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If there's one thing that will improve your financial health, it's paying down debt. Being in debt limits the amount of money you could be using to save, invest, and enjoy.

One of the most important things you can do if you're carrying debt is to make a plan to pay it off. But the secret to ridding yourself of debt is to cultivate everyday habits to help you pay off what you owe and avoid going into debt in the future. Here are a few tips to help you pay down debt.

Create a Budget

The first step is calculating your monthly income along with how much you can put toward your debt. Determine exactly how much you earn each month. Then, list all of your essential expenses, such as your mortgage or rent payment, utility bills, groceries, transportation costs, and healthcare. From there, look at your non-essentials. How much do you think you need for entertainment, restaurant meals, and travel? Those categories are usually good places to consider cutting back on so you can put that money toward your debt.

Consider adopting the envelope system, as explained by Dave Ramsey, to help you budget. Each month, withdraw cash for your different spending categories, then put the amounts you've allotted for each into labeled envelopes. Once the money in a given envelope is gone, you're done spending in that area until next month. Not only can this help you curb impulse spending, but it will also give you a more tangible sense of where your money is going.

Reduce Non-Essential Purchases

Track your daily expenses and review them once a week or month to see where you can further reduce spending. Maybe you've budgeted $100 a month for restaurant meals but realize that you don't need to dine out as much. Trimming that category in half gives you an extra $50 a month and $600 a year you can use to pay down debt.

Once you start paying attention to your daily habits, you'll find a surprising number of ways to cut expenses. The more intentional you are about getting out of debt, the better equipped you are to discern between essential and non-essential expenses.

Search for Free Alternatives

Whenever possible, seek out free entertainment and social opportunities. Check your city's Facebook page and the local newspaper for events, such as free movie nights, free museum days, and free festivals. Local libraries often let cardholders borrow more than just books, including free passes to area museums, zoos, and more. Farmers markets are also great places to socialize.

Start a Side Gig

Sometimes your current income isn't enough to move the needle on your debt as quickly as you'd like. That's when you need to look for ways to earn extra cash. Tutoring, pet sitting and dog walking, and becoming a part-time personal helper are all great ways to boost your income without sacrificing your 9-to-5 job. Taking on a side job for even a few hours a week could give you a few hundred extra dollars to put toward your debt each month.

Make Extra Payments

The next time you receive cash back rewards or score big savings while shopping, put those extra funds toward your debt. You can also sign up for a service like KeyBank's EasyUp, which transfers $1 to your savings every time you use your KeyBank debit card. Those small amounts, combined with your regular debt payments, can make a big impact over time.

Paying down debt is a long-term project, but you can shorten the timeline by applying these tips and being mindful of your spending. Once you're in the habit of reducing expenses, you'll be surprised by how creative you can get on the road to becoming debt-free.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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