It’s a new year, which means it’s time to set big goals. You’re going to get in shape, save more money, and finally get out of debt. But let’s be real: after all the holiday spending, most of us could stand to tighten our belts and give our finances a reset.
The truth is, January is the perfect time to jumpstart your debt payoff journey. You’re fresh, inspired, and brimming with good intentions. Plus, with a little planning, you can set the stage for a (relatively) financially stress-free year.
If you’re committed to paying off debt in 2025, here are 10 smart, practical tips to start your year right in January.
10 Smart Ways to Pay Off Debt in January
1. Face Your Debt Head-On
Paying off debt starts with facing it — all of it. Many of us don’t want to know the total we owe, but knowledge is power.
Grab a sheet of paper and list all your debts: credit cards, student loans, personal loans, car payments, and any “buy now, pay later” services. Write down the balance, the interest rate, and the minimum monthly payment next to each one.
Once you know the full extent of your debt, you can create a realistic payoff plan that actually works for you.
Related: 9 Things to Do In January 2026
2. Make a Debt Repayment Plan That Works for You
While there’s no magic formula for getting out of debt, there are a couple of proven strategies that can help you decide on the best approach:
Debt Snowball Method: Tackle the smallest debt first, then work your way up to the larger ones. This approach can be incredibly motivating because you see quick wins early on.
Debt Avalanche Method: Focus on the debt with the highest interest rate first so you save the most money over time. The avalanche may be less exciting at first because it can take longer to eliminate your initial debt, but it’s the most cost-effective strategy.
Whichever method you choose, write it down or use a budgeting app to track your progress and hold yourself accountable.
Related: 100 Things To Do In January 2026
3. Trim the “Silent” Spending
January is a great time to reassess your spending habits. After the holidays, many of us realize how much our little daily expenses add up — the coffee runs, food delivery, streaming subscriptions, and impulse online purchases.
Review your last two or three bank statements and highlight areas where you can cut back or eliminate spending. Cancel unused subscriptions, cook more meals at home, and set a weekly limit for “fun” expenses.
Saving ₦20,000 or $50 per week can give you enough to make an extra payment toward your debt each month — and it all adds up in the end.
Related: 248 Affirmations For New Month (January-December)
4. Try a “No-Spend” January (or January 1–7)
One of the quickest ways to save money is by doing a No-Spend January (or even just a No-Spend Week). It’s a challenge where you spend money only on essentials — groceries, bills, and transportation — and skip everything else.
While you can’t do it forever (trust me, I’ve tried), this short-term spending freeze forces you to examine your habits, find areas to cut back, and redirect that extra cash toward your debt.
Related: 20 Things To Do Everyday For A Year
5. Negotiate Lower Interest Rates
Here’s one of the best-kept secrets about debt payoff: you can often negotiate your interest rates — especially on credit cards.
Call your credit card company and ask if they can lower your interest rate or offer a hardship plan. If you’ve been a good customer (meaning you make payments on time), many companies are willing to work with you — they’d rather keep your account open than see you default.
Even a small rate reduction can save you hundreds in interest over the year and make it easier to chip away at your balance.
Related: 20 Things to Do in 2026: Ideas to Make the Year Count
6. Consolidate or Refinance Your Debt
If you have multiple high-interest debts, debt consolidation or refinancing might be a smart option. This is where you take out a new loan with a lower interest rate to pay off all your other debts.
You’ll only have one monthly payment to track, which simplifies your finances and could lower your total interest payments.
Consider options like:
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A personal loan from your bank or credit union
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A 0% balance transfer credit card (introductory period)
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A reputable debt consolidation service
Just be sure to compare rates, fees, and repayment terms carefully before signing on the dotted line.
Related: 20 January Side Hustle Ideas to Make Extra Money
7. Increase Your Income — Even a Little
Cutting expenses is great, but sometimes the real key to paying off debt faster is boosting your income.
Think about ways to earn extra cash this month:
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Freelance or sell a skill online (writing, design, tutoring, virtual assistance)
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Sell unused items around the house
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Pick up a weekend or part-time job
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Rent out a spare room or your car
It doesn’t have to be a lot — even an extra ₦50,000 or $100 each month can make a real difference if you put it straight toward your debt.
Related: How to Budget As a Couple and Avoid Money Fights
8. Automate Your Debt Payments
Automation is your best friend when it comes to debt repayment. Set up automatic payments for at least the minimum due on each debt.
Then, whenever you have extra money, manually make additional payments toward your top-priority debt (using the snowball or avalanche method).
Automatic payments help you avoid missed due dates (which protects your credit score) and remove the temptation to spend that money elsewhere.
9. Celebrate Your Wins (Big and Small)
Debt payoff is a marathon, not a sprint, so remember to give yourself credit along the way.
When you pay off a debt or reach a milestone (like knocking ₦100,000 or $500 off your total), celebrate in a small, budget-friendly way. Go to the movies, enjoy a nice meal, or simply take a day to relax.
These small celebrations can keep you motivated and make the process feel rewarding instead of restrictive.
10. Change Your Mindset About Money
At the end of the day, the most important step in paying off debt is shifting your mindset.
You’re not just “getting rid of debt” — you’re taking control of your financial future. Instead of feeling guilty or anxious about past spending, focus on the freedom and opportunities ahead.
Commit to changing your relationship with money, and the rest will follow.
Final thought
Paying off debt is hard — but it doesn’t have to be complicated. Use these tips to create a solid plan, review your spending, and stick with it.
The real key to success is momentum: start small, but make consistent progress every day. January is just the beginning. With persistence and smart planning, you’ll look back in December and be amazed at what you’ve accomplished.
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