When we first started off on our journey to pay down $40,000 in debt — a combination of car loans, credit cards and student loans — I kept thinking I was doing something wrong. After I paid all our bills and at the end of each pay cycle, I kept finding that there was no money left to throw toward debt or to even build an emergency fund.
As I read about how people were throwing $500 a month toward their debt, I just assumed they must be making double what we were making salary-wise. It was disheartening and I really felt like we would never be able to make much progress toward paying down our debt.
Until we changed our mindset.
I found that in order to pay down debt, we had to make it a priority. It could no longer be the last thing we paid; it had to be among the first.
So instead of waiting until the end of the month to see how much money we had left over, which always turned out to be “zero,” we focused on paying debt first. As soon as we received our paychecks, we would pay our rent and mandatory bills, and then we would make a $500 payment toward debt. Whatever we had left over was what we had to pay for everything else — groceries, gas, entertainment.
While it was at first hard to limit our spending to such a drastic amount, we found that when you have less money to spend, you actually spend less. What a novel idea.
If you keep money in the bank account, hoping to have something left over, you will never have any money to contribute toward debt. When your money is in your bank account, you are almost guaranteed to spend it.
By paying debt first, you’re forced to live a more stringent lifestyle — which is absolutely necessary in order to pay off debt.
Through this “pay-debt-first” mentality, we now have less than $14,000 in student loans to pay off. It is so motivating to see the balance on your debt go down.
Do you ever see those other people who pay off debt and wonder what their secret is? The number one secret to paying off debt is to pay debt first!