Paying off your debt begins with cultivating a new mindset. By creating a budget and committing to it, you can feel empowered and in control of your finances. As Mark Twain once said, “The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and starting on the first one.” For some, the burden of debt can feel like an overwhelming obstacle, but don’t lose hope and let it impair your ability to address debt.

There are many ways to make changes in spending, and here are a few tips to help you start saving and stop adding to your debt:

Track your fixed and discretionary expenses

Begin by tracking all your fixed monthly expenses — rent or mortgage payments, utilities, internet, phone bill, car and home insurance, property taxes, condo fees, groceries, monthly subscriptions, pet costs, and anything else that you pay monthly. For variable expenses, such as personal care, clothing, travel, entertainment, and dining out, be sure you track everything you purchase — even the cup of coffee you buy before work. Whether you write all your expenses in a notebook, use a spreadsheet, or an online budgeting tool — understanding where your funds are spent is critical to assessing where changes can be made. 

Prioritize

First things first: it’s essential that fixed living expenses and debt-repayment are the priority. Budgeting helps you determine your “wants” from your "needs" and by reviewing your spending habits, you can identify areas where you can cut back. This may involve reducing dining out, canceling unused subscriptions, or finding cheaper alternatives for certain expenses. Even small changes add up over time and free up more money for debt repayment. Online budgeting tools can help you monitor your current spending and see where you need to prioritize.

Save

While it may seem counterintuitive to save money while simultaneously working to pay off debt, having an emergency fund can prevent you from going deeper into debt. Strive to save at least $1,000 to begin, then gradually build it to cover three to six months of living expenses. An emergency fund can help ensure you’re prepared for any unexpected expenses that may occur without resorting to credit cards or loans.     

Improve your cash flow

Sometimes budgeting alone isn’t going to solve your debt issues as quickly as you want, and it’s time to get creative to boost your income to accelerate your debt repayment. Improving your cash flow can mean refinancing or consolidating your debt into one loan, finding equity in your home, getting a second job, or taking advantage of other unexplored income opportunities. 

Start big or start small

There are two ways to tackle your current debt, and both have their advantages. Starting “small” and paying off your least intimidating debts first allows you to see results sooner — giving you that feeling of accomplishment you need to get through the debt repayment process. Meanwhile, starting “big” with your highest interest debts will take longer before you see them fully repaid. However, it will mean paying less over the long run by saving you more money in interest payments.

Know your milestones

Setting clear financial goals is a great way to track your progress, and will also earn a sense of achievement as you make your way out of debt and help motivate you to stick to your budget. Don’t worry if your goals have to change along the way or take you longer to accomplish than you hoped. As long as you keep working towards your goals, you are making gains towards reducing debt.

Seek help as you work to achieve your goals

Overcoming debt can be a challenging process to work through. Rely on your support network and share your financial goals to family, friends, professionals, and mentors. They can offer encouragement, advice, and cheer you on throughout your journey.

We’re here to listen, and if you need help getting started or would like to talk with someone at ATB about a financial plan that would best fit your situation, contact us or visit your local branch.​