How to Pay Off Debt Fast With Minimalism
Welcome back to my channel. I’m Rachel Noakes. I do videos about decluttering, minimalism, and my no-spend year. Today, we are going to look at minimalism and debt.
I had trouble with debt on and off for most of my adult life. It was easy to get into the habit of having a credit card and using the credit card every month. It’s a dangerous game because there can be times when you don’t have the funds to pay it off and it can start spiraling.
I decided a few years ago to start a no-spend year. It started with a focus on not spending, but kind of turned into minimalism. Minimalism is the thing that made it easier to manage my debt and pay it off quicker.
By having a minimalist mindset, I was able to really think about how I could clear that debt and take that weight off my shoulders. It’s such a difference not having debt that it’s definitely something I would advise anybody to do.
So, I want to share with you how to pay off your debt fast with minimalism. You can apply some of the principles of minimalism to your finances.
1. Know your finances
Firstly, you need to know exactly what is coming in and what is coming out. You need to find a way to track your finances in a spreadsheet or on a piece of paper, so you know exactly what your finances are.
Once you know your finances, you can identify what areas you are spending on, and find ways to cut your spending. If you spend a lot of money on certain categories, like takeaway or clothing, you can set yourself a limit – a cap on how much you will spend in that area — to help you gain control.
2. Prioritize your debt
Once you know exactly what is coming in and what is going out, you need to allocate a certain amount of money to paying off debt. Right after payday, allocate the money to your debt, so you can reduce the temptation to spend it on other things and reduce your wiggle room.
Sometimes, when it comes to debt, it’s easy to say “I’m never going to get out of it. I’ll just pay the minimum and see what happens.” The problem is, interest rates rise, our bills increase, and we lose the control and ability to focus on clearing those debts. If you spend the money on paying off debts straight away, you reduce the temptation to spend it elsewhere.
3. Automate your bills
I have my allocated monthly payments towards my debts set on direct debit. They come out straight away from my account so I’m not worried about where the money will come from, and I automatically know what’s left for food, gas, and spending.
This means I have good control over my finances and don’t have to check my bank balance so often because I don’t worry about needing to have enough money to pay off bills later in the month. I’ve taken a lot of stress out of my finances.
You can set up a regular debit payment towards debt at the beginning of the month which is automatic. You can plan it in advance and set it up, so you don’t have to think about it.
4. Create a simple plan and timeline for how you are going to clear your debt.
I used to have the debt listed at the beginning of my spreadsheet, and I worked out how long it would take me to pay it off if I paid different amounts each month.
This gave me a rough idea of how long the debt would take to pay off and it was reassuring to highlight or tick off the amount paid each month and watch the debt figure go down.
If you have that plan in place, and you find extra money, put it towards the highest-interest debt, because that is the debt that will cost you the most in the long run if you keep it going.
5. Spend less money
It sounds really obvious, but you need to get on top of your spending. It can be too easy to buy the extra thing at the supermarket or get the extra clothing, or knickknack. Actually, you need to keep track of this.
If you have a minimalist lifestyle, you have an idea of what you already own and are less likely to want to purchase other things. You will have a better and more controlled attitude towards money.
Ask yourself these few questions: “Will I use it? Do I need it? Is it a duplicate? Is it going to serve a purpose?”
If you are saying no to any of those things, you probably don’t need the item. Be quite harsh on yourself. Just buy things that are necessary. Having that focus will give you more spare money to put toward your debt, which is your goal.
6. Sell unwanted items to raise money
If you are decluttering, reducing the number of things in your home, and gaining an appreciation for the things you have, think about what items you could sell to earn extra money and pay off debt.
It sounds like it will only give you a few dollars here and there, but it really adds up. I did this a lot when I was clearing out my home, and all the extra money went to paying off debt.
It’s important to think about how having less stuff around you can be quite freeing and you can even use this stuff to pay off your debt.
How to pay off debt fast with minimalism
When I started this process, I had over $6,000 in debt. I managed to clear it in a year by following these strategies. They really do make a difference.
Minimalism can help you focus on your finances, declutter and make money, and streamline your finances, making them less of a burden. If you have control of your finances, by automating your bills and having the plan to pay off debt, you will feel calmer about the whole process.
That feeling is just as freeing as paying off debt itself. How do you keep your debt in check? Drop a comment and let us know.