Let’s be honest, everything is more expensive these days. Basic necessities like housing, food, and transportation are sky high. Things like inflation and tariffs are making sure those prices not just stay high, but constantly creep ever higher. I get it. Let’s dive into five tips to help you afford your minimum debt payments.
Before we dive into the five tips that will help you free up money to cover your monthly debt payments, it’s important to set the proper mentality about your money. Be sure you keep your chin high and your mindset aggressive about improving your financial situation. A mountain of debt can be downright demoralizing. You must avoid a scarcity mindset toward money at all costs. Remember, you have control over your financial wellness. You have control over your financial future. You have control over your financial presence.
One last thing to consider before we dive into the five tips that will help you afford your minimum debt payments is the debt strategy you choose. Do not, under any circumstances, approach debt repayment with a scattershot approach. You need a sound strategy that you will diligently follow. Perhaps the two most famous approaches are the Debt Snowball method made famous by Dave Ramsey and the Debt Avalanche method.
Both methods are quite similar. With the snowball method, you attack your debt from smallest to largest. This plays to the psychology of most people, feeding that sense of accomplishment from watching debts get closed out sooner, which helps maintain motivation. The downside with this method is purely mathematical. At times, your highest interest debt could wait to the end of your debt repayment, accumulating far more interest than you would have had you focused on the higher interest first.
This is where the Debt Avalanche method shines. With the avalanche method, you attack debt based on the highest interest first. Viewed strictly mathematically, this method saves you the most money. The weakness here, however, is where the Snowball method shines. If your highest interest debt also happens to be your highest amount, you may be left feeling like your chipping away at the side of a mountain with a tiny chisel. Those ‘wins’ from closing out debt accounts come far less often.
In general, both are great approaches that have helped thousands of people. The method I recommend is closest to the avalanche method, but places an emphasis on tackling the debt of the highest consequence first, then switching to work toward tackling debt from highest interest rate to smallest. In this method, debt that belongs to the IRS or a HELOC are attacked first, regardless of amount or interest rate. You can learn more about this method in our article detailing how to prioritize your debt repayment.
Once you’ve settled on your method, you’re ready to relentlessly attack your debt. But here’s the problem, right? You’re here reading this article because you can’t afford your minimum payments. Now it’s time to dive into the five tips to help you free up money.
Cut out all unnecessary spending
The first tip is the easiest fix. Cut out all unnecessary spending to free up cash that you already have coming in. The best way to do that is to get on a budget. I know, that’s often easier said than done. But I can’t stress how important this step is. People often unlock hundreds of dollars per month by making coffee in the morning at home instead of buying it outside, bringing a bag lunch to work or school instead of eating out every day, and cooking dinner at home instead of ordering in or grabbing takeout.
Seriously, this first step alone will often free up enough money to cover all your minimum payments. With the excess money you’ve freed up, maintain that discipline and put it toward your most consequential debt.
Increase your income
This second tip is another relatively easy one. Pick up extra shifts at work if necessary. All overtime available should be your goal. If overtime is not an option, gig work is wonderful. Driving Uber, delivering Uber Eats, Door Dash, etc. All of these are great options that can be done on your on time.
The great thing about this tip is that it’s something you can get started on right away. In just minutes, you can be registered right from your phone and taking on gigs. This is another tip that can work on its own. Hustle with extra shifts at work or take on gig work, even if only for a short time, and you’ll see that mountain of debt melting away faster than you would likely expect.
Sell High Value Items
This third tip is something that most people often overlook. Do you have a car with a payment that’s taking a chunk out of your monthly budget? Consider selling it or trading it in. The ideal scenario would be selling that car, getting rid of that expensive monthly payment in the process, and paying cash for a cheaper replacement. This might free up several hundred dollars per month in avoided costs and potentially net you a nice chunk of money to throw at that debt. If you’re considering this, definitely check out our three guaranteed tips to avoid an expensive car note.
Ebay is a great resource as well, particularly if you can identify some items that you might have accumulated that has some value. Every year or so I take a look at some of the items I have around the house that I no longer use and list them. On average, I net a few hundred dollars each time. That’s not a whole lot, but it can definitely help if you need to scrape up some cash in a pinch.
I don’t have direct experience selling on Facebook marketplace, but I would consider that as an option as well.
Check your IRS withholdings
This next tip is one that I’m still surprised so many people haven’t considered. A shocking amount of Americans pay too much in taxes every paycheck. In general, if you normally receive a large income tax refund at the beginning of the year, you pay too much in taxes. To be more specific, you have given the government an interest free loan over the course of the year. That money you get back in a refund is what you should have had in your budget throughout the year.
According to Bankrate.com, the average tax return for a single person in 2024 was $3,138. That is an extra $261 dollars per month that should be back in your account, working for you instead of working for the government. If you’re struggling with making your minimum payments, this tip would definitely come in handy. Heck, it’s good practice even if you were completely debt free.
Just be sure you do it properly. The IRS website has a ton of information that would help guide you through your proper withholdings. Things change from time to time, particularly after a new presidency. You can certainly go that route, but I would actually recommend you sit down with a tax accountant. It’s a small financial investment for the peace of mind of knowing you are properly set up.
Payment deferment
Believe it or not, many creditors are willing to work with people. If you’re in a pinch and need a bit of breathing room, you can absolutely reach out to your creditor and ask if they would allow you to defer payments. They are sometimes willing to give you a 30, 60, or even a 90 day hold on payments.
Now, you would still be responsible for the debt. Your creditors would not forgive the debt. And that debt would absolutely still accumulate interest. But this might be a good choice if you’re in over your head and do not want the derogatory remark on your credit report.
If you do use this option, just do so wisely. Take the time to form your game plan, and then execute your plan of attack using whatever method you like best.
Avoid bankruptcy or Debt Consolidation
One point of caution. I would recommend you avoid bankruptcy or debt consolidation at all costs. Bankruptcy is catastrophic to your credit and can come back to haunt you far into the future. Getting approved for a mortgage after a bankruptcy is much more difficult. In the cases of federally backed student loans, bankruptcy wouldn’t even wipe away the student loan debt. Again, bankruptcy should be a last resort at all costs.
Debt consolidation is not as bad as a bankruptcy, but I would still advise against it. In the vast majority of instances, you would be paying a fee for the ‘service’ of consolidating your debt. Sometimes these fees are extremely high. But the biggest reason to avoid these services is probably the fact that they don’t do anything that you couldn’t do yourself with a little time and effort, and without the penalty.
If you’re struggling to find ways to cover your minimum debt payments each month, I am confident these five tips will help. In fact, if you aren’t already doing the first four tips, I guarantee you will see a dramatic shift in your financial wellness if you implement them. Either way, keep your head up, and go out and attack that debt until it’s gone. Then stay out of debt!
