A Personal Finance Expert Has 2 Tips for Paying Off Your Debt Faster

You may be able to pay off your debt faster than you think, even if you don’t have a ton of extra money on hand.

Personal finance expert and author Tiffany “The Budgetnista” Aliche spoke at OneUnited OneTransaction, a conference about closing the racial wealth gap, about her best debt payoff tips. She recommended putting all “unexpected money” toward paying off your debts.

“Unexpected money is any money that you were expecting to spend but did not, or money you were not expecting to receive but did,” Aliche said.

1. Money you expected to spend, but didn’t

Aliche gave the example of buying a $50 item, only to find out when you go to the register that it’s half off. Instead of grabbing a second item so you get two for the price of one, put that extra $25 toward your debt. That $25 is unexpected money you didn’t plan to have.

Or maybe you go out with a friend, and the end of the meal, they grab the check. That’s $30 of unexpected money.

“You were planning to spend that $30 — $30 was gone in your head,” Aliche said. “Let it really be gone, but put it toward your debt. And if you’re debt free, put it toward your savings.”

This strategy may not sound like it produces much money. But think of all of the times in the last month a friend has treated you or a store has held a sale.

It’s easy to forget to put $25 here or $30 there toward your debt, so Aliche recommended having apps ready on your phone. If you have credit card debt, download the credit card app on your phone. As soon as you get into your car after brunch with your friend, go into the app and pay off $30 of your credit card debt.

2. Money you didn’t know you would receive

You can also put money you didn’t expect to get toward your debt. Maybe you get a bonus or unexpected raise at work, or money for your birthday or a holiday.

“Even your tax refund check could be unexpected money,” Aliche said. “Even though you’re kind of expecting it, it’s money outside of your normal job.”

Aliche does her best to reallocate this money within one hour of getting it.

Bonuses and birthday gifts will probably be more substantial than the money you save with discounts. Instead of $25 here and $30 there, it might be more like $100 here and $200 there. When you combine these two debt payoff strategies, you could pay down hundreds or even thousands more in a year.

About the author

Laura Grace Tarpley is an editor at Personal Finance Insider, covering bank reviews and guides. She is also a Certified Educator in Personal Finance (CEPF). Over her five years of covering personal finance, she has written extensively about ways to save.