10 Proven Ways to Pay Off Debt Faster! | Clever Girl Finance

[00:00] So if paying off your debt is one of your goals this year, this video is for you. Paying off that isn't just about cutting back. It is about being intentional, making intentional choices,

[00:12] adjusting your mindset and then taking action. Today I'm breaking down 10 key ways in which you can accelerate your debt payoff so that you can free up money, reduce stress, and get yourself on the path to building real well.

[00:24] These strategies are practical, effective, and doable no matter where you're starting from. So let's get into it. Hi everyone, my name is Bola Shokunbi. I'm the founder and CEO of Clever of Finance. I'm also the author of the Clever of Finance book series

[00:38] and the book Choosing to Prosper as well as my most recent book, My Wealth Plan Workbook. Welcome to Clever of Finance TV. So in today's video, we're going to be talking about 10 ways

[00:54] to accelerate your debt payoff, starting with number one. Make a list of all of your debts and then choose a debt payoff method. So this is foundational to starting your debt payoff journey

[01:06] and to accelerating this journey. You need to know how much you owe, prioritize this debt, and then choose a debt payoff method. So this is as simple as listing down all of your debts and either prioritizing them by highest interest rate

[01:20] or lowest balance. And then you want to choose a debt payoff method. Basically, you can decide to go by the snowball method, which is where you pay off the smallest balance first or the avalanche method, which is where you pay off the debt

[01:34] that has the highest interest rate first. Whichever method you choose, they both work. The key to each method is that you're paying more than the minimum payment on your top priority debt.

[01:46] And this is how you get ahead of that compounding interest that keeps people in debt. You want to pay more than the minimum payment on your number one priority debt that you want to pay off first

[01:58] while you're paying the minimum to your other debts. Once that top priority debt is gone, you take all that money you're paying, that's our priority debt, and you roll it into your next priority debt, paying again more than the minimum

[02:10] until you pay off that debt. And so this is your foundation to getting ahead of your debt. And when you write down your debt, literally you're writing down your total balance, your minimum payment, and then your interest rate.

[02:24] So you can see how you want to prioritize your debt. Number two, take a look at your spending patterns. This is essentially how are you spending your money? And so I always recommend people going back

[02:36] to the last three months of their bank statements and their credit card statements. Are there any patterns you can recognize when you go through these statements? Are you spending more than you shouldn't certain categories?

[02:48] Are there random purchases that you're identifying that don't align with your financial goals? These are the things you want to look for as you review these bank and credit card statements over the last three months. Once you understand what your spending habits are,

[03:01] you can start making intentional changes to change those habits, and then repurpose that money towards your debt payoff plans. Number three, set a budget based on your needs versus your wants.

[03:14] So now that you know what your spending habits are, you want to set a budget that prioritizes your needs, right? The things that are most important to you surviving day-to-day month-to-month, and that minimizes unnecessary expenses.

[03:27] Now, I'm not saying that you cannot enjoy yourself, you cannot have fun, you can enjoy your life. But I'm saying in this critical period of you wanting to accelerate your debt payoff, which is why you're watching this video, you want to prioritize your needs

[03:40] over your wants for this period of time. And so prioritizing your essential to mean prioritizing your housing, your rent, your mortgage, your food, transportation, your core utilities, any medicines or household you need,

[03:54] would need those core things that are essential to you living life. And then you want to limit that discretionary spending. So eating out, travel, vacation, shopping, those things that are not necessary,

[04:07] that money that could otherwise be put to your debt, you want to limit it. I'm not saying cut it out forever. You could even carve out a small budget to enjoy yourself, fun money, but you want to limit that so that you can repurpose

[04:19] as much of that money as possible towards accelerating your debt payoff. So for the next few months, ask yourself, is this a need or is this a want? Can I live without this thing, right?

[04:32] Does it serve me better, hanging in my closet or paying down my credit card? Number four, go on a cash diet. One of the best ways to cut back on impulse spending is to go on a cash diet,

[04:45] meaning you only have a designated amount of cash to spend on specific things, like eating out groceries or personal spending. And so the way this works is that you would withdraw a specific amount of money every week

[04:58] that you keep safe and secure, right? You don't want to lose this money. You don't want it to get stolen. And then once this money is gone on your eating out, on your grocery shopping, on your personal spending, that's it. You don't have anywhere money to spend

[05:10] in any of those categories. And those three categories I mentioned because those tend to be the biggest categories of impulse spending, that personal spending, shopping, eating out and food, groceries.

[05:22] And so by going on a cash diet, this just forces you to be more mindful of your spending because every time you have to take money out of your little bundle, you have less. And your mind is connecting to the dots that you have less versus using a credit card

[05:36] where there isn't really that mind to physical matter connection. You just are not that mindful when you're using a credit card or a debit card. And so by going on a cash diet, you're able to eliminate those little expenses

[05:49] that you're like, oh, it's just $5. It's just $7 that you think that they don't add up, but they actually really do. Number five, find ways to increase your income to accelerate your debt payoff. So like I mentioned earlier,

[06:02] paying off debt isn't just about cutting back because you get to a point where you can only cut back so much. So the next area you want to shift your focus to is how can you bring more money in? How can you earn more?

[06:14] And this is money that you want to be intentional about throwing at your debt. And so you can do this by asking for a raise at work by starting a side hustle, by driving for Uber, lift, by doing Uber Eats or GrubHub driving

[06:28] or deliveries, tutoring, pet sitting, landscaping, catering, graphic design. Those are little side hustles you can start on and there's several platforms where you can start side hustles,

[06:40] Fiverr, Upwork, and you can earn a lot of money that you can put towards your debt. I have interviewed so many women on my podcast who have done side hustles like this and brought in so much money to help pay off student loans and credit card debts

[06:54] and is so surprising how much they've been able to earn by just getting out of their comfort zone and picking up one of these side hustles for a short period of time because you can do anything uncomfortable for a short period of time

[07:06] and just getting that debt out of their way. So I'd explain different side hustles that you can do to accelerate paying off your debt. And then also you can sell things that you own that you don't need or don't use. Think about electronics, gadgets,

[07:20] kitchen appliances, clothing, kids items that you have, especially if you have little ones, think about strollers and cribs and kids that baby accessories, kids accessories, those always come in handy and they sell very quickly.

[07:33] Every extra dollar you earn is a dollar that you can put towards accelerating your debts and becoming debt-free quicker. By the way, for enjoying this video and you haven't already subscribed to this channel, please do, stop by ClevverGirlfinance.com,

[07:47] check out our over 30 plus complete free courses and our over 40 plus complete free worksheets. Check out the ClevverGirlfinance book series. These books are available everywhere you purchase your books. They're available as e-books and audio books.

[07:59] And then check out the ClevverGirls' No Podcast at interview guests from everything, from saving, paying down debt, investing, entrepreneurship, motherhood, and more. And then stop by ClevverGirlfinance.com

[08:11] as I already say that, but you should stop by anyway. We update our blog with new content very, very often and there's just something for everyone on our website. Okay, let's go back to the video. Number six, find ways to cut back.

[08:24] Yes, I said you can only cut back so much, but have you really explored the opportunities to cut back on your finances to save more money or to put this money towards your debts?

[08:36] The ways that you can cut back include doing things like looking at those subscriptions. Do you have every streaming service out there? Do you watch all of them? How about you cancel some all half most of those subscriptions

[08:51] and put that money towards your debt? What about gym memberships subscriptions, app subscriptions? Take a look at all your subscriptions. If you're not sure, pull your credit card and back statements and see what you're paying for in a monthly basis to determine what you can cut back.

[09:05] Also think about swapping expensive or paid activities for free or low cost activities. For example, many cities have free first Saturdays

[09:17] in terms of museum entrances so you don't have to pay on the first Saturday of every month to get into all the big museums. A lot of cities offer this and so explore what free or low cost entertainment

[09:29] options exist in your city as opposed to paying for expensive things especially if you're someone who loves to do things with your family with your kids on the weekends. You can eat at home. You should eat at home. This will save you a lot of money

[09:41] and make it a fun thing. Cook meals with your partner with your kids with your family members. Get a cookbook, find recipes online or on YouTube and cook at home, right? Try out new things, a meal plan

[09:53] and this can save you so much money versus ordering in so much. I remember cutting back is not about restriction of punishment. It's just about being more intentional about how you're spending your money because ultimately your goal as you're watching this video

[10:07] is to accelerate paying off your debt. Number seven, pay more than the minimum. So I talked about this earlier on with point number one when we talked about picking a debt payment method but I really wanna highlight this again

[10:19] because when you're paying more than the minimum on your debt this is how you get ahead of compounding interest because when you pay more than the minimum every month the extra money you pay on top of that minimum payment

[10:32] that was due is money that gets applied to your principal balance and what happens is the next time when the month rolls around depending on your fine friends the next time around your debt compounds

[10:46] based on your interest rate it's going to be compounding on a lower principal balance because you paid more than the minimum last month. So this is how you can get ahead of that interest payment

[10:58] that keeps, of that compounding interest I mean that keeps so many people stuck in debt. And so you may say okay I can't find the money to make those extra payments but even making an extra $20 or $50 can make a big difference

[11:10] rounding up the dollar amount if that's all you can do do that. And then if you get any unexpected money, birthday money, tax refunds, bonus put that money towards your debt don't even think about it

[11:23] put it towards paying down your debt. Remember the goal is to pay the principal balance off faster so that less is compounded right and you can pay off your debt faster. Avoid new debt.

[11:35] This sounds like a no-brainer but it's important for me to state this because as you are working and accelerating your debts you just don't want to take on any new debt. I can't tell you how often I'm asked

[11:47] when I go to the store do you want to open XYZ store card save 5%, 10%, 20% I get asked this at least every single time I go to a store basically I get asked that question and you can just say yes without thinking about it

[12:00] because you're trying to save 20% but listen it's not worth it especially those store cards don't do it and so avoid any new debt don't open any more credit cards any new debt you don't need to take on like don't do it

[12:12] it is not worth it just focus on paying down that existing debt that you have and even if you get tempted to remind yourself that every new debt you take on is pushing back your financial freedom to paying off that credit card debt

[12:24] faster than loan that you have. So don't take your credit card out with you stop using it to pay for groceries unless you're in a bind where you don't have emergency savings and you actually have to buy food and your credit card is your only option if you do not have to use it

[12:37] do not use it focus on budgeting appropriately which we just talked about and then paying down your debt and forget about taking on any new debt. Number nine, learn to be content and practice gratitude.

[12:50] So the truth is that sometimes we're spending money even on credit because we feel like we're missing out on something we are trying to fill a void we feel like if we have more things we'll feel better

[13:02] and I think it's because we're lacking contentment and we're missing being great before we already have, right? And so it's really important that we shift our mindsets to start being more grateful.

[13:14] So look at everything that we already have and practice being content in this moment with everything that we have because we have so much and practice gratitude for what we have because there are so much that we already have now

[13:27] that other people are actually praying for. So shift your mindset away from I can't have this to I'm choosing something better which is debt freedom, right? And then celebrate your small wins every time you make a debt payment

[13:39] every time you spill off a small credit card every time you see yourself making progress and paying off your debt, celebrate that, right? Let that be exciting for you. Choose contentment, choose gratitude. Things do not always bring us the joy with desire

[13:54] we get over them so quickly. And so focus on being content where you are, what you have, what you own and being grateful for things like your health, being able to watch this video and receive this content that can help you do better with your finances, being able to be in a position

[14:07] where you're like, wow, I have this aha moment where I want to become debt free. You know, having that job, having the income, be grateful for that and forget about for the time being acquiring new things

[14:19] that the real you on your journey is becoming debt free. And then finally, number 10, educate yourself. The more you learn about money, the more confident you'll be when you're making your financial decisions. So read books, listen to financial podcasts

[14:33] and power yourself with financial knowledge. Learn about investing, learn about wealth building, learn about how the rich people have built wealth. These are all things that you can use

[14:45] to build financial confidence as you make your own investment decisions, saving decisions as you work on paying off your debt. And then surround yourself with people who are going to encourage your financial growth. Not people who are going to ask you

[14:57] why you're paying off debt, who you think you are to pay off debt, no. You don't want to surround yourself with those people. Instead, surround yourself with people who are going to motivate you and encourage you and chair you on as you pay off your debt.

[15:09] They're going to be excited for you to, as they see you achieve your financial goals. Those are the people you want to surround yourself with. Becoming debt free is possible, but it requires action. It may not always be easy, but like I said,

[15:21] it is totally possible with intention, focus, patience and by taking action. So I gave you 10 strategies, pick a few of them and get started today. They consistent and remember those small steps add up.

[15:34] I remember that this is your journey. So are you on a debt freedom journey? Are you working to accelerate paying off your debt? What are you doing to accelerate your debt payoff? Share in the comments below. You may inspire somebody else as well.

[15:47] Thank you for tuning in and I will talk to you in the next video. Thank you.