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Feeling defeated by 2020? Perhaps you are hoping that 2021 will bring you a brighter financial future. The symbolism of passing from one year to the next invites us to enact changes in our lives and can be a great opportunity to jump-start fresh goals. If ditching debt is something you’d like to address in the new year, consider following this advice.

1. Say Goodbye To Debt by Identifying Your Financial Weaknesses

Does money stress you out?  If the thought of reviewing your finances fills you with anxiety, then it’s probably time to identify weaknesses in your money management style. Unpacking and correcting those weaknesses is a gradual process. Once you have taken stock of areas for improvement, you can start tackling those weaknesses and making them a thing of the past. 

Which of the following money weaknesses resonate with you?


I live paycheck to paycheck

I have an irregular income stream


My debt-to-income ratio is too high (calculate your DTI and learn why it matters)

I have high-interest debt

I am chronically late with payments

I owe money to friends and family

I am in denial about big-ticket debts like student loans, credit cards, or personal loans


I don’t make a budget (learn how to make a budget here

Organizing financial paperwork overwhelms me

I have a hard time tracking my spending

I have a hard time estimating what I can afford

I don’t plan ahead for my taxes

I rarely save over time for a big purchase


I impulse buy things I don’t need

I make a budget, but don’t follow through with it (try a new budgeting method like 50/30/20)

I shop with a clear list in mind of what I can afford

I purchase subscriptions I rarely use or forget about

I rely on credit cards for emergencies or big purchases

Mindset & Relationships

I keep money secrets from my spouse or others in my household

My household does not communicate openly about budgeting or money

I focus on short-term rather than long-term money goals

Once you’ve pinpointed your financial stumbling blocks, you can start to address them. Some issues may require significant interventions, while others can be relieved with habit changes. 

2. Make Good on Your IOUs

It’s one thing to owe money to a bank, but entirely another to owe money to friends, family, and colleagues. Owing money to people with whom you have a personal relationship is a sticky business. While we don’t typically recommend lending or borrowing this way, it does happen. 

If a well-meaning relative or friend has loaned you money, the end of the year is an excellent time to round up those outstanding IOUs and make sure you have a plan to pay them off. 

Pro Tip: Treat money borrowed from friends or family just as you would any other type of debt. If you’ve chosen to repay them in monthly installments, set-up automatic payment from your bank account. This can be in the form of a mailed check or an automatic transfer. That way, you won’t forget to pay. They will feel free of the uncomfortable burden of reminding you about the debt. 

3. Automate Your Bills

If you find yourself struggling to pay bills on time because you are forgetful or disorganized, you should take advantage of automated bill payments. Most lenders, utilities and landlords offer this feature within their apps or websites. Also, most banks have bill pay features that will mail out paper checks on a regular schedule. 

Automating your bill payments ensures you don’t have to keep track of every bill each month. However, you do need to ensure that your account has enough funds to cover each bill when it auto-debits. 

Make sure your bank account is prepared for each bill with a few simple steps:

  • Make adjustments to your paycheck deposits to make sure enough money is deposited into the account you use to pay your bills. 
  • If paycheck deposits and bill pay dates are out of phase, consider reaching out to your lenders to adjust the due dates. 

Pro Tip: If you have multiple bank accounts, consider using one of your accounts exclusively for bills. You can deposit a certain amount of money from your paycheck each month into this account to cover your obligations and use another account for variable expenses like groceries or discretionary spending.

4. Ask Lenders to Adjust Your Debt Due Dates

Sometimes, your paydays and your bills just don’t line up, and your finances can become a logistical nightmare. Suppose you regularly find yourself worrying that you will be paid in time to cover your bills or avoid setting up automatic payments for this reason. In that case, it may be time to contact your lender, utility provider, or landlord to ask for a due date adjustment.

There is no guarantee that they will agree to change your due dates; however, if they do, it can be a big help.

Make sure you know ahead of time what adjustments will be most helpful to you—depending on when you get paid and when your bills are due.

Examples of due date adjustments to consider:

  • Make all bills due after your last monthly payday
  • Make all your bills due after your first payday and use your second for saving and spending
  • Space them out:
    • Make half of your bills due after your first biweekly paycheck
    • Make the other half due after the second
  • Make one-quarter of your bills due each week
    • Best for people who are paid weekly 

Pro Tip: Some credit cards allow you to change your due date on your account dashboard, but in general, a phone call is an easy and effective way to ask for a due date change.

5. Commit to Building an Emergency Fund To Avoid New Debt

Debt caused by unforeseen circumstances or emergencies can sometimes be avoided when you have emergency savings in place. When you have money in the bank for last-minute car repairs or vet bills, for example, you won’t need to rack up charges on a credit card or take out a personal loan. 

Saving for an emergency fund is the best way to prepare for short-term expenses that could land you in debt. If you do dip into those funds, prioritize replenishing them so that you’ll be prepared for the future.

6. Ask for a Raise or Pick Up a Side Hustle to Chip Away at Your Debt

If your debt outpaces your income, then it might be time to find a way to increase what you bring each month. If you have worked for a company for six months or more, ask your supervisor for a raise or about opportunities for advancement to a higher-paid position within the company.

If asking for a raise isn’t possible, consider picking up a part-time side hustle to earn more money. Side hustles are like part-time jobs but usually come with more flexibility, which should keep it from interfering with your primary job. 

Check out this advice side hustles and freelance workers to learn more. 

The money you make with your side hustle should go directly toward your debt or a particular savings goal that will help you get out of or stay out of debt in 2021.  

7.  Ask for Help From Debt Specialists

Sometimes we take on more debt than we can handle. If you are in a position where your debt is ballooning out of control, it’s possible that no amount of extra income, tighter budgeting, or habit changes can pull you out of it.

Instead, it might be time to talk to debt specialists to explore more aggressive debt consolidation options like a debt consolidation loan. The Consolidation Specialists at Accredited Debt Relief will help you discuss your options and come up with a plan to manage your debt.

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