9 Ways to Redirect Money to Pay Off Your Debt

A little self-discipline can go a long way

Origami Birds made of money flying from purse

Jan Stromme / Stone / Getty Images

Debt can be overwhelming, but it doesn't have to take over your life. Paying it off can be easier than you might think if you adopt a few healthy habits that will help control and manage your money. Know what you owe to whom, and figure out ways to redirect the money you earn to pay off those accounts. You can eliminate debt with a little time, patience, and diligence. ​

Put Yourself on a Bare Bones Budget

This goes a step further than the dreaded "B" word. It's the Triple-B word, but don't let that daunt you.

Start by making a list of all your monthly expenses. Now eliminate anything that isn't essential. Grabbing a coffee on your way to work? Paying for a gym membership rather than jumping rope in your basement? Cross them out and redirect the money you've been spending on these things to your debt payoff. Only you know what you can conceivably live without.

You can do this on a notepad or you can start a spreadsheet on your computer. You might even consider buying personal finance software. That's another expenditure that you'll have to figure out how to pay for, but it might be worth it in the long run.

Budgeting can be much easier when you see everything in black and white—how much you spend each month on each and every obligation. Some bills might be due quarterly, semiannually, or yearly, so divide them into monthly increments.

Don't overlook your cash expenditures and debit charges. Keep a running total each day in your phone—apps for that make it really easy. Yes, it means making a note every time you purchase one of those cups of coffee you can't live without, but you might be really surprised when you realize how much you spend on these little things when you total it all up at the end of the month. This can be a prime area for cutting back and saving some money.

Try it for a month or two, plunking the extra money you've freed up into a savings account all its own to be dispersed among your creditors.

Earn More Money

Find out if your employer will authorize some overtime or get a part-time job. Do whatever it takes to bring in more cash. It doesn't have to be grueling. You can pick up a side gig, such as driving for Uber occasionally, on your own hours and your own terms. You're not punching a second-time clock. You're available when you want to be available. Explore whether you can actually make a little money off your hobby.

If even that feels like too much for you because you're already working 65 hours a week, considering selling some of your belongings. Go through your closets, drawers, maybe even the garage or your storage unit if you keep one. Tag anything in decent condition that you haven't used or even thought about in months and post those items on craigslist or eBay. Take some quality photos of the items if you really want to get top dollar which you'll apply to your debt.

Shop Smarter

Challenge yourself to get the best price possible on everything you buy. Look for sales. Clip coupons. Send in mail-in rebates. Do whatever it takes to get a better deal and keep track of your savings, then apply it to your debt.

Credit Cards Are the Enemy

You might also want to tuck those credit cards aside. Leave them at home instead of carrying them with you, or at least hide them in the back of your wallet where you have to really work at fishing them out. This trick can be as simple as wrapping one or more rubber bands tightly around them. You'll think about it the next time you're trying to free up all that elastic.

And what about all those online stores where you've stored your credit card information for frequent purposes? Delete that information. You'll have to look up your card number to enter it the next time you decide to buy something...which gives you a little time to think about whether you really want to do so.

Try to confine yourself to cash purchases only. People tend to think more about what they're spending when they're handing over paper dollars for purchase...just don't forget to enter the expenditures in that list of cash purchases you've been keeping on your phone. You'll still want a record that you spent the money.

Give yourself $50 or $100 a week—whatever works for you—for spending money. When it's gone, it's gone. Don't let yourself dip into the checking or savings account for more. Just make do. It's painful, but so is carrying a lot of debt.

Delay Purchases

Make do with what you have, or do without it until your debt is paid off. This might mean buying fewer clothes or learning how to repair things around the house to make them last longer. You might even learn a new skill at the same time.

Take Advantage of Any Windfalls

Did you get a raise or a bonus at work? How about a tax refund or birthday money? Make a habit of putting any unexpected money you receive toward your debt, maybe sticking it in that same savings account you set up to collect what you've shaved off your budget.

Look at it this way. If you've been existing on $750 a week all along and now you've been promoted and you're earning $850, you won't miss that extra $100 because you never got used to having it in the first place.

Plan Your Attack

Decide how much you can afford to pay toward your debt each month, then decide who gets how much first. There are two common strategies here: the snowball method and the ladder method.

The snowball method provides a feel-good approach. If you owe Lender X $5,000 and Lender Y just $500, clear that $500 balance first. Now move on to the next lowest balance. You'll have the satisfaction and reward of paying off one, two, then more accounts on a somewhat regular basis, which can give you the incentive to keep on saving.

The ladder method involves starting with the account that charges you the most exorbitant interest and fees. You're just throwing that extra money away when you could be putting it to other bills, so get rid of those accounts first. Continue making minimum payments on other accounts until that nasty one is paid off and gone, preferably without using those. Now move on to the next highest interest rate and start the process all over again.

Don't simply commit yourself to make only minimum payments on all your accounts. You'll be paying them off forever.

You might want to schedule automatic payments to ensure that you follow through with your plan.

Get Help From an Expert

This shouldn't cost you much because credit counseling is often free of charge or provided at a very low cost. Have someone in the know review your budget with you. She might be able to point out a few strategies or options that haven't occurred to you. The National Foundation for Credit Counseling can put you in touch with a credit counseling organization in your area.

Stay Motivated

Knowing that you're one step closer to being debt-free can be very motivating and a great stress-buster. Look at how much you've paid off rather than at how much you still owe. An optimistic attitude can keep you on the right track. Make use of these strategies:

  • Keep a log for each individual debt. Write down the date and amount of each payment and keep a running total of the remaining balance. Paperclip this with all the bills and receipts you receive so you stay organized.
  • Move that pile of paperwork to a "Debt Free!" folder when you pay off an account. Watching the folder grow over time is a reward in itself.
  • Double-check that your payments are being applied properly if you say organized with good records. After pay off, keep your records for a few years just in case you need them.

And remember, you're in this for the long haul. You don't want to pare down your debt just to start charging and dig yourself in deep again. That said, there's nothing wrong with periodically rewarding yourself—periodically being the operative word here. Give yourself a small treat when you achieve a major milestone, such as paying off a certain account.

Maybe just go out for dinner rather than on vacation. The point is that a life without any sort of occasional splurges can be unpleasant, so make yourself happy at appropriate times and in manageable doses.