3 Ways to Make a Huge Dent in Your Debt

3 ways to make a giant dent in your debt

Editor’s note: Meet new writer Kayla, who blogs at Shoeaholic No More about how she’s getting out from under $18K in debt. Here are a few of her tips!

I’ve been working my way out of debt for just over a year now and I’m sad to say that I made very little progress during my first year. So little progress was made in the first year that I feel like I could say I just started in January 2015 and it would mostly be true. Some of the setbacks I had in 2014 were legitimate; I needed new tires for my car and I bought a new computer so I could continue with my online freelance work. But other setbacks were purely of my own making. I bought way too many clothes and shoes, and I continue to spend way too much on going out to eat with friends.

My light bulb finally came on at the end of 2014 when I realized how much money I had put toward my debt all year with absolutely no progress to show for it. I was disgusted with myself. I had consistently put over $500/month toward my consumer debt and students loans with only about $1,350 worth of progress to show for it. Though I’m still far from perfect when it comes to spending and sticking to my budget, particularly when it comes to eating out, I have finally figured out a few things that have helped me make a huge dent in my debt during the first few months of 2015.

So, without further ado, here are three strategies for making a huge dent in your debt:

1. Overpay Whenever there is a Surplus

Overpay when there's a surplus -- Frugal Portland

In addition to a monthly budget, I also have an excel sheet that tracks all the deposits and withdrawals I make to my account on a daily basis. It also has projected expenses for the rest of the month: debt payments that have yet to come out of my account, my car insurance payment, gas for my car, etc. I also update the projected expenses and deposits as I go too. This leaves with me with a number for what my account will be sitting at when the month ends. Every time that cash flow shows a surplus more than about $20, I make an extra payment to one of my credit cards. This method has helped me put an extra $200-300 toward my debt each month so far this year and has resulted in me paying off two credit cards already this year!

2. Use Extra Income Productively

Use extra income wisely -- Frugal Portland

Last July I started a freelance writing and VA business to bring in some extra income to help me reach my financial goals faster. My side hustle income last year was nothing to sneeze out and it could have made a huge dent in my debt, but I used it foolishly. Instead of putting it toward debt or building my emergency fund, I used it as extra “fun money” and spent it on anything and everything except my financial goals.

One day I realized I was working myself to death to bring in all this extra money each month and instead of being productive with it so I could get out of debt and not have to keep working so hard; I was wasting it and perpetuating the cycle of overspending and being in debt. Now I put most of my extra income toward debt and savings. I still use some of my extra income for fun things, like going out to eat with friends and to pay for my trip to FinCon later this year, but most of it goes directly onto my debt when I get paid.

3. Find an Accountability Partner

Find an accountability partner -- Frugal Portland

The last smart thing I’ve done to make 2015 a better year is to find an accountability partner. A fellow blogger working her way out of debt is a great accountability partner to have. My accountability partner and I do have different life situations. She has a husband and kids while I’m single. Her spending struggle is groceries while mine is going out to eat. Having different struggles and situations has been great as we can ask questions and provide a different perspective on the things that each of us struggle with. We check in with each other at least weekly to give an update on our successes and struggles. We provide each other with praise for the wins, but also support, suggestions, and encouragement when we struggle. We’ve even agreed that now and then we’ll have to give each other a little “tough love” to help each other when one of us falls off the wagon. Without an accountability partner, I wouldn’t have started overpaying on my debts whenever I have a surplus and I don’t think I’d have started using my freelance income as productively either. For me, having an accountability partner was the key to putting all of these strategies together and making a big dent in my debt this year.