8 Steps To Kick Debt From Your Life

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As we grow there are certain things that are part of the journey such as debts in your financial life. They help in times of an unexpected crisis or paying for large purchases when you do not have the full amount, such a purchasing a home or car. There are two types of debt, good debts and bad debts which you can learn more about in a previous article.

Loans you receive can either be secured such as mortgages or unsecured such as payday loans. When taking a loan you should get one that considers your ability to pay and has manageable interest rates. These usually fall on the secured side. A situation where you take payday loans could leave you in a debt trap due to the high interest rates. Fear not you magnificent person for all debts shall be paid if you follow the outlined steps and you can live a debt free life.

Steps You Should Take To Be Debt Free

   1. Look at your expenditure

Knowing your spending pattern is important because you can know when and where to adjust your budget. This adjustment makes you more aware of how much more you spend on things you do not need and use that money towards paying off your debts.

Making these cuts might seem extreme and stressful at first but in your financial life the future is what matters. In a few months or years you breathe a sigh of relief as you realize you no longer have debts weighing you down. A bonus gift is you gain better spending habits and a certain cautiousness when you are about to spend your money recklessly.

   2. Create a debt plan

Image: Jess Bailey

This step is often overlooked but it gives perspective. People tend to pay their debts in different order; it could be looking starting with the longest owed to the latest or it could be starting from the least amount to the highest. It might work for a short time; however, for a long time goal you have to be more organized. Sit down and create a list of all the debts you have together with their interest rates. Once you have completed create a sustainable plan on how you will pay those debts in a less stressful way and an order that is efficient.

   3. Start with the high interest loans

After creating your plan you can see things clearer than before so now you have to decide which to start paying first. It is advisable to start with those with high interest rates because they build up fast and you end up with more than you were prepared for at the beginning. Credit cards have high interest rates so it is better to start with them, so you could pay them off if you are able to.

If not you could transfer some of your high interest balances to a lower interest card but make sure you read the fine print before you make the decision. If you have payday loans or other unsecured loans that could leave you in a debt trap, they should be one of the first to be paid off. For low interest debts such as your mortgage they could be placed lower on your plan. Not ignored because you need a roof over your head, but a bit lower.

   4. Find another source of income

income sources to pay debt
Image: Wendy Wei

When you get a loan your main source of income might not be enough to pay it back fast. It is tough having debts hanging over your head for years so one way you can finish early is to find a second source of income. Diversification of your income sources is important, whether its Passive income such as dividends or Active income where you start a home food business you will appreciate having it in the end.

Your second source could be affiliate marketing that brings in money without added stress of the daily grind. While you build your audience for affiliate marketing, you could work extra hours or get a part time job to supplement your income. It might be strenuous on your mind and body because you are used to working a certain number of hours but you adapt over time. Don’t overdo it and collapse with exhaustion, know your limits.

   5. Extra payments

There is no rule that states you have to pay your debts once or twice a month. If you get some unexpected money, it could be a work bonus, a tip or money from family, you could use it to pay some of the debt. It might seem like a little bit of money but in the end it goes a long way so do not spend  birthday gift money, instead put it towards the payment.

   6. Biweekly payments

People often pay their debts monthly or every other month which takes a long time to finish paying off. You could shift things around to the point where you can make bi weekly payments which makes it easier on you to finish paying early. The impact is not instantaneous but you will be grateful over the years because you are preventing a rise in the interest rates. Constant payments prevent the interest from increasing and shorten the loans time span drastically an example is if you get a mortgage for your home that you are set to pay in 15 years, it could be shortened to 11 years.

   7. Refinancing your debt

Image: Karolina Grabowska

Interest rates never stay the same for years so you could find that the same amount has a lower interest than when you took it. You could take out another loan to pay the one you have and pay the new loan with the lower interest rates. It shortens the time needed to pay the debt which makes it a smart move to make. It also eases the strain you were under with your previous terms so you could relax more and reward yourself for all the hard work you had done to keep up with the payments.

   8. Automated system

When we receive money it is easy to spend it all before we put some towards our debts. If it is hard for you to do this you could talk to the bank so that they could set up a way for the money to be automatically put towards paying outstanding loans. It eliminates the moments of doubt and temptation to make  in the moment decisions that you regret after as well as removing the stress of scrambling around to find money to replace what you had spent in order to make the payment.


Debt is not a life sentence if you learn good money habits. We are often influenced by our environment on how we view and spend money. Your first interaction with money, through your parents could have some lingering impact on you. Work towards healing your mental health in regards to money so that you can make better choices without doubting yourself.

The steps outlined in the article may seem impossible especially if you have a low income. What you can do is adjust them to fit your needs. It might be rough but it doesn’t rain every day, the sun has to rise sometime.

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