5 Effective Ways To Pay Off Your Debt
By: John Lim
Tags: Personal Finance, Debt, Make Money, Credit Card Payment, Pay Off Debt

In the summer of 2016, I was left with a staggering $70,000 debt in my hands. So, I did what every 20-something year old with that kind of debt would do: I crawled under my blanket and wept.

I was stuck with this debt for almost two years. Every time I tried paying it back, the interest rate would eat up my payment until I was back to square one. This was a vicious cycle that left me emotionally paralyzed and depressed for months.

Then one day, I decided that enough was enough. I figured that there had to be a better way to pay back my debt, even if I didn’t have cash in hand. So I decided to read up on personal finance books and learn how to better tackle my problems.

In the process, I learned that there were other ways that I can pay back my loan and, at the same time, reduce my anxiety about my financial problems.

Eventually, I made a system for myself that guaranteed that I could pay back x amount of money back if only I did y and z. After all, money was out there; I just needed to find it. As Dave Chappelle once said: “You’re not poor. That’s a mentality. You are BROKE.” Those words made all the difference in my life.

This system was a life-changer. It not only helped me pay back my loans but also changed my relationship with money and material things. Not to be overly dramatic, but this system really helped me, and it works.

In this article, I’m going to teach you the same system that helped me pay back my debt.

With that said, let’s get started.

1. Sell unnecessary stuff in your house

According to a study by the LA Times, Americans have about 300,000 items in their household. If you live in America, then chances are you have stuff that you don’t need lying around. A LOT of stuff.

You might be saying to yourself, “but yeah, some of these stuff I have fond memories of. Like this keychain that I bought at a snowboarding trip with my girlfriend.” Alright, if these stuff have sentimental value to you, then by all means keep them. But if you have stuff that you don’t really use-like old toys, unused tech gadgets, and books-then you should consider selling them online.

I made a ton of side money just by selling all the useless things that were lying in my house. For example, I took the liberty of cleaning my wardrobe that was full of clothes that I either outgrew or didn’t wear. After selling them online and to friends, I ended up making almost $800, all from clothes that were sitting in my closet.

If you have things lying around, take stock and start selling them. You might just make enough to pay for your next credit card bill. And speaking of credit card bills…

2. Pay more than the minimum payment on your credit card

This one’s important. Always pay more than the minimum payment on your credit card or face the wrath of high interest rates.

There’s a simple logic to this: Your bank, the institution that gave you your credit card, is simply looking out for itself. Whenever you make a payment every month, your bank will see whether or not you paid the minimum or more. If you paid more, your bank will think that you’re making good money so it’ll give you a lower interest rate, assuming that you’ll continue making the same high payment the next month.

If you pay the minimum, or worse, skip a payment, your bank will freak out and start charging you with a high interest rate fearing that you won’t be able to pay the money that you owe them. Even worse, if you stop paying your card for months, your bank will shut down your credit card so that you can’t use it, even if you start paying later on. In addition, your credit score will drop, making it harder for you get a loan for anything in the future.

With that said, always, always pay more than the minimum payment on your credit card. You’ll save months, possibly years, of headache.

3. Cut off subscriptions

We all like to kick it back and watch Netflix once in a while, but do we really need all those other subscriptions?

According to a study, Americans watch an an average 3.4 services today including Netflix, Hulu, HBO Max, and Disney Plus. Altogether, these streaming subscriptions run Americans an average of $29 a month. That doesn’t even include subscriptions to services such as music, magazines, and other monthly charged services.

From my personal experience, I saved around $50 just by cutting off subscriptions. Some of them included Apple Music, Time Magazine, Hulu, and HBO.

After cutting my ties, I realized that I barely even paid attention to them to begin with. I saved so much money just by letting go of the things that I didn’t need and instead channeled the extra money into paying off my debt.

Try it yourself. If you like to watch streaming services, then try to stick with just one until you have more financial flexibility to afford the others. You’ll find that you can save more money just by saying no to things.

4. Live below your means

If you’re trying to pay back your debt, then you have to start living below your means. That means no more four dollar Starbucks coffee, no more eating out every day, and no more making impulsive purchases. The key to paying back your debt is to reign in your spending and monitor where your money goes.

You don’t want to wake up one day and see your credit card bill and think when did I make THIS purchase? We’ve all been there before, and the feeling sucks. The worst thing is we shrug it off and say we won’t make the same mistake, until it happens again. Learn to fix this habit by being more vigilant with how you spend your money.

With that said, I’m a firm believer that living below your means doesn’t mean you can’t splurge once in a while. Life is short, and buying things feel good. However, you should only buy the things that you love. Not want, but love. There’s a difference.

You might want that Starbucks coffee, but you might not necessarily love it (unless you’re a Starbucks aficionado then more power to you). On the other hand, you might love video games so much that you don’t mind spending money to buy the latest games and systems. So, instead of buying the things you don’t truly love, why not save for the things that you do instead?

To save up for something you love, take out a notebook and write down all the money that you have versus all the money that goes out to paying your debt (expenses). If you can find some extra money in between, save some of it towards something that you would love to buy. Later, once you hit a certain amount for, say, a PS5, make sure to buy it. You deserve it for all the hard work that you’ve done.

5. Earn money online

Earning money today has never been easier. There are many people who have paid off their debt simply by driving Uber or delivering food on the weekends. Thanks to our smartphone, we are one tap away from a temporary job that can make us some quick cash right away.

In addition to Uber and food delivery, you can also find plenty of opportunities to make money online. If you’re from an English-speaking country and your primary language is English, you can teach English online and make $2,000 a month. If writing is more in your avenue, you can earn money by posting stories on Medium and get paid for it. Check out my article about the 11 easy ways to earn money online to learn more about how you can start making money online today.

Overall, there are a lot of great opportunities out there to earn money. Ideally, you’ll want to pick the one that caters to your strength so that you can enjoy doing the job and learn new things along the way.