How To Pay Off Debt Fast In 6 Simple Steps

It’s easy to get overwhelmed by finances and anything debt related. Despite belief, you’re not meant to be drowning in debt for the rest of your life. When tackling debt and money management, a plan must be set in stone. Financial freedom isn’t easy, but it is doable. Learn how to pay off debt —credit cards, student loans, etc—with this quick guide.

Understand Your Debt: List All The Debt You Have And What Kind

Many people all over the world don’t know how bad their debt is. They haven’t sat down and analyzed the numbers or understood what has happened. The quicker you realize the severity of the situation, the quicker that same situation can be improved. Stop feeling shame because guess what?

You’re not the only one with debt. Start tracking your spending patterns. Figure out where your funds are going to—whether they’re going to something that matters or mindless spending. Look at your monthly statements, find the interest rates, minimum payments for those credit cards, and write them down. Make a budget.

Create A Debt Payoff Plan

So you’ve been using your credit card a little bit too much these past couple of months. And now you don’t know how you’re going to pay it off. It happens. But how do we tackle it? Debt payoff plans. There are 3 strategies to choose from: Debt Snowball, Debt Avalanche, Balance Transfer.

Strategy One: Debt Avalanche

To summarize, debt avalanche is a method that allows you to pay the debt in order from the highest interest rate to lastly, debt with the lowest interest rate. Remember, do not focus on the balance but the interest, instead. Technically speaking, this is the “correct” way to pay off your debt. Think of it like this.

By paying off accounts with the highest interest rates, money that would’ve gone to your debtors is now in your bank. You save so much more money! The downside to this? It’s easy to get sidetracked. You may feel as if you’re wasting your time since you’re not seeing results quickly enough. It takes time to see progress. Although this may be true, your money will be put to its best use and WILL you save you the most money.

Let me keep talking about the avalanche method a little more.

This is how your list of debts should look:

Debt Owed	Interest Rates (APR)	Balance Due	Minimum Due
Discover Credit Card	24.99%	$5,000	$100
TD Bank Credit Card	24.13%	$1,300	$70
Student Loans	6.2%	$23,000	$200

Once you write down all the debt you owe, start paying the minimum on all of those accounts. Pay the account with the highest interest rate with the extra money you have. As you keep implementing this strategy over the months, that account with the highest interest rate is no longer a bill to pay. What to do next? Take that monthly payment and combine it with the next account with the highest interest rate. The cycle will keep going until you are debt-free. 

Strategy Two: Debt Snowball

This method is a better option for those who need to be motivated to accomplish their goals. In the end, you will pay more in interest, but you will still reach that goal—to pay off that debt. Finance guru, Dave Ramsey, recommends this method to this day—check it out here. As a matter of fact, it is believed that there are psychological benefits to this strategy. I know I’d be happy seeing my debts paid off sooner than later. 

First, you must make a table listing your debts in order from the smallest balance to the largest. Interest rates don’t matter in this scenario—the balance due does! This list should also contain the same as before (APR, balance, minimum payment due).

Example here:

Debt	APR (%)	Balance	Minimum Payment
Student Loans	6.2%	$23,000	$200
Discover Bank Card	24.99%	$5,000	$100
TD Bank Card	24.13%	$1,300	$70

Next step: Make a budget and check your finances. Check to see how much money you can afford to put towards your debt each month. Any extra cash left over after paying the essential bills, adding to your retirement fund, and food should be going to that debt. 

Last Step: Like with debt avalanche, pay all your credit card minimum payments to avoid late fees. However, any extra money you can find should be going to the account with the smallest balance. Once that account is paid off, combine the monthly payment you were using on the old account towards the next lowest balance account and so on. Just like debt avalanche! And boom, say goodbye to that annoying debt!

Strategy Three: Balance Transfer

We’ve all seen those emails that offer you brand new credit cards with the option to balance transfer. But what is a balance transfer, and how does it work? This method allows you to transfer your credit card balance to that new card. What are the perks of this? Many of these cards offer promotional offers such as 0% APR for an introductory period (usually 6-18 months). That means a whole 6-18 months of no interest fees, which can save you so much money. Okay, that sounds great, let’s do it!

Not so fast. Yes, some cards offer no incurring interest fees, BUT will charge balance-transfer fees (usually 3%). Make sure to read the terms and conditions carefully. And also, make sure your credit score is decent. I’ll talk about it more below.

Will this affect my credit score?

Yes, it does. You’re applying for a new credit card. Of course, your credit score will drop a little (as with any new credit card!). However, if you have a credit score 700+, you may qualify for a good balance transfer deal AND get out of debt quicker. Your credit score will go back up when you finish paying off those large balances.

On the other hand, if your credit score is BELOW 700, don’t bother going down that road. There is a huge chance it won’t work out. Then again, there is a way to increase your chances of being accepted.

Most times, banks will reach out to you and say that you are pre-approved. What’s excellent about this? There will be no hard inquiry on your credit score, which means it will not be affected. I’m not saying you will definitely be in the balance transfer club if you’re pre-approved, so use this advice at your own risk. 

All things considered, balance transfers can be really beneficial to reduce debt if you have enough discipline to not overspend. If you’re approved, aim to always pay on time and don’t add a new balance on the card. Banks love balance transfers because they assume you’ll stay in debt with them, too. And what happens when you remain in debt with these balance transfer cards after the “promotional period”? Interest.

Cut Back As Much As You Possibly Can

Do you want to live a debt-free life? Spend your money on the bare essentials and leave the nonessentials at the store. Living debt-free requires sacrifice and discipline, but I promise you it will be worth it! 

Okay, you’re only buying the necessary items, but it’s still not enough? Here are some money-saving tips that have gotten me through some rough patches: 

1. Make Your Own Coffee. Instead of spending $5 at Starbucks every day, I invested in a coffee maker. It’s easy and saves you a ton of money! 
2. Use RAKUTEN to GET PAID TO SHOP. For every purchase you make, you get cashback and save money while shopping. All you have to do is visit the website HERE, find the store you’re looking for, click SHOP NOW, and shop like you usually would! It’s that easy. How do you get paid? Paypal or check in the mail.
3. Use Trim To Live Frugally. If you’re not the best negotiator, why not use this FREE tool that helps you lower your monthly bills. This service analyzes your expenses and negotiates your bills FOR YOU. It can cancel subscriptions that haven’t been used in a while, remind you when you’re spending money you shouldn’t be spending. Read more about how I’ve used Trim to save me thousands of dollars yearly! Go ahead and pay off that debt with that extra money!
4. Get Cashback On Your Groceries With Ibotta. I know you shop for groceries, so why not make some extra money while you buy them? Ibotta is absolutely free and gives you instant rebates when you shop at restaurants or go grocery shopping. Many stores also have available discounts, which makes this a fantastic money-saving app. Want to know how easy it is? Just take a picture of your receipt and upload it to the app. 

Related Posts: Save Money in 6 Easy Ways HERE

Make More Money

Okay, you’ve cut back as much as you can, and there’s still not enough money in the bank. I wish there was a loophole around this, but life isn’t that easy. You need to make more money to become debt-free. You could take up a second job, work more hours, or find a side hustle that works for you. Not sure about what to do?

Side Hustles That Have Worked For Me:

1. Survey Junkie. I’ve experimented with many sites, but nothing comes close to this one. You just take a couple of surveys a day, share your opinion, and earn gift cards along the way! Not interested in gift cards? Paypal is another option. 
2. Rent Your Car. This will only work if you don’t use your car regularly. It is an excellent opportunity to make some extra cash. Check out Turo for more information! 
3. Sell your clothes. Is your closet filled with high-quality clothes you know you’re never going to wear again? Thredup is an online thrift store that makes selling super simple. How simple are we talking? Request a bag, send your clothes by mail, and get paid for the items that sell. I have used this, and yes, it’s legit!
4. Teach English Online. If you love kids, then this might be a great side hustle for you! Get paid $15-$22 an hour to tutor children from China. What’s better? You set your own hours, making you your own boss. #bossbabes!
5. Use Rover to walk dogs. If you are a dog lover, this job is the perfect side hustle for you. Not only can you walk dogs, but you can also house sit and earn more money in your spare time!

Now, these are just some examples that have worked for me, but there are plenty more options with the right research!

Stop Using Your Credit Cards

I know it is hard. Trust me, I’ve been there. Everyone I know has been there. But it’ll be worth it in the long run, I believe in you! Stop using it when “it’s just one little $20 charge” or “this purchase isn’t going to make a dent in my account” starts playing in your head. You don’t realize how much you’re spending when you’re just swiping a card. Out of sight, out of mind, right?

And then the bill comes, and you’re not sure why it is so high. Because of YOU. Try using ONE debit card for your NECESSARY purchases and bills. And your credit cards? Lock them away. Far, far away. Your goal is to pay off that pesky debt, not pile up more. 

Put That Extra Money To Good Use

Did you come across some extra money and don’t know what to spend it on? Maybe an inheritance? Work bonus? Raise at work? You know what you need to do. Whatever money that falls into your lap, use to pay off your debt. It will help you in the long run. 

Bottom Line

I have made all the information you need available in this post. Now, it comes down to you. Everyone wants to get rid of debt, but can they change their spending habits and behavior? No matter what debt you’re currently in, it is POSSIBLE to get out. There is hope on the other side of this.

I’m not saying it’ll happen in twenty-four hours, but every milestone reached is essential. It starts with you. Stop adding more and more debt to your credit cards! You won’t achieve financial freedom with those actions. Instead, follow these strategies to get out of debt quickly and efficiently. I believe in you!

What are some strategies you’ve implemented to pay off debt quickly? Share some below!

Related Posts:

6 Astonishingly Easy Ways To Save Money (I saved $1,200 by cutting out Starbucks!)

4 Strategies to Help You Build The Perfect Credit Score

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