You may have heard of the infamous 52 Week Money Challenge, which helps you save money over the span of a year (or whatever timeframe you choose). Just like saving money, you can pay off debt with a similar challenge.
What is a Debt Payoff Challenge?
This debt payoff method is similar to a money challenge except you’re paying off debt instead of saving money. Often, debt payoff challenges occur with a group of people.
Believe it or not, debt payoff challenges have proven to be successful, and have helped consumers pay off thousands of dollars in debt. It turns out, that if you approach paying off debt as a game or competition, difficult and daunting tasks like saving money or paying off debt become more interesting and easier to accomplish.
The Debt Payoff Challenge 2019
Just like money saving challenges, you can alter the debt payoff challenge to suit your specific needs. For instance, this year, you can take a 12-week debt payoff challenge and focus on smaller debts instead of the larger ones (i.e., student loans). If you have a debt amount less than $10,000, you could set your goal to pay off 35 percent ($3,500) of it over 12 weeks.
Many participants opt to snowflake their debt (one of the most popular debt payoff methods) when possible while sticking to a strict budget to reach their goals. It’s often helpful to use a downloadable debt payoff chart like this one to keep track of your progress.
If you’re interested in taking part in the 12-week debt payoff challenge (or any debt payoff challenge) for 2019, here are some tips and ideas to keep in mind:
Pay the Smallest Debt First
This is often the most important piece of advice if you’re working toward paying off debt. First, it’s recommended that you have e a $1,000 emergency fund in place before tackling any debt. Then, you can begin paying off your small debts. For instance, if you have a couple of $100 medical bills that you need to pay, take care of those before tackling the rest of your debt. This tactic makes paying the big stuff easier because you’re no longer weighed down by the smaller amounts, and you get a sense of accomplishment early on.
Paying Off the Highest Interest Debt
Next, you should identify the high-interest debts you owe and pay those. For example, after paying off your small debts, work on credit card debt or student loan debt. If you have multiple debts accruing interest, you will want to focus on paying off those with the highest interest before the others.
Snowflaking Your Debt
You may have heard of “snowflaking” your debt. This means that any additional money outside of your base salary (i.e., birthday/holiday money, bonuses, additional income) goes toward your debt. If this type of debt payoff method interests you, you may want to also try the Debt Snowflake Challenge to pay off your debt this year.
Make the Debt Payoff Challenge a Priority
If you’re going to be serious about paying off your debt, any debt payoff methods you try should take priority. You should also create a new budget for the year, specifically with paying off your debt in mind. This could mean including a category for “additional bills” each week where you enter your debt payments. You might also need to scale down a few expenses such as transportation, entertainment, and beauty to make room for your debt payments. Or, even look for ways to make extra money.
Don’t Stress Yourself Out – Kill Your Debt
Although paying off your debt is a priority, be sure to make time for fun. If you spend all of your money paying bills and paying off debt, you’ll be miserable. When you make your budget out for your debt payoff challenge, be sure to budget some cash for entertainment or something you enjoy. After all, being well-balanced is important to personal finance.
Looking for a debt payoff challenge group? Join our forums and start paying off your debt today.
Photo: Sean MacEntee