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How To Achieve Your New Year’s Debt Resolutions

Guest Post by Andy from Penny Less Dad

coins with plants growing on top and a clock
Everyone is fast and prompt at making new year’s resolutions. But very few actually stick to their resolutions through the end of the year.

It’s not that we don’t want to follow and chase our resolutions throughout the year. It’s just that we fix goals that are beyond our capability, and we aim for things that are beyond our reach.

In this post, I’ll keep things simple and steady so that you can actually achieve your new year’s debt resolutions!

Your resolutions should be easy to follow

Most of the time we aim to do things that are not easy to bring into reality.

Like if you say, this year you plan to erase $25,000 of debts, then it is impractical, as typically it will take more than a year to do so.

To make small and crisp debt goals, here are a few tips you should follow:

  1. Sort out the different types of debts you have, like overall credit cards debt this much, mortgage debt that much, auto loan debt that much, so and so. You may want to consider using Credit Sesame, is a free service that shows you how much of each type of debt you have in one easy-to-understand site. 

  2. Aim at one debt at a time as per your capability. Say you can only aim to clear out your credit card debt this year. There’s absolutely no harm in clearing one debt at a time.

  3. Plan to tackle the lowest amount of debts first. Those that will take little time to be paid off. If your first debt goal takes more than a year or so to accomplish, then it will be very hard for you to get satisfaction and a morale boost.

  4. Don’t let your debt payments hamper your lifestyle much. If anything like that happens then you are bound to get demoralized and might actually bail out in the middle of your debt clearing journey. This is a big reason why you should set small debt goals and knock them out one by one.

Along with crispy debt goals, you must have a crispy budget

man holding a small piggy bank

I can think of one such nicely improvised budgeting strategy. I love to call this the zero-based backward budgeting.

Backward budgeting helps you to keep aside amounts for your goals and high priority expenses first.

First, determine and keep aside the amount you want to use for your debt payments.
Then you list all your monthly expenses one by one as per their priority.

Give realistic amounts to all those expenses. These expenses will include your grocery bills, transportation costs, electricity bills and so on.

Here also you can do a bit of moderation:

  1. You can find ways to decrease your grocery bills, and therefore save money that you can use to do extra payments for your debts.

  2. Go low on your electricity bills and save both energy and money.

  3. At times use public transport to avoid excessive gas costs.

  4. You can also make a mini resolution alongside your debt resolution. This could be not doing too much of luxury expenses this year.

After you’re done with making the list, you add up the amounts to see whether or not it’s covering your whole salary. If it does then good, or else whatever’s left punch it to savings, or toward debt payments or anything useful you can think of!

Implement a good debt payment plan

Once you are done with budgeting, your next focus should be to pay your debts fast and also save money wherever possible.

You should try to follow these tips to become debt free and save money that I am going to give you now!

Here my primary concern will be dealing with consumer debts, like credit card debt and payday loan debt. My straightforward suggestion is to follow either the debt snowball method or the avalanche method.

Debt Snowball:

Arrange your debts in an increasing order. Hit your lowest debt amount first. For this debt, you start to do a little extra payment, while you do the minimum on your other debts.

Once you clear your lowest debt, roll the payment amount for this cleared debt onto the next higher debt in line, and start doing maximum payments for this debt.

Keep doing this until you clear all your debts.

Debt avalanche:

Unlike debt snowball, with debt avalanche, you pay off the debt with the highest interest rate first. You do maximum payments for this debt, while as usual minimum payments for the rest of the debts.

Technically debt avalanche will help you save more on your payments than debt snowball. But with snowball method, you will get a boost, as you will be able to clear out your lowest debt in no time and feel really happy about that!

If you are smart enough to follow the above-discussed steps and methods, then you can easily keep up with your New year’s debt resolutions!

With all said and done, I wish you a happy and successful debt-free year ahead!

Andy Masaki is a blogger at Penny Less Dad and financial writer associated with the Oak View Law Group. He is a debt expert and amember of several online forums where he shares his advice as well as tips to lead a financially independent life. You can follow him on Twitter. 

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Kara Jackola

Wednesday 25th of July 2018

If i use orbitz how can I book two adjoining rooms at a disney resort?

How do I go about renting from a DVC owner? I need like a 2 bedroom animal kingdom villa or a key west villa or wilderness lodge villa


Wednesday 25th of July 2018

Hi Kara! To book two rooms on Orbitz you'd have to book two separate reservations. After you get your Disney confirmation number and link the reservations to your My Disney Experience account, then call Disney and ask them to 1) link the reservations in their system as a party traveling together and 2) add a request to each reservation to have adjoining or connecting rooms (they are different - connecting has a door that opens between the rooms and adjoining are just next to each other). Here is more info on using Orbitz promo codes:

I try to answer most questions about renting DVC points in this post: If you have specific questions just leave another comment!

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