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7 Steps to Paying Down Debt

November 3rd, 2021 | 13 min. read

7 Steps to Paying Down Debt


As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.

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Ok, be honest - how many times have you attempted to do a debt paydown plan but it fell through the cracks or it was too hard to stick with? Maybe because the amount of debt is too exhausting to deal with or perhaps it’s the realization that it’s going to take a really long time to pay it off. So postponing your pay-down plan for a later date probably feels like an easier decision.    

Savings-Calc-CircleTrust me, I get it! I was $50,000 deep in debt owing to student loans, credit cards, medical bills, and more. But it got to a point where I decided I finally wanted to live without stressing about how to repay it.

Before I became a financial expert, I used to worry about how to stick with paying down my debt while maintaining my other expenses plus saving money... is that even possible?!?  I also turned my friends down (more than I’d like to admit) because of the enormous amount of debt I already had. Even worse? I avoided financial conversations with my long-time boyfriend, which is a definite no-no in mixing money in a relationship.

Whether you’re goal-oriented and looking for a strategic plan that shows you’re on the right path or you’re the complete opposite but need answers to pay down your debt, this article will help.  (I’ll also throw in some fun to-dos to keep you motivated because I know how daunting debt can be!)

QUICK TIP: Before you go all-in on paying down debt, be prepared to make financial changes in your life but also celebrate the wins. It’s ok to spend a small amount of money to help you stay motivated throughout this entire process. 

before we get started...

It’s smart to make sure you have a little bit of cushion for savings in case of an emergency (think: unexpected car repairs, home maintenance issues, or something worse). Read more on how to build up a savings account and, as you work to build your savings, make sure you’re at least paying the minimum payments of your loans to avoid any penalty fees.

By the end of this article, you’ll know how to pay down your debt and become debt-free if you decide to stick with the plan. Oh, and you’ll get a freebie because you deserve it!


the quick view of your debt pay-down process

Psst... You can click on any step and jump directly to it


types of debt

Did you know there are different types of debt? There's good debt, and then there’s bad debt. If you’re asking, “how can you tell which is which?” it’s all about what you can and cannot afford.  A good rule of thumb - avoid borrowing more than you can afford. Simply because borrowing from a business and struggling to pay it back can negatively affect your credit score and your savings.   


With those things in mind, here are some effective steps to paying down debt: 

Listing-Icons_Green1. list out your income and monthly expenses

If you’re having deja vu because you feel like you already did this exercise when creating a budget, you’re correct! But don’t worry, you’re not just spinning your wheels for no reason. It’s important to review and revise your financial plan often because your financial needs and situations are always evolving

When making your budget, don’t forget to include monthly payments on gym memberships, app subscriptions (Netflix, HBO Max, Hulu, Pandora / Spotify), and a little extra for dining out.


Document-Icon_Green2. write down the total amount of debt owed

Even though you included the monthly payments to your debts in that first exercise, write down the total amount owed on each debt. Now that you have a good idea of what you actually spend each month, you can see how much extra income you have to put towards paying off your debts. If you have debt on a credit card, try to find alternative ways to spend money without adding any additional balance onto your card during this process. But don’t spend too much, we want to avoid impulsive buying at all costs.  

QUICK TIP: Cutting back on the little treats like 2 Starbucks per week can save you about $50 a month! If it seems too daunting to find extra cash in one place, start with the little things that add up to make a big difference. 


Name-Drop-Icons_Green 3. decide which plan works for you

Before we go any further and choose which pay down method works best for you, we need to cover the 2 types of debt: Unsecured and Secured debts.


Secured Debt - These are debts that are ultimately giving you value and investment. For example, as you pay down an auto loan or mortgage, you’re paying off the debt to your ultimate ownership of that vehicle or home, which can be added to your net worth.

Unsecured Debt - This is a debt that does not contribute to your financial wellbeings, such as a credit card or student loan. You should always make these debts your #1 priority to pay off since they do not add any value for you.

There are 2 most common methods when it comes to paying down debt – the Snowball Method and the Avalanche Method. There will be people who swear by one method over the other, so take a look at the strategies for each and decide for yourself which one you can really do that fits within your means.



This is where you make the minimum monthly payment on all debts and contribute as much extra income as you can to the smallest debt first. Once you pay off the smallest debt, you take the total you were contributing and put it towards the next smallest.

Snowball Samples-02


The avalanche method is where you put the extra payments towards the debt with the highest interest rate. Once you pay off the highest, you move to the next highest, and so on. Paying more towards debt speeds up the debt pay-down process.  This can save you some time and money during your journey.

Avalanche Samples-01


Magnifying-Glass-Icon_Green4. make your plan and make it visible 

Once you figure out your plan, you need to WRITE IT DOWN. If you’re a  visual person,  it’ll really help you see the progress you’re making.  Plus, you can hang it up on your fridge or at your desk so it serves as a constant reminder. It’ll be visible at all times so you won’t forget about the goal and might actually work harder to save away money to put towards payments.

QUICK TIP: If you need help determining how much time or money you need to dedicate to a debt, check out our calculators. This will help you figure out how much your monthly payment should be to pay down your debt by a certain date or how long it will take you to pay your debt down with what you can contribute now.


Adjustment-Icon_Green5. adjust and adapt

Hey – we get it! Life happens and sometimes you have to make some financial changes. Whether it’s an unexpected illness, job loss, or something completely different but equally debt payment-plan shattering, it's ok. Just make sure you don’t lose sight of your goal and do what you can to keep yourself on track until you’re able to finish your plan.


Thumbs-Up-Icon_Green6. stay motivated during the process

Now that you have a plan in place and you've written it down, it's time to come up with ways to stay motivated during your debt paydown process. I want you to take a minute and celebrate each milestone when paying off your debt

Paying down debt is like running a marathon.  While you're laser-focused on reaching the finish line,  you need a minute to pause and catch your breath. Grab some water to stay hydrated, maybe take a second to reflect on how far you've come in this process, and tell yourself to keep going. In your pay-down process, it's ok to pause reflect by celebrating the small wins. 


Simply-Elite-Icon_Green 7. reward yourself

Let's say you're 4 months into paying off debt. You're making payments on time, you're paying more than the minimum amount, and you may have even found some additional income to help speed up the deb paydown process. Either way - you're working your tail off to stay on track. 

Every few hundred (or few thousand) dollars of debt you pay off, treat yourself to something nice. Maybe go to the salon and have an affordable spa day or buy yourself something nice for dinner. 

Don't Forget: it's ok to spend a little money; just don't lose sight of your end goal!  


Here are some of the rewards I did in my journey to paying down debt: 
  • Treat Yourself to the Movies: The best part is you don't even have to leave your living room for this one! Nowadays, it seems like you can rent or stream any movie (current or not) from one of the services like Hulu, Amazon Video, Netflix, HBO Max, Apple TV, and Disney +.  

  • Have a Spa Day: Sometimes, it feels good to be pampered. And, you can still treat yourself without breaking the bank by finding discounted services from places like Spafinder or Groupon.

  • Have a Nice Dinner: Whether it's home-cooked or you go to a nicer restaurant, this is a nice way to treat yourself to something delicious. (When I rewarded myself with a nice dinner, it was always seafood!)

  • Take a Day Trip: Between hiking in Asheville, NC in the Spring, going to Myrtle Beach, SC for the summer, traveling to Virginia to see family in the fall, and snow tubing at Hawksnet Snow Tubing Park in the winter, I made sure my trips were eventful.

  • Celebrate and Do a Happy Dance: You can do this as often as you need to put a little more pep in your step. You deserve it!


QUICK TIP: If you want to hang onto your credit card to continue building your credit score, but don’t trust yourself not to use it on little (or big) impulses without going back into debt, you can always freeze your card. This way, you’ll still have that line of credit available for emergencies or big expenses but you’ll have to actively unfreeze it, which will provide you the time and opportunity to really think through the purchase.


here’s what’s next 

Feel free to come back and use this article as a reminder to stick to your debt pay-down plan. I also hope you feel more confident in kicking debt in the hams and enjoy your life stress-free. Remember, your expenses are constantly evolving, so it’s ok to revise your plan. Whatever you do, just keep that momentum going of paying down your debt. 


apps and banking services that'll help along the way  
  • CMCU Budgeting in Online Banking: Did you know Charlotte Metro has free budgeting tools for you to use in Online Banking? Learn more about building your custom budgets here

  • Truebill: I personally love this app. It does more than what's advertised on the website. The app reminds you of upcoming payments that’ll hit your bank account, tracks your spending, and can cancel subscriptions for you. Plus, Truebill’s experts can help lower your bill by negotiating the best rate with your provider. Check it out

  • Debt Payoff Planner & Tracker: The  Debt Payoff Planner is the best debt payoff overall,  according to the ratings and reviews on Google Playstore (4.5 stars with 2,477 reviews). The basic version is free, but the pro-version is $24 for two years, with shorter terms available on the app.  Get the app here

  • Debt Manager:  This is a  get-out-of-debt-fast app that's available for Apple users. it includes the snowball method, a debt summary and tracking, a progress bar, and more. Check it out here. 


you deserve a freebie

If you were awesome enough to sit through all of that info, you certainly deserve a high five and some free downloadable templates to create your own payment plan. Start paying down your debt and get your budgeting plans in place today with these free helpful tools. You’ll be able to:

  • Create a monthly budget with income and expenses
  • Design a debt payment plan that works with your timeline
  • Visualize your long-term financial goals


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