Here's How to Pay Off Debt (Without Going Hungry)

When you’re doing your best just to keep tiny humans happy and thriving, it feels overwhelming that you have to also worry about such things as retirement planning,wills, annuities, and credit card debt. Like, hello, molding the minds of the next generation should take precedence, right? Well, we all know that’s not the way things work. Yes, we wish there was a financial fairy who’d flutter in, sprinkle pixie dust on all our debt, and poof! It would be gone. In the absence of that option, though, we need to talk about how to pay off debt.

If this is something that weighs on your mind, it may comfort you to know that you’re not alone. Recent data from Northwestern Mutual reveals that 45 percent of U.S. adults suffer from debt-related anxiety on a monthly basis — 20 percent even describe feeling physically ill over it! You’re also not alone in turning to online resources for help. According to the latest search data available, “how to pay off debt” is searched for nearly 9,900 each month. And it’s little wonder when you consider that a reported 34 percent of Americans spend 34 percent of their monthly income on debt payments. Or, you know, the fact that Americans have over $1 trillion of credit card debt.

So, what’s a tired, penny-pinching mama to do? Let’s take a look at a few ways you can kiss credit card (and other kinds of) debt goodbye.

How does debt affect my credit score?

First things first, it’s important to know that there are two kinds of debt: revolving debt and installment debt. Revolving debt is measured based on your credit card, which “revolve” month to month, if unpaid. Installment debt is primarily made up of student loans, mortgages, and car loans, and any other personal loans you may have out. Timely payments on both kinds of loans is imperative to keep the lender from reporting you to the credit bureau. Late payments will inevitably lower your credit score.

Additionally, carrying high balances on your credit cards (your revolving debt) can impact your score because your percentage of available credit has now been lowered. Using simple math, if you have two credit cards with a $5,000 limit each, your available credit is $10,000. If you are carrying a balance of $8,000 across the two cards, then your available credit is only 20 percent. Paying off those balances or keeping them low is better for your credit score.

How can I pay off debt with no money?

When your bills basically exceed your income, it can feel impossible to make a dent in your debt. But the best way to pay off credit card debt — or at least lay the proper groundwork to do so — is relatively straightforward. You have to create a budget and stick to it. As writer Lance Booth told the Today show in March 2020, he was able to pay off nearly $70,000 in debt in under two years by “aggressively” following the budget he set for himself.

Of course, this isn’t exactly a quote-unquote fun solution. Then again, what part of debt is fun? Fortunately, there are tons of free budget apps like Every Dollar, Mint, YNAB, and PocketGuard that literally put financial literacy at your fingertips.

If you prefer to roll old school, you can just use an Excel spreadsheet. Write down your total income for the month (after tax), list all of your expenses, and subtract your expenses from your income. Based on the remaining figure, you can adjust non-fixed expenses such as entertainment costs. You’ll want to track your expenses throughout the month to make sure you’re not missing anything. It goes without saying that your budget should include not spending in a way that will add to your credit card debt.

How do you pay off debt fast?

Just as there aren’t a whole lot of ways to get rich quickly, there aren’t really any ways to get out of debt quickly — unless you find yourself on the receiving end of a financial windfall, in which case, hell yeah! Having said that, there are tactics you can take to whittle down your credit card debt as fast as it is feasible given whatever your financial situation currently is.

Of course, if you have a surplus of money after paying your bills and living expenses every month, you can put that money toward your credit card debt. Doubling up on payments, or at the very least making more than the minimum payment every month, will reduce your balance faster because you’ll be cutting through the interest and chipping at the principal.

You may be thinking, What if I don’t have any extra money to divert to my debt? You could try to get a side hustle that allows you to bring in a few more bucks every month. There aren’t a lot of legitimate remote, freelance jobs out there if you can find one that matches your skillset. But let’s be real — you’re a busy mom, and time is precious.

If you can’t imagine squeezing anything else into your jam-packed schedule, it might be time to consider adopting either the snowball or avalanche method of debt paying.

What is the difference between the debt snowball and avalanche method?

It might sound strange to be tossing around winter metaphors in relation to your credit card (or other) debt. But once you hear the gist, you’ll totally get it. Before diving into either one of these, financial guru Dave Ramsey recommends getting to a point where you’re current on your bills and have a $1,000 starter emergency fund saved up. Then, pick your approach.

The debt snowball method

You’ve heard of the snowball effect, right? It’s the same principle. You start small and get bigger as momentum grows. First, list your debts from smallest to largest based on the remaining balance and regardless of the interest rate. Make minimum payments on all of your debts except the smallest — pay as much as possible on that one. Once you pay off the smallest, take the money you were paying towards it and roll it into the next highest payment. Repeat until all of your debt is paid.

The debt avalanche method

This method differs from the snowball method in that you’re prioritizing debt based on the highest interest rate as opposed to the remaining balance. You’d funnel any extra money you have into paying down the account with the highest interest rate while paying minimums on everything else. You’d keep doing so until you pay that off, then move down the line.

The hitch? If your account with the highest interest rate also has the highest balance, it could feel like a long time before you experience any tangible debt relief.

Should you take out loans to pay off credit card debt?

If you’ve been Googling how to pay off credit card debt, you’ve likely been tempted by the idea of debt consolidation — or, basically, a loan that combines all of your debts into one single payment. In full disclosure, though, this method isn’t without its drawbacks.

According to Experian, the best-case scenario is that you qualify for a loan with a much lower interest rate than your current credit card and you’re able to pay your debt down fast while also establishing a consistent payment history. Unfortunately, these loans often extend the life of your debt, meaning you’ll ultimately owe even longer. The repayment terms may also include an increase in interest rate over time.

Other debt repayment options with mixed reviews include balance transfer credit cards (only ideal if you transfer your debt and pay off before the introductory rate expires), debt settlement (risky due to predatory company practices), borrowing from your 401k (could result in penalties, fees, and taxes), and home equity loans (borrowing against your house means you could lose it).

How to pay off student loan debt faster?

First of all, it goes without saying that with so many people living paycheck to paycheck, trying to make ends meet, supporting family, and paying off student loan debt can feel like an impossibility. But there are still measures you can take today that can help chip away at that mountain of debt little by little.

First, according to Nerd Wallet, your best bet is to pay more than the minimum payment each month, so you’re eating away at the principal and not just paying the interest each month. Before you do so, make sure your lender applies the extra payment to your current balance, instead of next month’s payment, which will only advance your due date without chipping away at your balance.

Next, if you have good credit and a stable job, see if refinancing could work for you. Refinancing with a lower interest rate can help pay off your loans years faster.

Make one or two extra payments each year, while it may not seem a lot in the grand scheme of things, it will shave off a lot more than you think.

How can you stay motivated?

It’s hard to stay motivated when you can’t really see the effects of your hard work. You know there’s long-term rewards. But, in the meantime, you might have to stop spending money and decide to miss out on things like cable or your once a month date night. Where’s the fun in that? One great option for “rewarding yourself” is to use credit monitoring. Each time you’re able to pay down a debt, your credit score goes up. Each month, apps and services like Credit Karma will send you an update on your score. If you’re even slightly competitive, it can be pretty exciting to get those congratulatory emails each month with your new, higher score. They also send their compliments when you go on an on-time payment streak. Sure, it’s not steak. But, it’s nice to be recognized for your hard work and to see the results right before your eyes in colorful charts and graphs.

Take note, though: Credit Karma and the like are typically free because they run ads, like the ones telling you to take out another credit card to pay off all your debt. You don’t have to apply for those credit cards to take advantage of the credit monitoring and their advice is sometimes more generic than custom-tailored to your situation.

Another important tip is to curb your spending and tighten the belt a little while you’re chipping away at debt. Even if you don’t have an overspending problem, there are still small steps you can take to spend even less. For example, don’t save your credit card information with all your favorite retailers. Yes, it may be a hassle to re-enter your information every time you want to purchase anything, but it may have you question that purchase. Another tip is to unsubscribe from as many coupons, deals, and retailers as you can. Let’s be honest, most of the time you didn’t ask to be added to their mailing list to begin with and unsubscribing may take a while, but it’ll help with impulse purchases.