Being in debt is one of the scariest and most overwhelming things because it’s so hard to know where you should start. A massive amount of debt can be soul-crushing so I’m here to try and help you figure out where to start. There’s a million blog posts out there talking about ways to pay off debt and what to do when you’re in the trenches of debt payoff, but what should you do to prepare for the long process?
Here are 10 very serious things you should attempt to do BEFORE you ever pay off a penny of your debt. If you want to save this for later, be sure to save it to Pinterest and share with your friends!
#1 – Add up your totals
This is one of the scariest parts of of having debt. I know it’s a lot easier to just ignore the total number and pay off some individual ones before knowing how deep in poop you are, but it’s a necessary step. You need to have that shock and awe moment where you feel like throwing up from the total number.
This is going to be an insane initial motivation tool because you’ll just be scared any time you think about it and it’ll push you so far in the right direction.
#2 – Decide on a pay off method
There are so many different ways you can pay off debt, and not all of them are going to work for you. My favourite method has always been the debt snowball. It does a really awesome thing where it starts off with your smallest debt and it gives you all sorts of momentum to keep working hard towards the debt. If you’re more of a numbers minded person you can use some of the ideas behind the debt snowball but then change it up for whatever works for you!
#3 – Create your first budget
Budgeting is the most important thing for you to do when you decide to pay off debt. It is possible to get it done without a budget, but it’s going to take years longer and be much less organized. I highly suggest you use a Zero-Based Budget because it gives every single penny a job and doesn’t allow for wiggle room and mistakes.
The best part about having a budget when you’re paying off debt is you can have a line in your budget called “debt pay off” so you can dedicate a certain amount of money each month directly toward debt!
#4 – Eliminate unnecessary expenses
Do you ever go into a store to buy one thing and end up coming home with 15 things that weren’t on the list? I can tell you right now, I do this all the time. It’s something I’m actively working on haha.
There are a ton of items you don’t need to be buying that you can easily cut from your budget and really not notice a difference in your day to day life. Like let’s say you switch from paper towel to dish towels, all you’ll notice is a tiny bit more laundry but you won’t be throwing money in the garbage.
#5 – Think about why you want to be out of debt
No matter what the goal, I’m a huge fan of remembering your why. Knowing why you’re doing something is the most amazing motivator because it helps you to imagine your life without the debt. Why are you paying off the debt now? Are you doing it so you can travel? Are you doing it to buy a home? Maybe you’re wanting to start a family but you don’t want the burden above your head when you do, that’s an amazing reason.
Whenever you’re having a hard time and having to say to things you want to buy, just remember the why.
#6 – STOP using credit immediately
I’m just going to make an assumption that if you have a lot of debt, some of it is probably from credit cards right? Please, even if you ignore every other tip on this list, stop using credit. It doesn’t matter if you’re paying off the balance of a specific card at the end of each month.
There’s a really high chance that you’re going to fall down that slippery slope and end up with debt AGAIN. Cut up your credit cards and get them out of your wallet for good.
#7 – Figure out your actual take home income
When most of us talk about our income, we talk about our yearly income or our income before taxes and other deductions. This is a legitimate reason why so many people live above their means. You need to take a couple minutes and calculate the amount of money that you actually bring home each week and start living off LESS than that amount. Once you’ve figured out this number, you can move on to #8.
#8 – Figure out your real monthly expenses
Now that you understand how much money you ACTUALLY bring home each month, you need to know how much you HAVE to spend each month to survive. This doesn’t include your fun money, this isn’t entertainment, or alcohol, or dinners out. This includes your mortgage/rent, utilities, and food. Anything above this can be cut without you dying and that money can help you pay off your debt!
#9 – Find a no fee bank account
One of the silliest thing a person with a ton of debt can do is to pay bank fees. Isn’t it outrageous that banks make us PAY to use their services? One of the first things you should do when trying to save money and pay off debt is try and find a no fee bank account wherever you live.
Personally, I use the Canadian bank (where my canadian friends at?) Tangerine because it’s amazing. Their customer service is next level and they’ve never charged me a penny. If you use the orange code 50681730S1 when you sign up you can get $50 for free when you deposit your first $100.
#10 – Create a side income
Trying to pay off all of your debt with just your 9-5 income isn’t going to be easy, this is why you should find a way to make a side income. Even if it’s just $100-200 a week, that’s still a TON of money that can go straight to paying off debt.
The key with having a side income is that you don’t let it just go towards fun stuff, it’s just for debt payoff. Just work hard on a side hustle for a few months and you’ll be out of debt and living your best life so darn soon.
Paying off debt is hard, but being in debt is harder. Just keep working at it. Don’t give up because there IS a light at the end of the tunnel. If you need someone to talk to because your debt is just overwhelming please email me at firstname.lastname@example.org and I’ll do my best to be there for you!
Hey! My name is Taylor O’Halloran and I’m a huge fan of saving money any way I can.I’m obsessed with dogs and I love all kinds of cheese even though my stomach hates it. I’m a recent university graduate who just wanted to do her own thing and see what happens! Follow me on the journey!