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4 smart strategies real people have used to pay off thousands of dollars in debt

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Austin Sauer.
Courtesy Austin Sauer

Total consumer debt carried by Americans topped $4 trillion dollars last December for the first time ever. But you can eliminate even major loans with these strategies, which have helped real people pay off thousands of dollars in debt:

1. Track your money

The only way to truly know where your money goes is to track your spending.

Angela Harmon, who runs the YouTube feed DebtKickin Mom, felt surprised when she discovered groceries narrowly trailed her family's mortgage as their second biggest expense.

"I knew that with careful planning, discipline, and effort, we could cut the cost of food dramatically," she says. Making more frugal food purchases helped her family pay off $77,000 in three years on mostly one income.

Harmon stayed within a $500 monthly budget for her family of six with a "zero-waste food plan," where she took inventory of what was in her refrigerator or pantry and planned meals around those ingredients. She estimates that prepping her own produce, packaging her own snacks, and going with store-brand options saved her between 30% and 50% on many essentials — and she never had to clip a coupon.

Angela Harmon.
Courtesy Angela Harmon

2. Make it harder to spend

Justine Nelson, founder of YouTube channel Debt Free Millennials, estimates that only taking cash to restaurants, and tracking her expenses after every outing on a spreadsheet taped to her refrigerator, saved her $3,000. (Useful, as she was paying off $35,000 in two and a half years on a $37,000 annual income.) "It helped me see that I only had a finite amount to spend, so I could say 'no' to places that didn't interest me and say 'yes' to restaurants that I loved," she says.

She also curbed spending by using the cash-envelope system: She divided the only money she was allowed to spend on categories like clothes, haircuts, alcohol, and gifts, into separate envelopes. The visual reminder of dwindling dollars served as a clear reminder to choose cheaper options or hold off on a purchase until the next month.

Justine Nelson.
Courtesy Nigel Cook

3. Cut back on 'small luxuries'

Paying off major debt often means making minor sacrifices.

Photographer Austin Sauer of Louisville, Kentucky, paid off $84,000 in 30 months. He used the snowball method, which meant paying off debts in order from smaller to larger. (This is in contrast to the avalanche method, where you pay off the loans with the highest interest rate first.) Sauer focused on his plan to start a photography business after making that last payment.

He says the first cuts he made were to "all the monthly subscriptions that weren't contributing to creating income. So no cable, no Netflix, no Spotify, Pandora, or Apple Music."

Instead of paying for a service, Sauer spent his six hours of workday car time listening to personal finance podcasts or free music streaming apps. He admits the monthly savings of approximately $40 "weren't huge," but it kept him motivated as he worked toward his bigger goal.

"Every time I heard an ad I would remember that, one day, when I didn't have my debt, I could enjoy the small luxuries in life like monthly subscriptions," he says.

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4. Celebrate small wins to stay motivated

Even with a clear goal, anyone can experience moments of weakness during the months- or years-long journey to pay off debt. It helps to have some "small wins" along the way, says Harmon.

She too had success with the snowball method. That strategy can help you see results more quickly, and you'll have fewer debts to keep track of — all of which helps you stay dedicated. "You really can't underestimate how encouraging it is to start eliminating those debts one by one and freeing up that cash from the minimum payments," Harmon says.

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