How To Pay Off Your Debt In 7 Steps


emergency fund, how to create a budget, how to pay off debt, how to save money, make extra money, pay off credit card debt, ways to save moneyA few months ago I published the article 9 Reasons Why You Can’t Save Money Every Month. As I mentioned in that article, I believe the first step to paying off your debt is to realize why you’re in debt.

Credit card debt, car payments, and student loans are some examples of debts that are costing you money—and are probably causing you unnecessary stress too. The good news is that once you make paying off your debt a priority, it’s often easier to do than you think.

If you don’t know what your problem is, then changing it will be more difficult. You don’t want to fall into the same cycle of falling into debt time and time again. But if you already know why you’re in debt (or why you can’t pay it off), the next step is to figure out how to pay off your debt.

If you’re ready to tackle your debts, below are 7 different steps to pay off your debt for good.

Paying Off Your Debt In Easy Steps

1. Join Swagbucks

Before starting, if you want to become debt-free as soon as possible, I strongly recommend you to join Swagbucks. The reason is easy; there are certain expenses that you can’t avoid and that are part of your monthly costs.

By using Swagbucks you’ll receive money back for all those expenses that you need to do anyway. This will not directly reduce your debt, but it will make you spend less and thus, pay off your debt sooner. Since I started using Swagbucks I’ve got paid over $400 and it feels great. I wish I could have found it sooner!

You can join Swagbucks here.

2. Emergency saving fund

Let’s face it, sooner or later, emergencies are going to happen. Emergencies are usually unexpected, so everyone should always be prepared for them.

Before paying off your debts, creating an emergency savings fund of at least $1,000 will help you pay unforeseen expenses and give you peace of mind.

Some examples of unforeseen expenses are:

  • Car repair
  • Medical bills
  • Boiler repair
  • Unexpected trips
  • Speeding fine

It’s easy to do. Keep your savings fund separate, and don’t touch that money until an emergency pops up. Use the emergency fund to pay for it, and during the following months, make sure to save the $1,000 again.

By doing this, you will avoid getting into more debt. Plus, it’s a healthy habit.

Important note: Buying a new TV or going on a holiday trip are not considered emergencies.

3. Don’t increase your debt

As obvious as it sounds, many people don’t pay much attention to this first step. Like I said earlier, if you don’t know why you are in debt, then it will be hard to stop increasing your debt. You need to keep your balance positive.

Balance = Income – Expenses

Income is the money you earn every month, and expenses are what you spend. If you spend more than you earn, then your balance is negative, and you are adding to your debt.

Some ideas to prevent increasing your debt:

  • Decrease your credit card limit (or even better, cancel the card!)
  • Think twice before you buy something. Change your mentality from “need it” to “nice to have it”
  • Book cheaper holidays
  • Create rather than consume

Everything that involves spending less will help you with this step.

Side note: If you are thinking about starting your own blog, I created a tutorial-guide that will help you start your own blog for cheap, only $3.95 per month for blog hosting (through my link). Additionally, you will receive a free blog domain (valued at $12-15) through my Bluehost link if your purchase is for at least 12 months of blog hosting. My recommendation is that you be self-hosted. This is important if you want to monetize your blog because your website will look more professional.

4. List debts by interest rate

It may be scary looking into these numbers, but if you do, you will figure out which debts are costing you the most.

Take out all your bills, and list your debts from highest interest rate to smallest interest rate. The one with the highest interest rate is the one you want to pay off first.

Student loans generally have low interest rates. However, car loans tend to have higher interest rates. In this situation, focus on paying off the car loan first. Take care of one debt at a time.

Once you finish paying off one of your debts, this will motivate you to keep going.

5. Create a budget…

…and execute it! This is one of the most important steps to pay off your debt. Your budget is your best ally!

If you don’t already have a budget, creating one is a great idea. You should create a realistic budget. It may take some time to perfect it, but it will make a difference.

As a reference point, list your last month’s expenses from your bank statement. This will give you an overall idea of how much you should spend every month.

To make it even easier, you can download my free monthly budget worksheet.

Start working on your budget, and most importantly, put it into practice!

Read more: How To Make A Budget Plan For Your Family

Tip! I highly recommend Personal Capital if you are interested in simplifying and taking control of your finances. Personal Capital allows you to manage all your financial accounts from one dashboard. You can connect all your accounts together (mortgage, retirement account, credit card account, investment account, etc.). The best thing is that it’s completely FREE!

6. Cut down your expenses

Perhaps you shouldn’t be expending $600 a month in fancy restaurants if you have $50,000 in debt. That’s your call, but if you want to stick to your budget, you may need to cut down on your expenses.

If you’re in a rush to pay off your debt, you’ll need to put some extra effort into cutting out some expendable things, like that Costa coffee (not easy, eh?).

There are loads of ways to reduce your expenses. Here’s a list of things you can do to cut down your expenses:

  • Cook your own meals at home, from scratch. I do my grocery shopping every week, and it’s very easy to stick with my budget because I know I can’t spend more than a certain amount. Then, every evening after work, my wife and I cook dinner as well as lunch for the following day. This helps us a lot in cutting down our expenses.
  • Swagbucks helps me earn gift cards that I can use at Amazon, and it’s very easy. Swagbucks gives you points for using its search engine (it’s just like Google), then you can redeem those points for gift cards. I’ve already redeemed 3 Amazon gift cards for $50, and it feels great. Plus, you’ll receive a free $1 bonus just for signing up today!
  • Ebates works similarly. Instead of points, you’ll earn money when you shop at more than 4,400 retailers. You just need to sign up and see all the available offers and discounts. Also, you’ll get $10 cash back if you spend $25 online.
  • Keep an eye on coupon codes. Every now and then I search for coupons. In this post, I have two for you. Here is a $20 Airbnb coupon code and a free taxi ride with Uber. These are two great services that I use very often.

7. Make extra money

Finding a way to make extra income has helped us to pay off our debts so quickly.

The more time you put into making extra money, the less time you have to spend it. It works like a charm!

There are thousands of ways to make some extra income to pay off your debt. Here are some examples:

  • Find a part-time job. Babysitting, working in retail, or even doing freelance work are some examples of part-time jobs you can do to make some extra cash.
  • Start a blog. Blogging is my number one hobby, and every month I’m making $1,000+ as a side hustle. If you don’t believe it, you can check out my online income reports where I share where the money is coming from. You can create your own blog here with my step-by-step tutorial (it takes less than 10 minutes). You can start your blog for as little as $3.95 a month if you sign up through my tutorial (plus get a free domain).
  • Answer surveys. Survey companies I recommend are SwagbucksVindale ResearchAmerican Consumer OpinionSurvey DownlineEarning StationHarris Poll OnlineTopcashback, and Mr Rebates. All of them are free to join! You get paid to answer surveys and use some test products. The best thing to do is sign up for all of them, and start answering surveys to make as much money as possible.

Read more: 12 Things I’ve Done To Make Extra Money


Enjoy your debt free life

If you follow the previous steps (and if your debt is not huge) you should be debt free soon.

Consistency and perseverance are key in this process. Keep strong, and look away every time you’re tempted to buy something you don’t need. I know you can! 🙂

Now that you’re debt free, you should start thinking about saving your money. A good idea is to increase your emergency fund to $2,000 or even more.

I have a selection of articles about saving money that you may enjoy:

At this point, make sure you don’t go into debt unless you’re in control, and you know what you’re doing.

I hope this post has helped you with your journey to becoming a debt-free person. If I could do it, you also can!

Are you a debt-free person or are you planning to be? What strategies do you use to pay off your debt?

emergency fund, how to create a budget, how to pay off debt, how to save money, make extra money, pay off credit card debt, ways to save money

About Francisco Anes 89 Articles
Francisco Anes is a personal finance blogger who loves blogging and spending time with his family. He works from 9 to 5, Monday to Friday but his dream is to reach financial freedom. On his blog, he writes about saving money, budgeting, pay off debt and making money blogging. Francisco lives with his family in Cambridge, UK.


  1. Hi, we are really trying to pay off all of or debts, and both I and my husband are really working so hard to get the money to start attacking our debts. As I’ve only just thank goodness that I’ve actually found work now as I couldn’t find work at some point. But thank goodness that I managed to find a job again as I was going literally every wherefore work. So now I need to get an extra job plus me and my husband want to do matched betting as a side hustle to help pay off our debts.

    • Hi Diane, I’m happy to hear you found out the job so you can reduce your debt. I also heard that matched betting can be a good source of income. Actually my wife has been doing it for a while and she managed to make a few hundred dollars per month.

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