paying off debts


In our final discussion during Money March, we will be talking about how to pay off your debts. If you missed any of the previous discussions on money, check out these links (and look for FREE PRINTABLES): HOW TO TRACK EXPENSES; WHY YOU SHOULD TRACK EXPENSES; HOW TO START SAVING MONEY; WHAT ARE SINKING FUNDS; WHAT IS YOUR MONEY PERSONALITY; DEBTS- CREDIT CARDS; DEBTS- STUDENT AND AUTO LOANS; AND DEBTS – PERSONAL AND HOME LOANS.

If you have been following along all month long while I have been talking about different aspects of financial wellness and thought to yourself that you can’t relate because it is too late for you, this post is for you. Maybe you have already made some bad choices, or even unpreventable choices, when it comes to your finances. Maybe you already got some credit cards, loans, and debt that is starting to stress you out. Or maybe it isn’t stressing you out, but you have debt that you feel you should pay off, but don’t know where to start. Don’t worry. It is never too late to start fixing mistakes and making better choices.

As you learned in CREDIT SCORES, some people think that it is necessary to have debts to build up your credit score, and this can be true. There are some people who believe if you don’t have debts and use cash only, then you won’t NEED a credit score, because you can pay cash for everything. This is true too. The truth is, there is no right answer for every person. If you are they type who can make good choices with their finances, then maybe credit can be useful. No matter what your school of thought, if you have debts piling up, it is a good idea to start paying them off and building your credit score that way.


There are several methods for paying off your debt, and it doesn’t matter which one you choose, as long as you stick with it and don’t deviate from your plan. The main thing is to make sure you have enough income to pay for ALL of your expenses. Just like a good diet or exercise program, the trick is to make a plan, track your progress, and stick with it, even when it gets rough. For some people, it may be a matter of months and they will see themselves debt free; for others, it could take years. It doesn’t matter how long it takes, the reward will be worth it when you can do whatever you want with your money and not just “pay bills.” Let’s take a look at a few different methods of paying off your debt.

  1. Lowest balance first: This method, often called the “debt snowball,” requires you to list out your debts and then begin paying the smallest balance first, by throwing any extra money you have (or make) at it and paying it off as quick as possible. This method works well because it can be motivating when you pay off your first debt completely! To tackle the next debt, you take all the extra money you are saving from the first bill plus all the extra you used to eliminate the first, and start paying it off as quick as you can. This method doesn’t save you interest over the long term as some methods will, BUT you will get a rush from seeing results much sooner.
  2. Highest interest rate first: When you list out all of your debts, make sure to list the interest rates for each of them, as well. Once you have done this, you will see some debts have higher interest rates than others. If you start paying as much as possible on the debt with the highest interest first, you may not see results as quickly as the previous method, BUT you will find yourself saving a lot more interest over time. This is because when you quickly pay down the principal, the amount of interest compounded will start to decrease (See DEBTS-CREDIT CARDS to understand more about compounding interest).
  3. Consolidation: Another way to start paying off your debt is consolidating all of it into one, lower interest debt. Several credit card companies and banks offer consolidation methods, or balance transfers, with a low introductory interest rate to help you pay off your debts quickly. Instead of making small, individual payments that are getting you nowhere fast, you can pay off all of your debt except the one and then use any extra income to help pay that off as quickly as possible. The good thing about this is it can help raise your credit score quicker and get you out of debt quicker. The bad thing is, if you start using your paid off credit cards again, then you will be stuck with double the debt!

The one thing that these three methods have in common is “extra money” to help make larger payments. By tracking your expenses (click here for a FREE PRINTABLE EXPENSE TRACKER) and watching your monthly budget (click here for a FREE PRINTABLE MONTHLY BUDGET WORKSHEET), you can begin to analyze if there are any areas you can start cutting back on in order to save extra money. DO NOT use any retirement savings or investments for this, as you will have a large tax penalty for withdrawing early. And I wouldn’t recommend using up your savings, in case an emergency comes up. If you aren’t able to free up enough from your budget to pay more, then is there another way to make some income? Can you sell something you own? Make something to sell online? Is there anything you can offer that is worth extra money? Can you work overtime or get a second job? Can you downsize your vehicle or your living arrangements for the time being? Remember, all of this is temporary, because once you pay off your debts, you can basically have the freedom to have whatever you want! Just don’t continue the cycle of incurring more debt.

I have really enjoyed learning with you through Money March. I, like many Americans, struggle with finances and am trying to figure out how to get ahead just a little. The more I learn and the more I help teach YOU, the more motivated I become to take control of my money and make better choices. I really help that you have learned something valuable this month, I know I have. Let me know what you think in the comment section and check out these other FREE PRINTABLES:




In the meantime, follow Being Grown Up on Instagram, Pinterest, and Facebook. Listen to Being Grown Up on or on your favorite podcast subscriber. Make sure you like and follow me for more information you haven’t learned, but need to know! XOXO

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