Direct Lending

9 Effective Ways to Pay Off Your Debts

(This article was originally published on the 7th May 2017 and updated on the 20th February 2020). 

Do you have a pile of debt and it seems like you are never going to get it cleared up anytime soon…or ever? You are not the only one. We have rounded up a few easy to follow strategies to help you pay off your debt effectively!

1. Create a Budget

Photo by Pressfoto

The first step to clearing off your debt is to create a budget. You can start with an Excel spreadsheet or Finance Manager apps to track your monthly income and expenses. This way, you can itemise all your expenditures and be able to see where you can spend more or less on.

2. Pay Off the Most Expensive Debt First

Photo by Freepik

Sort your debts according to their interest rate from the highest to the lowest interest or from the most important to the least. On top of that, you prioritise paying off the necessities first such as home loans or rental, car instalment, utilities, personal loans, groceries, and then miscellaneous or pocket expenses.

3. Pay More than the Minimum Required

Photo by PennState World Campus

You should pay more than the minimum payment in your statement balance each month. Paying the minimum balance only would offset your debt and prolong you clearing the sum of your debt which increases with your monthly interest rate.

4. Avoid Unnecessary Spending

Photo by iStock

The best way to stop accumulating your debt is to stop spending! Of course, we do not mean by stopping your spending entirely. But rather, practice the habit of thinking before you spend. Ask yourself is it worth buying or will you still need it or use it 6 months from now? Practice this like a mantra until you have your finances in control.

5. Make Use of Credit Card Benefits

Photo by Today Online

If you have one (or more) of this ‘plastic money’, they can essentially do more than just buy things on a credit. Some credit cards allow you to move funds at 0% interest rate. If you have a sum of debt that you are confident that you can pay off within a few months, check with your bank to perform a ‘balance transfer’ for a small (if not free) fee to speed up your debt clearance.

6. Put Work Bonuses towards Debt

Photo by Malay Mail

If you receive a bonus or reward for your job, especially during year-end or festive season, allocate the money to pay off your debt instead of spending it. Avoid the temptation of splurging on a pick-me-up, it is more important to get your finances right first!

7. Sell Unwanted Gifts and Household Items

Photo by Time Out

If you have any old gifts, decorative or furniture that you do not need and is still in good hands, give it a good dusting and sell it off online to earn some quick cash. Put it up on marketplaces like or Lelong at a reasonable price so it can sell quickly! Profits from the sale of these items should go into your debt clearing funds.

8. Change your Spending Habits without Sacrificing your Lifestyle

Photo by Behance

At times, our daily habits are what got us into money problems. Think about how you spend your money daily, weekly and monthly. For instance, if you spend on a cup of teh tarik at the mamak every morning before work, it would be cheaper to bring a flask of the hot cuppa to work instead. The key is to ask yourself, “How do I spend less without changing my lifestyle too much?” Read up our tips to save money to help you get started!

9. Reward Yourself when you Achieve your Milestone!

Photo by Dominik Jirovsky

Paying off your debt will be a long and painful journey if you look at it as a punishment for your lifestyle. Set a milestone or a payoff goal and give yourself a small reward when it is met. This helps to keep us motivated. Of course, do not go on a splurging frenzy. For example, instead of taking an outstation trip, settle for a weekend camping trip nearby.

There are also ways you can earn extra pocket money to help clear your debt faster, check out our article on how you can earn side income while having your day job. Have your personal tip to keep your debt in check? Share it with us in the comments section below or on our social media.

This article is written by Direct Lending, an online personal lending platform that provides – Simple, Safe and Affordable Financing. Reach out to us if you are in need of a personal loan or talk to our friendly loan consultant team if you have any questions about personal financing. Our service as always is 100% free. For more useful personal finance tips, follow us on the blog or our Facebook page.

Direct Lending

Add comment