5 Steps To Debt Payoff This Year

In a coffee meeting just the other day, my friend and I were talking about what we were excited about going into the New Year. His comment surprised me because he confided, “I’m finally going to payoff my debt this year.”

After some high five-ing and “that will feel great” and “yeah, won’t it though?”, I asked him what kind of debts he was about to payoff and why he’s now able to do it.

He said he would like to think that his mortgage debt was in the mix but instead he was focused on credit card and student loan debt. Now what surprised me wasn’t that he had these debts, after all he has a professional degree (which generally means student loans), and he travels regularly for his job so having a little travel related credit card debt is probably typical. But what shocked me was the amount of credit card debt he’d accumulated over time — almost $9,000.

Now to be very candid, no amount of credit card debt ever shocks me. I’ve sat with families who carried upwards of $50,000- $70,000 in revolving credit card debt. (The couple with $70,000 were paying $2,800 in minimum payments on a monthly basis and not getting anywhere with the balance.)

What DID shock me about my friend’s $9,000 is the fact that he realistically could’ve taken care of the balance in just a few months of paying extra. But having that debt hanging out there was just fairly normal for him and it never really bothered him.

His answer as to how he was now able to pay it may seem obvious, but the way he stated it made me want to write a blog post about it.

“I just made up my mind I didn’t want it anymore.”

Before I get into some of the ways to take a laser beam to your debt in the next several months, consider the certainty in the statement my friend made. He made up his mind he didn’t want it anymore. Honestly, part of the reason that his statement hit me in such a profound way is I’m re-reading Think And Grow Rich by Napoleon Hill for the 7th time. And one of the core principles shared in the book by every successful business tycoon Hill had interviewed was they all had DEFINITENESS OF PURPOSE.

My friend’s statement was about the definiteness of not having debt anymore.

THE FIRST STEP TO DEBT PAYOFF THIS YEAR IS… BE DEFINITE ABOUT DOING IT.

I’ve been in the financial education business long enough to know that there are people who talk about paying off debt, building wealth, investing in real estate, taking courses or attending seminars and then there are those that are actually doing these things. Talking about doing these things is not definite while actually doing them is.

A client of mine recently told me she and her husband each receive $500 cash from his parents for Christmas. While they can’t stand having student loans, his idea was to take the cash and buy a luxury item for their home. Her stance was to put the money towards their debt. Can you tell which is more definite about getting rid of Sallie Mae?

THE SECOND STEP TO DEBT PAYOFF THIS YEAR IS…FIND EXTRA CASH FLOW AND APPLY EVERY DIME OF IT TO DEBT.

When I asked my friend at the coffee shop about his process of getting clear of credit cards and student loans he told me point blank, “I’m finding every ounce of extra cash flow I can and applying it to the lowest balance debts. Once that’s paid off, I move right up the list.”

He went on to tell me that his “extra” cash flow came from evaluating every expense he had and digging into how he could minimize that expense until he was free and clear. While there are literally dozens upon dozens of ways to find extra cash, here are just a few examples:

  1. Have your insurance premiums re-quoted to see if you can save on your monthly, quarterly or annual bills. Every dime of savings goes right to debt.
  2. Examine your W-4 filed with your employer (if employed!). The number of dependents you claim will determine how much in taxes are taken out of your paycheck. If you’re accustomed to receiving a tax refund, consider using the extra monthly amounts you could be receiving in your paycheck to blast away debt.
  3. Refinance your car at your local bank or credit union and ask if they can move your first payment out about 90 days. This would give you three months worth of car payments that you could be using to eliminate those debts.
  4. Buy a Roku or Amazon Fire Stick for $30 and CANCEL CABLE. We’re headed for the future where cable subscriptions are a thing of the past. Blaze your own trail and cut the cable saving between $75-150 a month in the meantime. That’s some serious debt payoff glue.
  5. Limit your meals out to a certain amount per month. Take that amount out in cash and once it’s gone, it’s gone.
  6. Sell everything in your house that no longer holds meaning, is no longer useful, or you’ve outgrown. All proceeds go to blast away debt.
  7. Ask for a raise. You’ve been thinking about doing it for weeks now. It’s time.

If you’re intrigued about other ways to find some extra debt payoff fuel, I wrote a book called 30 Days To $1K which walks you through all of the ways to find extra in the budget.

THE THIRD STEP TO DEBT PAYOFF THIS YEAR IS… KEEP YOUR PRIORITIES FRONT AND CENTER AT ALL TIMES.

My friend showed me his payoff priority list which detailed when he conceivably could have each of them knocked out. All in all, he was looking to payoff nearly $25,000 between his credit cards and student loans in the coming 12-14 months. When I asked him how he intended to keep himself accountable, he showed me the payoff priority list was the homescreen on his phone, and told me it was taped on the inside of his planner, he had one attached to the dashboard of his car, one on his bathroom mirror and one on his monitor at work. “Adam, I can’t go anywhere without this being front and center.”

We are in a culture of instant access. Want a movie? Stream it. Want to watch a show? Download the whole season and binge to your heart’s content. Need something from Amazon? In some cities you could have it delivered the same day. Need a date? Swipe right.

I’m super guilty of feeding habits like daily coffee at Starbucks. It’s too easy to apply my thumbprint in my phone to recharge the Starbucks app with another $25. You have your own immediate gratification challenges which is why you MUST keep your debt payoff priorities in front of you ALL. THE. TIME.

Part of the reason our society is neck deep in debt is it’s too easy to swipe the card and not think twice!

THE FOURTH STEP TO DEBT PAYOFF THIS YEAR IS… TELL OTHER PEOPLE AND CREATE A SUPPORT GROUP.

In no small way, the reason my friend confided in me about his debt payoff was he knew that I would hold him accountable to it. Having gone through the process myself nearly 15 years ago, I’ve helped others walk the path and know the power of someone regularly asking, “hey, how’s the debt payoff process going?”

Whether these are close friends of yours, acquaintances from work or the gym, family members, or your financial planner or coach, AT LEAST SOMEONE needs to know about your mission this year to payoff debt.

Tell them they have carte blanche to hold you accountable. Call you to the carpet when needed and challenge the decisions you’re making daily that are hindering your progress. What you need is an accountabilibuddy.

THE FIFTH STEP TO DEBT PAYOFF THIS YEAR IS… CELEBRATE YOUR WINS.

The element most critical to your success is celebrating those little victories over your debts. When my wife and I were in our debt payoff process, we celebrated debt payoffs big and small with a $10 bottle of wine (instead of a $3 bottle!). A red sharpie marker was attached to the debt payoff priority sheet hanging on the refrigerator and every time an account was zeroed out, a big red line was drawn and some cheap red wine was drank.

While the process of getting in debt can be fun, getting out of it takes work but IT IS WORTH IT. There is nothing better than having only one or two bills to pay at the end of every month and knowing that you own the majority of your income.


Whatever your financial goals for the coming year, consider blasting away some of the debt that may be lingering from the holidays, from trips, or just from trips to Target, Costco or Nordstroms. We’ve had a monster bull market and hopefully you’re feeling the positive energy from that. Take some of those economic wins and apply them to the debts that may be holding back your wealth building power. There’s no time like the present and I’m rooting for you all the way to an island retirement.