you aren’t already tracking your debt payoff then start now. This is a must as far as I am concerned and was a core component of how we paid off $107K in 33 months.
The reason why I think it is so important is because it takes the power from the lender and puts it in your hands. It is critical to know more about your loans than anyone else does. It is at that point that you see the most impact on your debt payoff.
There are 2 tools that I recommend for doing this.
- Track your debt using this free debt tracker which is the spreadsheet that I built to track every payment we made. This might sound too in depth or unnecessary but when you track your progress and break each payment down into principal and interest you start to understand what is happening and are driven to do more. If you don’t like using excel, then you can use these printables which include the same tracking information as the spreadsheet.
- Track your progress visually with this free debt thermometer printable. This is great to show you how much progress you have made as well as what you can aspire to.
Both these items I found to be a big reason why we were successful at paying off debt.
2. Build Better Habits
Regardless of where you are at in your debt payoff or money journey I can’t recommend examining your habits enough.
This far extends beyond money, but we know how many decisions we make daily that involve money and many of them are made by habit.
The best resource on habits I can recommend is Atomic Habits by James Clear.
This book has quickly become a favorite of ours and within a couple weeks of reading it we have already noticed a big difference in our habits. We honestly were feeling stuck and maxed out and reading this book was a big reason we have become more focused and intentional with how we use our time.
For someone paying off debt I know that sticking to a budget can be a struggle, but this book does a great job breaking down our habits and helps you understand why you do what you do.
Think about eating out. It is a habit that provides a quick win. Right? You feel gratified the moment you take that first bite and are glad you aren’t having to make your meal. Later though, you have long forgotten that and wish you had that money to spend on your next meal. It is a vicious cycle that hurts your pocket book and debt payoff goals.
Take control by making small changes that leads to better habits as well as you breaking bad habits.
Atomic Habits is your ticket to making this happen.
3. RoundUpToZero For Student Loan Payoff
RoundUpToZero is a new app that takes your spare change from everyday purchases, rounds the transaction to the nearest dollar, and applies that change towards your student loans.
For example, if you make a purchase for $3.85, that transaction would be rounded up to $4.00 and $0.15 would be applied to the student loan of your choosing. If you think that doesn’t add up, think again. You could easily find abut $30-$50 applied to your loans each month.
Be advised there is a small fee for using their service but the amount it saves you in the long run exceeds the fees.
They have a great tool that will show you how much you are saving too so you can compare it to the small fees to decide if it is right for you.
It is perfect for people starting out their debt payoff and are trying to squeeze out more money of their budget.
For a bonus, your family members can sign up and their spare change can be applied to your loans. If you hustle, it might really pay off for you.
Note: Don’t make purchases for the sake of making them, just do your normal routine and then you will find a little something extra at the end of each month to boost your debt payoff.
4. Walk 20 Minutes A Day
This might seem out of place but taking as little as 20 minutes a day to walk has multiple benefits financially.
Besides the many health benefits of being more active I think the biggest benefit is the opportunity to take some time to reflect on your goals and progress. So often we are going fast and hard we miss a chance to reflect and think through decisions. We continue on, stuck in our daily routine that is working against us. Walking gives you a break from that.
If you are married, and especially if you have kids, walking together daily gives you a chance to get on the same page with your money and goals. While you can’t put a dollar amount on this activity, it can be highly vauable.
Make this one of the habits you build when listening to Atomic Habits.
Also, those health benefits do pay off long term when it comes to your money so don’t forget about that.
It is also free, and healthy entertainment that is free is worth its weight in gold.
5. Refinance Your High Interest Student Loans
Refinancing your loans is not for everyone, but it could be for you, and it could save you big.
The number 1 way to pay off your debt and save the most money on interest is to pay down your principal aggressively. When doing this using the debt snowball method though, which is what I recommend, you only pay off one loan at a time which is the lowest balance regardless of interest rate. The rest of the loans sit there with only minimum payments being applied.
While that is still the recommended way to pay off debt, interest does matter.
Even 1% can make a big difference on how much you pay overall.
So, for those of you who have larger loans that are waiting to be paid off in a year or two, consider refinancing them to lower the interest you are paying in the meantime.
If you want to know how much a lower percentage can make, plug it into this free amortization schedule to see the change even before you pay any extra to them.
A company I recommend using is Splash Financial. Using that link, if you refinance for over $30,000 you receive a $300 bonus.
One thing to keep in mind is that if you refinance your loans, DO NOT consolidate your loans. Do not bundle multiple loans together for ‘one easy payment’. Refinance each loan one for one which I realize isn’t as convenient. That way, you still have the flexibility to pay them off as part of a debt snowball and more loans means more lower balances to tackle. This will keep you more motivated in the long run and help you avoid the trap of adding more debt after consolidating.
6. Review Your ‘Why’ – List 10 Reasons Why You Want To Be Debt Free
While doing your 20-minute walks, think about why you are trying to pay off debt.
When you aren’t focused on the long term benefit of being debt free, you get stuck making decisions for today. While that can be OK to an extent, the YOLO (you only live once) mentality has a knack for catching up with you when you least want it to. I’d prefer an approach that gifts you benefits in the future which will be the best way to enjoy the present as it only gets better.
Take some time and write down at least 10 reasons why you want to be out of debt. Put this on your fridge and keep adding to it when you think of something new.
They don’t have to be perfect, but this will help you start to get to point of why you are doing what you are doing and why change is critical to get there.
7. Plan Your Debt Payoff With UnDebt.It
As I said earlier, I recommend the debt snowball method for paying off your loans. While it tends to be the most assured way to pay off your debt, it is not the cheapest. Using the debt avalanche method can save you more money but it may not be the best way to start a debt payoff that will give you the results you want.
There is a hybrid approach though that you can consider as you move along your journey. This hybrid approach is one that customizes a plan that based on your loans. This is a plan that sees the benefit of paying off smaller loans now to free up cash flow while favoring some higher interest loans to save money. This was ultimately how we finished paying our loans but didn’t have a fancy app to do it for us.
One problem with both the snowball and avalanche method is that they aren’t specific to your loan situation.
Using UnDebt.It you can find that custom plan that you can follow to save both money, time and keep you motivated.
Check it out as it is free to sign up for and get your custom plan while comparing the debt snowball and avalanche.
Regardless of which plan you follow, just keep pushing to improve all aspects of your finances and I think you will be happy with the results.
8. Pay With Cash
Where you can, consider paying for your food, entertainment, clothing, etc. with cash.
This is a surefire way to stay on budget. You will feel your purchases much more when you see the amount of money you are handing over for each purchase.
If you are struggling to stay on budget or need to hit the reset button on your spending, paying with cash is a great tactic to use. This won’t be all categories of your budget, but it can be the ones that get you the most in trouble like food.
Pay your rent or utilities with your debit card like you typically would.
9. Avoid Social Media
This is primarily here from a mental health standpoint.
Social media can be a good thing. In fact, I recommend joining a great Facebook group that would help keep you motivated to pay off debt.
With that said, social media can take up a lot of time and it is common for a few minutes to turn into much more and then you don’t have time to budget or track your loans. Plus, there is so much negativity and division on social media that it only hurts you.
What some politician, actor or athlete says has no effect on you paying off your debt but getting worked up about something you can’t change will. Don’t let the negative emotions of one topic spread to the rest of your life.
I’m not saying don’t care about important topics to you, but I am saying for you to care about something that directly affects you like your goals, habits and debt payoff and prioritize those.
Put measures in place to make it harder to access social media and make it a reward to access once you have completed what you needed to today. It can be fun and mindless, which is good at times, but we want to avoid the downward spiral of who said what when there are more critical things occurring in your life that you have power over.
At this point, I have shared 9 clever ways to boost your debt payoff in 2019. You don’t have to do them all at once but take a few of these and start implementing them so you can make a big impact on your debt payoff this year.
Signing up for RoundUpToZero is an easy way to put something in motion now and reaping the benefits later while you focus on other things. Reading Atomic Habits is another way to start putting in place better habits that will make the rest of these items more doable.
Maybe each time you fill out your debt tracker you reward yourself with a fun snack and check Twitter. That is a nice way to accomplish something and get in that social media time you avoided during the day.
Either way, just get going and check in every once in a while to see what else you can add to boost your debt pay off.