I found the solution by installing Postfix and reconfiguring Rails.

Here is what I did ..

step 1 -> follow this tutorial on how to install and configure postfix

step 2 -> when editing the postfix config in /etc/postfix/main.cf make hostname = localhost

here is my working setting (I have to set it to 'localhost' because the default for Spree's mail configuration is 'localhost' you can change Spree also but just have to make sure they match one another.)

myhostname = localhost
alias_maps = hash:/etc/aliases
alias_database = hash:/etc/aliases
mydestination = APPNAME, localhost.localdomain, , localhost
relayhost =
mynetworks = 127.0.0.0/8 [::ffff:127.0.0.0]/104 [::1]/128
mailbox_size_limit = 0
recipient_delimiter = +
inet_interfaces = localhost
inet_protocols = all

step 3 -> Reconfigured Rails application.rb in config folder of Rails by adding this line (i found the solution here)

config.action_mailer.smtp_settings = { enable_starttls_auto: false  }

Here is what my application.rb looks like..

require File.expand_path('../boot', __FILE__)

require 'rails/all'

# Require the gems listed in Gemfile, including any gems
# you've limited to :test, :development, or :production.
Bundler.require(*Rails.groups)

module APPNAME
  class Application < Rails::Application

    config.to_prepare do
      # Load application's model / class decorators
      Dir.glob(File.join(File.dirname(__FILE__), "../app/**/*_decorator*.rb")) do |c|
        Rails.configuration.cache_classes ? require(c) : load(c)
      end

      # Load application's view overrides
      Dir.glob(File.join(File.dirname(__FILE__), "../app/overrides/*.rb")) do |c|
        Rails.configuration.cache_classes ? require(c) : load(c)
      end
    end

    config.action_mailer.smtp_settings = { enable_starttls_auto: false  }

    # Settings in config/environments/* take precedence over those specified here.
    # Application configuration should go into files in config/initializers
    # -- all .rb files in that directory are automatically loaded.

    # Set Time.zone default to the specified zone and make Active Record auto-convert to this zone.
    # Run "rake -D time" for a list of tasks for finding time zone names. Default is UTC.
    # config.time_zone = 'Central Time (US & Canada)'

    # The default locale is :en and all translations from config/locales/*.rb,yml are auto loaded.
    # config.i18n.load_path += Dir[Rails.root.join('my', 'locales', '*.{rb,yml}').to_s]
    # config.i18n.default_locale = :de

    # Do not swallow errors in after_commit/after_rollback callbacks.
    config.active_record.raise_in_transactional_callbacks = true
  end
end

Thanks @kode54

I did open my firewall to port 2525 by..

sudo ufw allow 2525/tcp

and also try this method

iptables -I INPUT -p tcp -m tcp --dport 2525 -j ACCEPT

when i check with

telnet mydroplet'sIPaddress 2525

I still get connection refused..

telnet: Unable to connect to remote host: Connection refused