We have all heard that to pay off debt, we have to cut out the coffee, not eat out, cancel cable, and don’t go on vacations. But what if you have done all of that and you still do not have any significant amount of money left at the end of the month?
This is where we lived for a long time. Then one day, I finally realized we really could still get there. We just had to chip away at it instead of knocking out large chunks at a time.
“How do you eat an elephant? One bite at a time!”
Thankfully, other than our mortgage, our only debt is our car loan. However, while my husband was working on his PhD, we racked up almost $10,000 in credit card debt! His program was overseas and because his small college was not set up a particular way, we were not able to apply for student loans or receive an education credit on our taxes. Add that to the fact we were not making frugal choices on other life happenings and, well, we dug ourselves into a hole.
After many, many fruitless hours of sitting in front of the computer trying to rearrange a budget of unwavering expenses with an income that never seemed to increase (and decreased a few times), I needed to find a new way.
I needed to think past what everyone else was saying and figure out what would work for us in our situation.
Here are five things we have done to pay off debt slowly, but steadily.
Pay cash and collect the change
I have two categories I use cash for each week, Groceries and Other. (I found this simplified version of the envelope system here.) Each time I use the cash in my envelope during the week, I only use the bills. At the end of the week, I empty all the change out of my purse into a jar at home.
About once a month or whenever it seems like a decent amount, I dump out the change, roll it and deposit it back into the bank. There have been times I have had $30-$45 just in change. As soon as it is deposited, I make a Principal Only payment on our car loan.
It doesn’t seem like a lot looking at the grand total; however, making those kinds of payments works on lowering the amount of interest your regular monthly payment is being used for. When more of that payment is going to your principal, it is getting you just a little bit closer to paying off that loan!
Use the balance
When you have money leftover in your budget categories at the end of the month, total up the balance in each category and make an extra payment on the debt you are working on. What looks like just a small amount of change, can add up and make a dent in that balance owed.
Any cash leftover at the end of the week gets deposited and I make a payment. Some weeks that has been just $7, some weeks more than $20. After a month which included a no-spend week, I paid off an additional $75!
Remember the goal is to chip away. No amount is insignificant. It all counts!
Sell the small stuff
So you have sold the unneeded furniture, the treadmill that served as a clothes hanger, and the old game system no one plays anymore. You have nothing left to sell. Oh, but maybe you do!
If you have a safe place to sell your items online, try selling the “little” things you no longer need. Toys, stuffed animals, dishes, picture frames, figurines, and clothes are all great options to sell locally.
As we prepared for moving, I knew we needed to clear out and began getting rid of things right and left. Most of the items I sold were $2-$5 each, with just a couple items over $30. When all was said and done, I had raised almost $300! Unfortunately, this time I had to use that for moving expenses rather than our car loan.
Rent out a room or something else
For this one, be sure to check your insurance and local/federal tax laws. We were able to rent out a room for below market value to some students needing housing for short-term intensive classes. We only had the privilege of doing this for a few months since we had to put the house on the market; however, we paid down our car loan more than $200!
If you don’t have a room, do you have tools, skills, or equipment? On the way to the library the other day, I noticed someone had a small horse trailer parked in their yard with a “For Rent” sign. Do you have something you could use to earn a little extra on the side? Do your research and see what you come up with!
Budget it
I know this seems counter to what I have just been saying, but hear me out. Whether it is $5 a month or $50 a month, if you can find a little room in the tight budget, make it an actual line item.
This one is more about your mindset than about the debt itself.
With a change in my husband’s income, we were able to commit to an additional $50 a month straight to the principal of our car loan. On the budget, it is listed as “Extra Car Payment”. By listing it separately, it is a reminder of our commitment to pay off our debt. That commitment has an impact on all our decisions throughout the month. Seeing it on the budget, is a reminder throughout the month.
In only 6 months, we have paid off an additional $840 on the principal of our car loan (in addition to our regular monthly payment)!
A bonus way to have some extra to pay on debt is to have some sort of side hustle. I do have a very part time essential oil business, which helped us pay off $140 of the $840 on the car loan.
Other posts you might find helpful:
How to Plan for Yearly Expenses
Create a Morning Routine that Sticks
Basics of Essential Oils
Pin Ways to Pay Off Debt for Later
