pay off debtHey Ladies!

By show of hands, how many of you want to pay off debt? That many huh? No worries, so do I and so does just about everyone you know.

Unfortunately, debt is a way of life for many women. I didn’t want that to be my life, so I created a 7-step, pay off debt system that will have me debt free in a few years!

My pay off debt system is working so well for me, that I had to extend my financial help to my Sis-Stars. 🙂

Ready? Set? Let’s pay off debt…

Step 1) Create your Money List aka a quick budget. Before you can dig your way out of debt, you need to know where you currently stand financially. This process should take you no more than 30 minutes.

(Need financial help with step 1? Use Day 1 of my bestselling book, The One Week Budget, to get you up and running… don’t worry, it’s FREE—> TheOneWeekBudget (Sneak Peek))


Step 2) List all of your debt from lowest to highest.

FYI: You might need a box of tissues handy. Looking at your debt can be a bit depressing, but cheer-up chuck. You’re only 5 steps away from getting your situation under control.


Step 3) Figure out how much money you can squeeze from your Money List, for your pay off debt plan. Good news Boo! There’s no need to change your lifestyle. There are ways to free-up cash, without making dramatic changes to the way you live.

First, I suggest doing things like: reduce your cable (ask your provider to get rid of the channels you don’t watch), cancel magazine subscriptions (ehm…the library), cancel a gym membership (come on, you’re not using it), and call your service providers and ask for discounts (i.e.: car insurance, cell, utilities). This works! If they claim they can’t help you, use the magic words, “Can you please transfer me to your Retention Department?”. There’s always a deal to be made. 🙂

Reminder: Make sure to keep some of what you save for saving. Paying down debt and savings should always happen simultaneously, because being debt-free without savings = debt.

The reason is, even if you pay off your debt, eventually an emergency will arise and if you don’t have savings, you’ll have to get back into debt (i.e. credit card or borrow money), in order to handle the emergency. Sooo being debt-free, but not having and savings = debt (eventually)

Step 4) Pay only the minimum amount required on all of your debt, with the exception of the one debt you are trying to pay off. This should be the debt with the lowest amount owed. I suggest paying the lowest debt off first vs. the debt with the highest interest rate, because when you pay off debt quickly, having early success will trigger an emotional reaction from you (happy-dancing), and that will enable you to feel encouraged and will motivate you to continue with your pay off debt plan.

Note: Paying only the minimum on your debt with high balances means that it will grow.  Before starting your debt pay-down plan, try and transfer the debt with the high-interest rates to new cards with lower rates. Head to Magnify Money to help you find a free or low-cost balance transfer card based upon your specific, financial situation. This site will even calculate how much you’ll save if you transfer your current balances to a new low-interest rate card.


Step 5) Pay the minimum and the money you squeezed from your Money List (step 3) for debt reduction, toward the first (lowest) debt on your list. Make sure to automate the payments. This will leave you with less work and tallying to do each month. Remember to reset your automation when you move on to the next debt on your list.


Step 6) After paying off the first debt, apply ALL of the money you used each month to pay off debt #1 and put it towards the next debt on your list. This means that the minimum amount from the first debt, the minimum from the second and the extra money that you found in your Money List, will be applied toward the second debt on your list. Don’t forget; automate this new payment; doing so will help you stick to your pay off debt plan. Haven’t you heard? Automation is the new discipline.


Step 7) Pay off debt #2, then transfer ALL of the money you were paying each month to the second debt and apply it towards the third debt, along with its minimum. This means the third debt will be getting: the first debt’s minimum, the second debt’s minimum, its own minimum, plus the extra money you found in your Money List. Once again…AUTOMATE this new payment and continue with the cycle until you’re debt free!

The AWESOME thing about this pay off debt plan is that, as you begin to pay off debt with higher balances, you’ll have larger amounts of money to pay them. The reason is, you’ll have “collected” all of the minimums from the previous lower debts, and will be using them along with the money found in your Money List to pay the higher debts off.

A little extra financial help: After using this pay off debt system, continue to make “payments” to yourself and finance your savings, retirement and investment goals. BOOM! 🙂


SIDEBAR: Give your pay off debt plan a Turbo Boost!

Use UM (Unexpected Money) to help pay off the main debt you‘re focused on. UM is any money received outside of your primary source of income, a.k.a. your J-O-B.

Examples of “Unexpected Money” are: a raise, loan repayment (to you), a refund (from taxes or from returning unwanted items), rebates (do you fill out and mail in those forms? I do!), found money, gifted money (happy birthday!). If you purchase an item that is on sale but don’t realize it until you get to the cashier, the money you save is “Unexpected Money”. You already planned to spend the money on the item, so you won’t miss it if you use it for your debt reduction instead.

If you have generous friends who occasionally surprise and treat you by paying for your meal, the money you were going to pay is also Unexpected Money. Cha-ching! Are you starting to see the possibilities here?


In a nutshell, “Unexpected Money” or UM, is any money that you did not expect to receive or save. It’s money that does not normally contribute to your day-to-day living expenses. So, it’s therefore not calculated into your Money List you now have. You do have a new Money List, right? (step 1)

The best way to use UM is immediately. As soon as you encounter UM, go online and make an additional bill payment in the amount of the UM, to the lowest debt you’re working on. There is no amount too small and it really adds up!


Soooo, now that you’ve got your pay off debt plan in place, do you feel a little better?

Questions? Thoughts? Please share them nicely with me in the comments below. 🙂

Need more help? Sign-up for my free resource, the Live Richer Challenge: The Fundamentals. JOIN us here and LIVE RICHER!



Sidebar: If you still need MORE help. I’ve written an in-depth ebook entitled:

How to Get Out of Debt (a step-by-step, quick & easy guide). 

It’s $.99 and can be found on Amazon here:

About the Author Tiffany Aliche

Tiffany “The Budgetnista” Aliche, is an award-winning teacher of financial education, America’s favorite, personal financial educator, and author of the New York Times Bestselling book, Get Good with Money. The Budgetnista is also an Amazon #1 bestselling author of The One Week Budget and the Live Richer Challenge series and most recently, a children's book, Happy Birthday Mali More.

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  1. Great post – people don’t realise (until its too late) the devastating effect that debt can have on their health, happiness and relationships

  2. Love this post. I have now run into some unnecessary debt due to my ex husband. And though I am mad I have to sacrifice and pay it it is something I have to do. I was a bit discouraged but this post has surely helped me to put it in perspective. Hopefully I can be out of that debt by a years time. I do have a favor to ask, I do not have facebook and would like to get the one week budget please. Is there another way to do that? @thebudgetnista:disqus


    1. Hi Khia!

      I’m so glad that you’ve found this post useful. You don’t have to have facebook to get the book. Use the link above and enter your email UNDER the FB option as an alternative.


  3. Good afternoon ms bugetnista I’m into debt way over my head. I don’t know where to start . I owe @ least 80,00.00 in taxes . I need serious help. Frustrated

    1. Hi Janeen, I too owed a lot of money to the IRS, but now totally paid off. I contacted them and they set me up with a payment plan I could afford with several years to pay it back. Fortunately, I didn’t need it for the full length of time. I could have automated, but chose to do it online and it worked for me. They were very friendly, courteous and understanding. I also prayed before I made the call!☺

      1. Thank you for that positive feed back. I have to make that call & this is the 1st I heard something postive

  4. Tiffany,
    Thank you for these “golden nuggets” of valuable insight on how to get control of that monster called Debt. I do see light at the end of the tunnel and it’s not a train…which is great news. I am currently unemployed; however, I still do my monthly budget as I have been doing for about 5 years. This post gives me hope that I will get this debt under control…well on to becoming employed, soon…very soon.
    Standing on Faith and being Debt FREE

  5. What about if your debt is only large amounts like student loans and mortgage? Shouldn’t out try to pay those off? My student loan interest is very low. Should I focus on that or mortgage which is higher but a lot larger. Or just use any extra money I cone across to save and invest…ie. pay myself?

  6. Thanks Tiffany!!
    This is very helpful and motivating. About to work on my budget again!
    I was able to do a balance transfer from a credit card with really high interest and that help me feel a sense of relief!!
    My debt isnt that bad but I have it and I really hope to get it under control and be able to save/have a savings/emergency fund.
    Thanks, again!!!!

  7. I set this up about 2 months ago. I have paid off 3 cards with this method. Also, when they are paid off, I remove them from “circulation’, so I am not tempted to use the card until all are paid off. I have one go to card now that I use and allow to accumulate a balance until I can get the rest paid off. In 2018 I will assess my debt ratio and credit card balances and possibly close a couple of the high interest cards. Until then, to keep up my credit rating I am just leaving them with a zero balance.

    1. Make sure you don’t close the older cards because that adds some positive points to your credit score for length of credit! But congrats!!

  8. I was asked to join this company that will help me pay off my house in 5.7 years however: it will cost me 3500 to join. Is there any tips on paying off my house sooner without being a member of a club? H
    ow do I delete interest?@ thebudgetnista

  9. I have multiple credit cards and been trying to pay the min on all so that my credit isn’t totally ruined but its not working. do i just focus on one at a time?

  10. Thank you Tiffany! You have been a big help with me knocking off my debts. I been using this method and it’s be doing extremely well. Thank you so much

  11. I am in this process now and thanks to unexpected funds I can achieve my goals much sooner than expected.

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