Having more than one debt doesn't just stretch your dollars thinner; it makes sleepless nights that much longer. The bad news is that paying off debt takes discipline to pull back on spending while you focus on repayment. The good news? There are strategies that can help you get through it with more ease and efficiency.
Looking for smart ways to budget multiple debts? Try one of the strategies below and see if it works for you.
Make a Budget to Pay Down Debt
The first thing you’ll want to do is ensure you have a budget. If you don’t, it’s time to sit down with a list of all your household expenses and monthly take-home to figure out exactly where your money goes each month and how much you have leftover when it’s all said and done.
There are a number of strategies that can help you stay on track as you budget each month.
50/30/20 Rule for Creating a Budget: With this strategy, you put 50% of your needs towards the necessities, like housing, utilities, and groceries; 30% goes towards entertainment and recreation; and 20% goes towards savings and debt repayment. Of course, if you want to be able to put even more money towards debt repayment, let’s get rid of that second category. Dine in, stream instead of going out, and redirect what you save toward your debt
Zero-Based Budgeting: This strategy requires you to take your entire monthly budget and whittle it down to $0 by giving every dollar an assignment, like household expenses, savings, and repayment.
Pay Yourself First: If saving consistently is a struggle, this strategy is for you. Instead of saving whatever is left at the end of the month, you set aside a predetermined amount from your take-home pay the moment it hits, then use what remains to cover bills and expenses.
Envelope Method: Create digital or physical envelopes designated for different expenses, like groceries or entertainment. Once an envelope is empty, you stop spending from that category until the month resets.
Other Helpful Tips for Paying Your Debt Back
Beyond budgeting strategies, there are other ways you can help keep yourself on top of repayment. This includes automating all your monthly payments, so you never miss or make a late payment. There are also budgeting apps that can help you keep on top of your finances, like GoodBudget, which is good for anyone who wants to try the Envelope Method, or Honeydue, which is for couples. Additionally, trying repayment methods like the debt avalanche or debt snowball can help you streamline paying back your debt.
If your debt feels unmanageable, look into nonprofit credit counseling. These organizations offer budgeting help, financial education, and goal-planning. They can also enroll you in a debt management plan, negotiating with your lenders to consolidate your debt into one monthly payment, lower your interest rate, and set a repayment timeline of three to five years.
Budgeting strategies aren’t one-size-fits-all. If one doesn’t work for you, keep trying until you find the one that fits your lifestyle and financial situation—and you’ll be able to pay off your debt once and for all.