Chip Away at Your Debt in Under 10 Minutes a Day

July 25, 2012

Chip Away Debt

Paying off debt can feel like a daunting process, but don’t let feeling overhwelmed stop you from getting started. Today, Shannon McNay from ReadyForZero will give us some tips on paying down our debt at little at a time.

Chipping Away at Debt

One of the problems with debt is that it can sneak up on you a little bit at a time.  You borrow money to cover one small expense here, another there, and before you know it you owe far more than you intended to borrow.  Then you top it off with compounding interest and your balance is quickly ballooning out of control.

The good news is, while you can you slip into debt a little at a time, you can also escape from the burden of debt by taking small regular actions. By starting to make small changes in the way you approach your finances now, you could soon starting paying off your debt and someday acheive debt freedom.

Start chipping away at your debt in only minutes per day by following this week long program of small tasks.

Day One: List Your Expenses
You may have to bear with me here – I really like lists. Seeing things on paper helps to give a realistic view of your financial picture.  So to start, take a sheet of paper or create an excel spreadsheet and make several horizontal columns. For example:

Expense  | How Often It Occurs  | Cost
Student loans | Once per month   | $300
Mortgage       | Once per month   | $1200
Gas               | Once per week    | $40

Easy enough, right? Next, just make a second list of these expenses and list them from top to bottom in order of importance. When doing so, don’t just consider what you want to pay the most, but what you need to pay the most. For example, you may want to put your student loans on top of the list, but it makes more sense to put your vital needs like shelter (your mortgage) first.

Day Two: List Your Income
Time for another list. This time, take a new sheet of paper (or excel spreadsheet) and list from top to bottom all the income you have coming in. This could be your job, a side hustle if you have one, returns or dividends on investments if you have them, and any other extra money coming in. If all you have is listed is one job don’t feel bad, you just finished today’s step even faster. For example:

Income | How Often It Occurs  | Amount
Day job | Twice per month   | $1500

Day Three: Balance Your Expenses and Income
This is the final – and ultimately most important – list. Take a new sheet of paper (or excel spreadsheet) and make two horizontal columns: Money In and Money Out. The time period of this list should be framed in one month increments.

Start with the amount of income you have coming in for one month and deduct each expense as you go down the list. Is the number at the end positive or negative? If it’s positive, put extra money into an emergency fund and then towards paying off debt. If it’s negative, then you’re going to have to make some changes – but we’ll get to that in the next few days.  For example: 

Day Four: What can you cut?
Now you should have a clear picture of your current financial situation. If the total from the day before was negative, then it’s time to look for things that can be cut. Even if there’s nothing that can be cut, there may be things that can be decreased in frequency.

For example: in the list above gas occurs once per week. But if the person creating this budget could take save money by taking the bus to work, maybe the gas expense could only occur once per month. Of course a public transportation column would have to be added to expenses – but if it’s less expensive than gas then that’s a win.

FYI – even if your total amount from yesterday was positive, that doesn’t mean you should skip this step. A closer look at your expenses may reveal things you no longer want or need, or that you’d like to cut down so more money can go towards paying off your debt. 

For example, let’s say you had family dinners out on your list for four times per month. Maybe you decided that you can have equally as nice family dinners at home and cut that to once per month. That money saved can go straight to paying off your debt.

Day Five: Make the Call
Up until now, you may have already done all these steps in the past. But many overlook today’s step. Today you should go back to your list of expenses and determine what you may be overpaying on.

This can be a multitude of factors but will most often come in the form of interest rates and fees. Have a credit card? Call your lender and ask them to lower the interest rate. Multiple credit cards? See about getting a balance transfer onto a new card with little to no interest.

Are you losing money to overdraft fees? Sign up for overdraft protection. What about fees on your phone, could you save money on your cellphone bill? Are you paying late fees on bills?

Sign up for automatic payments so you’ll never be late again. If you’re going over on minutes, change to the next highest plan. It may have a higher base cost but could save you a lot in the long run.

Day Six: What Can You Add?
You are now finished thinking about ways to cut down on expenses. Now let’s talk about adding income. First look at ways you can earn extra money at work. Don’t just stop with the job you already have.  You may be able to earn more by making extra money on the side.

Taking on a second job can come in many forms and doesn’t necessarily mean doing shifts at the local restaurant or retail store. Other ways you might earn extra money: sell your unwanted items on ebay, sell crafts you’ve made on Etsy, pick up odd jobs on Fiverr…the list goes on and on. Be creative and you may find some easy and fun ways to add to your income list.

Day Seven: Create a Follow-Up Plan and Get Informed
Congratulations! You’ve now completed a budget and plan to pay off your debt. What’s left to do? Follow it diligently!

Ride the positive momentum from this week and hold yourself accountable for staying on track. Write down your expenses regularly to make sure you stay on budget. Mark your calendar for once quarterly (every three months) check ins with your lists to see to if any changes can or should be made.

You can also mark your calendar for twice a year check ins to re-contact your lenders and negotiate interest rates. If you have credit cards or student loans, an online tool like ReadyForZero to help you get out of debt. Finally, stay on top of changes in the economy, consumer issues, and personal finance trends by regularly reading online.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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10 Responses to Chip Away at Your Debt in Under 10 Minutes a Day

  • John

    I like how you focused on both the income and expense sides of the equation – so important! For example, I know that I’ve cut my expenses down as far as possible, and now I have to work at getting my income up! The more income I have, and as long as I keep my expenses the same (adjusting for inflation), the more money I can throw towards debt (our mortgage). Thanks for the article!

  • Mary McNay

    What an informative article. Basic steps
    are like baby steps. You have to start a
    little at a time.

    Great insight!


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