This Is Why It'€™s So Hard for So Many of Us to Pay Off Debt
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  • Real incomes have been stagnant for decades, while the cost of basic expenses has soared.
  • That’s meant less “slack” in people’s budgets, which makes it harder to pay off debt or save.
  • Picking up side income, living like a student, planning ahead and chipping away at basic expenses can help.

Earn extra income.

Easier said than done, of course, but one of the most exciting modern developments is the ability to pick up spare income in the sharing economy: Drive one night a week for Uber. Sell your crafts on Etsy. Airbnb your apartment. (Or try any of these other side gigs.) Use all that extra income to pay down debt.

Live like a student.

One of the best pieces of advice I heard leaving college was to embrace the three-roommates-and-Ikea-furniture culture throughout my early 20s and beyond. If you can live like a student a few more years, you can seriously decrease some basic budget line items. Given that housing is almost everyone’s largest expense, tolerating a complicated morning shower schedule a while longer can really make a difference.


Chip away at basic expenses.

You can save as much as 10 percent a year on heating and cooling by adjusting your thermostat by 7-10 degrees from its normal setting for eight hours a day, according to Department of Energy estimates. (Warmer in summer, cooler in winter.) Buying in bulk can save you money on groceries. Carpooling even one day a week can save you money on gas and wear on your car. Using your insurance company’s mail-order service to purchase prescription medication you take regularly can dramatically cut costs. Many retail pharmacies now offer 90-day prescriptions, too, with lower co-pays.

Plan better.

Just about everything you buy has a last-minute tax. If you’ve ever waited too long to purchase a plane ticket, you know what I’m talking about it.

But nearly everything works this way. If you plan ahead, you can take a subway instead of a cab. You can make (or even microwave) dinner instead of ordering in. You can score happy hour specials instead of paying full price—or invite friends to hang out at your place instead. A lot of unnecessary spending occurs because of poor planning.

Zero in on your spending weakness.

Everyone has a weakness, whether it’s shoes, video games or cable TV. No one’s saying you have to live like a monk, but take a minute to do the latte calculation above. How much is cable costing you over the course of the year? How much do you spend on movies? On food you end up throwing out, or cell phone data you don’t use?

Look at these expenses on an annual basis (even my $4 latte above adds up to almost $1,000 a year). Then make some commitments—a few less coffees or pairs of shoes, one more night at home each week. Climb the mountain $1 at a time.

Don’t neglect savings.

Finally, for many people living month-to-month, aggressively paying down debt when you have no emergency savings is a bad idea. Emergencies happen, and neglecting savings to put every last dollar toward your loans can result in having to borrow money at expensive rates when the unpredictable happens. To really make strides toward financial health (and see the biggest difference in your net worth), pay down debt and build up your savings simultaneously.

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