7 Easy Steps for Making 2018 the Year You Finally Pay Off Debt

pay off debt

It’s a new year, and you’re ready for a fresh start.

And while you’re probably setting goals and preparing for the year ahead, there’s just one thing holding you back: debt. Perhaps you’ve even tried to commit to paying off a debt in the past, and it just didn’t stick.

If you’re finally ready to pay off debt, here are seven steps you can take towards finally getting out of debt this year.

Step 1: Achieve what you believe

You might think the first step in creating a get out of debt plan is crunching the numbers. While that is an important step, the first step to getting out of debt is actually believing that you can.

Start by removing negative self-talk (which is easier said than done) and focus on the belief that you can and will get out of debt. At the end of the day, you can only achieve what you believe.

Maybe that sounds cheesy, but actions follow thoughts. And if you repeatedly say “I’ll never get out of debt!” or “I don’t know how I’ll pay this back” then you’ll stay in debt pretty much forever.

When I made the commitment to pay off debt, I was making $12 an hour at a temp job. Nevertheless, I said (out loud) that I was going to pay off debt within four years.

It certainly felt scary at the time because I didn’t have all the answers yet on how it would happen. But sure enough, after I believed I could get out of debt and set a crazy goal, I ended up reaching my goal ahead of time.

Step 2: Be ruthless with your budget

If you really want to get out of debt this year, you need to be ruthless with your budget.

Although it’s not fun to cut back on life’s little luxuries, doing so temporarily can help you make much-needed progress. To pay off debt this year, you need to allocate every extra cent you have towards your debt.

It can be a test of your will and seem extreme. But if you want to pay off debt this year, think of it as a temporary sacrifice for a longer-term gain. Those Venti Soy Macchiatos with whip aren’t going to help you become debt-free, but not drinking them will.

Step 3: Monetize your life

Cutting back on expenses is just one way to get out of debt. Something that can make even more of an impact is earning more money. You might think you don’t have a lot of time or don’t have any skills you can monetize, but that’s simply not true.

In fact, there are a variety of side hustles listed right here that you can start tomorrow. When striving to reach a goal like paying off debt, you must commit 100 percent and give it your all. That means figuring out ways to monetize the time you have available.

You can sell stuff online on eBay or Craigslist in the evenings and work as a tutor or brand ambassador on the weekend. Or, consider working as an Uber or Lyft driver during the holidays. The point is to get creative and find ways to earn more consistently.

Step 4: Make weekly payments

Instead of paying your debt once per month, consider making multiple payments per month.

You can strive for making weekly payments and cutting down on overall interest. At one point in my life, my student loans were accruing $11 in interest per day. Talk about a money pit.

Even if you just divide your regular monthly payment by four and make weekly payments, you’ll be able to cut down on interest. Our Student Loan Hero payment calculator can help too.

Step 5: Set a goal and work backward

So you want to get out of debt in 2018? Calculate how much debt you have left and divide it by 12, the number of months there are in a year.

Then, figure out how much do you need to put towards your debt each month to be debt-free before you ring in 2018. If the number you need to put towards debt seems scary, don’t panic. Instead, figure out a way you can reach that goal.

How many extra hours do you need to work? How many $20 to $100 eBay or Craigslist sales do you need to make? Don’t let yourself be held back by the impossibility of it all.

Remember, step one is believing you can solve a problem and then figuring out a way to do it.

Step 6: Throw all windfalls to debt

Sometimes you come across some money you weren’t expecting. You get an unexpected bonus at work, or you get cash for the holidays from your parents. Maybe you get a killer tax refund.

It’s easy to think that windfalls are free money and your desire to spend it on fun can be overwhelming.

However, you need to harness in your discipline and throw every last penny of windfall money towards your debt. It will help you reach your goal that much faster — and frees your life from burdensome monthly payments.

Step 7: Ask for a raise, then put the difference toward debt

If you’ve been working at your job for a while and doing a great job, evaluate if it’s the right time to ask for a raise.

But before you do, take some time to do some research on Payscale and Glassdoor to get an accurate sense of what folks in your area and level of expertise are making. Then, make a list of all that you have accomplished so you can illustrate that you’re worthy of a raise.

Finally, set up a meeting with the boss and make a case for earning more money. The worst they will say is “no.” If you are successful, put all extra income towards your debts.

Pay off debt today, not tomorrow

In order to pay off debt, you have to be fully committed and make changes across the board in your life.

It’s tough; no one ever says it’s easy. But they do say it’s 100 percent worth it. That’s one thing you can be sure of this year.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal LoansFixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 4.98% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 21, 2017 and are subject to change without notice. Not all rates and amounts available in all states. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 4.98% APR assumes current 1-month LIBOR rate of 1.34% plus 3.89% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
4.98% - 14.24%1$5,000 - $100,000
Check rate nowon SLH's secure site
8.00% - 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.