Times are tough. Wages continue to stagnate as everyday Americans are paying more than ever for housing, transportation, and food. Debt often seems to be the easiest way to plug the gap — using a credit card or a home equity line of credit (HELOC) to make ends meet and stretch the paycheck until next month.
Over time, that quick fix can become a heavy burden. According to the Federal Reserve Bank of New York, Americans collectively owed $5 trillion in non-housing debt by the end of 2024. There is no doubt that the increasing pain of carrying debt affects our mental health. It affects our relationships, families and confidence about the future.
What if there is a better way? As a CERTIFIED FINANCIAL PLANNER® professional, I want to share strategies to reduce stress in tackling debt while maintaining financial stability at home. These hacks are actionable and proven to help you gain traction on your journey to a debt- and stress-free life.
Automate Payments for Peace of Mind
Leveraging technology is an easy way to reduce your mental load. From remembering due dates to avoiding late fees, the more you rely on your already-stressed mind, the more likely you are to get stuck and lose traction:
- Set up autopay to cover at least the minimum on all your debts.
- Use alerts to avoid having to log in constantly to keep track of balances and due dates.
- If cash flow is tight, schedule payments strategically around paydays to prevent overdraft or bounced checks.
Break Large Debts Into Manageable Chunks
It’s easy to feel defeated when looking at the total amount of debt you owe. So how do we eat the proverbial elephant? One bite at a time:
- Use the snowball method (paying off smallest debts first) for quick motivation boosts.
- Try the avalanche method (tackling highest-interest debts first) to minimize long-term costs.
Need help getting organized and creating a plan? Work with a CFP® professional to create a financial plan and strategy that aligns with your financial goals.
Stick to a Debt-Repayment Plan Without Feeling Restricted
A balanced approach to paying off debt is the ultimate weapon against discouragement. Our goal is to stop the bleeding (don’t add more debt) while being able to enjoy life to stay motivated.
- Set a realistic budget that reflects needs, debt payments, and some fun money.
- The 50/30/20 rule (50% needs, 30% wants, 20% savings/debt repayment) is a good starting point if you don’t know where to start.
- Find low-cost or free fun activities (for example, home workouts instead of an expensive gym membership or grilling with friends instead of dining out).
Increase Income or Free Up Extra Cash for Faster Progress
Cutting expenses and earning extra money can help make extra payments toward debt, reducing interest and shortening the repayment time. Every dollar counts to get you to debt freedom:
- Look for side gigs to make extra cash (freelancing, consulting, selling unused items).
- Redirect unexpected windfalls (bonuses, tax refunds, gifts) toward debt instead of spending.
- Cut your subscriptions or renegotiate bills to add extra payment money.
Build an Emergency Fund to Avoid New Debt
Once you have a plan to become debt-free, the next step is to build an emergency fund to avoid any setbacks that could add to your debt:
- Start small (e.g., $500-$1,000) while paying off debt.
- Gradually build three to six months’ worth of expenses once you start clearing high-interest debt.
- Keep the fund in a high-yield online savings account that is FDIC-insured to avoid the temptation to spend it.
Stay Motivated With Progress Tracking
Keeping track of your progress is key to know how effectively you are moving toward debt freedom:
- Use an online tracker (debt payoff charts, apps, or spreadsheets).
- Celebrate milestones (paying off a credit card, reaching a lower debt-to-income ratio) by doing something for yourself — like going out to lunch or getting tickets to a summer concert.
Paying off debt doesn’t have to be stressful. With the right plan and resources, you can conquer debt and live a stress-free life. Whether it is leveraging automation, breaking down your debts, developing a payoff strategy or building a realistic budget, a CFP® professional can help you commit to a plan and reach your financial goals.
I encourage you to start small and stay consistent. Slow and steady wins the race.
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