Is it realistic to pay off your debt in just a year? Absolutely, but it requires planning and consistency to achieve your goal of being debt-free. Here we’ll give you the tools and tips to eliminate your debt in a year.
1. Read for Financial Success
The first habit to adopt to help you on your way to being debt-free is to increase your financial literacy. There are so many helpful books to help you on your journey. One example is Dave Ramsay’s Total Money Makeover, which can help you change your money habits. By focusing on brushing up on your financial literacy, you’ll learn about strategies like the Avalanche or Snowball method and the 50/30/20 rule. If you surround yourself with the tools and knowledge you need to pay off your debt in one year, you’re more likely to achieve success.
2. Know What You Owe
Next, you have to be aware of how much debt you’re in. It may seem obvious, but creating a spreadsheet or using a budgeting app is essential if you plan on aggressively paying back your debt. You may be stuck in the cycle of paying minimum payments on credit cards that you don’t have a good idea of the big picture. Take a step back to assess where you’re at so that you can come up with a realistic game plan.
3. Make an Easy Debt Payoff Plan
Sticking to the ambitious goal of paying off your debt in one year is completely achievable, but you have to make your payoff strategy realistic. At the same time, you’ll also have to pay more than just your minimums. Finding the right schedule for debt repayment can make the process easier. You can choose to make payments every paycheck for an easy schedule. Maybe you’re more comfortable with weekly payments. It’s all about holding yourself accountable and creating a comfortable schedule.
4. Change Your Shopping Habits
You’ll be surprised how much you can save by adjusting how you spend money. Some families benefit from placing a spending limit each week for groceries and then shopping sales to reach that goal. There are so many grocery store hacks to help you save money. With a few adjustments, you can save money on things you normally buy without feeling like you’re cutting back or missing out.
5. Lower Your Utility Bills
Another simple way to create additional money to pay off your debt is to try and lower your utility bills. In the winter, can you lower your heat by a few degrees? Can you unplug appliances when they aren’t in use and turn off lights when you leave a room? Even limiting how many times a week you run your washer and dryer can reduce your bill. These small changes can add up to big savings over the course of a year.
6. Celebrate Your Wins
Make sure that you adopt the habit of celebrating your wins when you make progress toward paying off your debt. If you’re a visual person, a debt payoff meter or a jar full of coins that you fill in each time you make a payment could give you a rush of dopamine. You may even start to enjoy reaching your financial goals more than you enjoy spending money.
7. Increase Your Income
Are there small ways to increase your income to help you become debt-free in a year? This doesn’t mean that you need to find another part-time job though. If you have any hobbies like crocheting or baking can you turn those into side hustles in your spare time? Even picking up small tasks like dog walking, delivering for Doordash, or washing other people’s laundry can help you add additional income.
8. Sell Off Things You Already Own
Not only can selling off things you own help you become debt free, but it can also help you declutter and live more simply. Facebook marketplace is a great place to list items you’re no longer using like household appliances or furniture. Even just a few hundred extra dollars can help you become debt-free in a year.
9. Continue to Enjoy Life while You Pay Back Debt
You can still enjoy the things you love while becoming debt-free. You just have to change the way you enjoy those things or the frequency to stay on track with your goals. If you really enjoy trying new food, could you learn new recipes to try at home instead of eating out often? Maybe you love a good latte in the morning. There are so many recipes for Starbucks dupe recipes that you can make at home. Also, you can indulge in a meal out or a morning coffee say once a week if it fits into your budget and debt repayment plan. But, you may have to look at your lifestyle if you’re spending hundreds of dollars every time you leave the house.
10. Say No to Additional Debt
When you feel like you’ve got a better handle on your finances, you may be tempted to take on additional debt. One trap to avoid is Buy Now, Pay Later debt. It may feel like it’s better than a credit card purchase, but this kind of spending adds up quickly and can get in the way of your goal of being debt free.
Achieving Your Goal of Becoming Debt Free
These simple habits can help you achieve financial freedom and eliminate your debt in just a year. If you believe in yourself and stick to your goal you’re sure to find success. Are you in the process of becoming debt-free? What strategies are you using to pay off your debt?
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.