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I don’t like having any type of debt.
Since I don’t like the idea of owing anyone money, I do whatever I can to avoid it.
However, sometimes I have no choice but to take it on. For example, several years ago, my car was on its last leg and I financed a 2013 Nissan Juke.
At the time, I was working an entry-level marketing position and I didn’t have any extra money to put towards my car. I made only the minimum payments on my 48-month car loan until I picked up a freelance writing job for a local car dealership. Thanks to this side hustle, I was able to pay off my car loan in only a year.
If you’re struggling with debt and hoping to pay it off quickly, know that there are a number of realistic ways you can do just that.
12 Steps You Can Take To Pay Off Your Debt Fast
If you want to pay off debt fast, it’s important to get motivated. Write down why you want to get out of debt. Maybe you’d like to save for a down payment on a house or put more money in your 401(k).
Or maybe you hope to pay for part of your child’s college education or travel more often. Hang whatever you wrote down on your kitchen fridge or bathroom mirror so that you have a visual reminder of your “why” to keep you motivated to reach your goal.
1. Add up your total debt
Gather your most recent statements for all of your credit cards and loans.
Then, make a list of all your debts and include the creditor’s name, total balance, minimum monthly payment, and interest rate for each one. Total all of your debts so that you know how much you owe and need to pay off.
2. Determine your debt payoff strategy
Once you have a list of all your debts as well as their minimum monthly payments and interest, you’ll have to decide whether you’d like to use the debt avalanche or debt snowball strategy to pay them off.
Debt Avalanche
The debt avalanche strategy aims to save you the most money in interest over time. With this strategy, you prioritize your debts with the highest interest rates. Here’s how it works:
Step 1: List your debts in order from highest to lowest interest rate.
Step 2: After paying the minimum balances on all your other debts every month, put as much extra money as you can toward your debt with the highest interest rate.
Step 3: As soon as you pay off the debt with the highest interest rate, focus on the one with the next highest rate. Take the extra money you used to pay off the first debt and add it to the minimum payment for this one until it’s paid off.
Step 4: Continue this process until all debts are paid.
Debt Snowball
With the debt snowball strategy, you’ll pay off your smallest debt first then apply the payments you were using toward it to pay for the next smallest debt. This strategy allows you to build momentum or “snowball” your payments as you pay off each debt. The debt snowball strategy works like this:
Step 1: Make a list of all your debts and order them from the lowest to highest balance.
Step 2: Put as much extra money as you can toward your debt with the smallest balance while paying the minimum balance on all your other debts every month.
Step 3: After you pay off your smallest debt, take the money you were using for that debt and apply it to the one with the next lowest balance. Keep paying the minimum on the others.
Step 4: Stick with this process until you’ve paid off all your debts.
If you want to save as much money as possible in interest on your debts, the debt avalanche may make the most sense. But if you’re feeling overwhelmed with your debt and need to celebrate milestones to stay motivated, the debt snowball may be a better option.
Related: How to Get Out of Debt: A Step-by-Step Guide for 2021
3. Create a livable but bare-bones budget
Making a budget is one of the best ways to get a handle on your finances, and a livable but bare-bones budget is a powerful tool than can help you pay off your debt fast. To create one, follow these steps:
Figure out where you’ve spent money in the past: Use your bank and credit card statements from the last few months to understand where your money typically goes. To do this, create categories such as food, restaurants, and mortgage and jot down how much you’ve spent in each category.
Get rid of non-essential expenses: Once you’ve categorized your spending, it’s time to cut non-essential expenses like morning Starbucks runs or your cable subscription from your budget. Non-essential expenses are anything you can live without.
List your new bare-bones expenses and add them up: Now, you’ll create a bare-bones budget based on the expenses you can’t cut such as your mortgage or rent payments, utilities, and groceries. This new bare-bones budget should leave you with more money to throw at your debt each month.
Keep in mind that sticking to a bare-bones budget is a temporary situation. Once you pay off your debt, you can add non-essentials back into your budget.
4. Credit card balance transfers
If you’re struggling with a lot of credit card debt, a credit card balance transfer may be a good idea. A credit card balance transfer is a type of debt consolidation where you transfer your high-interest credit card balances to a new credit card with a lower interest rate.
There are some balance transfer cards that offer a 0% APR for a limited time period so if you go this route, be on the lookout for these types of cards. By transferring balances from multiple credit cards to one, you can benefit from a single manageable payment and save big on interest.
If you decide to use a credit card balance transfer to help you pay off your debt faster, make sure you understand all the fees that may be associated with it. Most cards have balance transfer fees that are between 3% and 5% of the transferred amount. This will increase the total balance you need to pay off.
Also, consider the length of time it will take you to pay down the balance. Let’s say you find a card with a 0% introductory APR offer for 15 months. If you don’t feel confident that you can pay off your credit card debt in 15 months, this card is probably not a good option as its interest rate will likely increase significantly after 15 months.
If you opt for a credit card balance transfer, don’t use the card for new spending as the 0% APR won’t apply to new purchases and you may dig yourself deeper into debt.
Related: Here’s What People Mean When They Talk About “Good Debt vs. Bad Debt”
5. Find extra money in your budget to put towards debt
Even if you don’t have a high income, you can find extra money in your budget to put toward debt using a few different tools.
Trim is an app that can help you negotiate your bills so you can save more money. With Trim, you can also cancel unwanted subscriptions and earn cash back while shopping.
Truebill is another app that can identify and cancel unwanted subscriptions and reduce your bills. It can also help you collect refunds for fees and outages and find better deals on the services you currently use.
The goal of the Billshark app is to help you reduce the amount of money you spend on your bills. Billshark negotiates bills for subscription-based services like cable television, internet access, and home security.
6. Sell your stuff
It’s likely that you have stuff sitting around your house that you don’t need or want. If you come across a CD, game, book, or electronics item that you know you won’t use again, sell it on Decluttr. If you find any clothes that you no longer wear, you can use thredUP, Poshmark, or Tradesy to sell them.
Craigslist, Facebook Marketplace, and yard sales are other options if you prefer to sell locally. Once you sell your stuff, put the money you’ve earned toward your debt.
7. Find a side hustle
If you work a full-time job, figure out how you can use it to earn extra money. For instance, you may want to ask for a raise or take on extra shifts. If these aren’t an option, a side hustle or a job you can work in addition to your full-time job can be a great idea.
From blogging and freelance writing to renting out your car or starting a home bakery, there is no shortage of side hustle opportunities available. You can use your side hustle earnings to get out of debt fast.
8. Get a seasonal or part-time job
While a side hustle gives you the freedom to decide how much you want to work and earn, a seasonal or part-time job involves an employer making these decisions for you. If you prefer a seasonal or part-time job, retail stores, restaurants, and banks are good places to look.
By putting the money you earn from your seasonal or part-time job toward your debt, you can get out of debt faster.
Related: 16 Seasonal Jobs Hiring That Pay $10/hr or More
9. Use windfalls to pay down debt
A windfall is unexpected money you may receive. While it’s unlikely that you’ll win the lottery, there is a higher chance that a windfall like a tax refund, huge bonus, birthday cash, legal settlement, or large inheritance will come into your life.
Although it can be tempting to use this money on a dream vacation or new car, putting it toward your student loans, car payments, and mortgage will help you pay off your debts faster.
You can use part of the money to treat yourself and put the rest toward debt, or throw all of it toward your debt and use it as motivation to splurge once your debt is paid off.
10. Debt consolidation loans
A debt consolidation loan involves taking out a new fixed-rate loan and using the money from the loan to pay off one or more loans in installments over a set term. This strategy allows you to bundle your existing debts into one convenient monthly payment at a lower interest rate.
It may be an option if you have an overwhelming amount of debt and are not having any luck with the other strategies we’ve mentioned.
Related: Compare Debt Consolidation Rates
11. Bankruptcy
If you are over your head in debt, you may want to consider bankruptcy. Chapter 7 can help you if you have little to no disposable income (money left over after you’ve paid your essential expenses and taxes).
During Chapter 7 bankruptcy, you sell most of your possessions so that you can repay your existing debts. While it can provide you with some relief from debt collectors, it may cause you to lose your home, car, or other important assets.
If you’re not eligible for Chapter 7 and earn a sufficient income, Chapter 13 may be a solution. It can give you the opportunity to make one consolidated payment towards your debts via a repayment plan that usually lasts three to five years.
You should understand that bankruptcy won’t help you with debts like student loans, child support, alimony, and tax debts. However, bankruptcy can take care of medical bills, credit card debt, and other unsecured debts.
12. Change your habits
Simple lifestyle changes can help you achieve a debt-free lifestyle. For example, if you smoke, quit and use the money you would’ve typically spent on cigarettes to pay down debt.
A pack of cigarettes costs between $4.50 and $12.50 depending on where you live. If you assume an average of $7 per pack, one pack a day could cost you over $200 per month. Imagine if you put that amount toward debt instead.
If you go out to lunch with co-workers every day, pack instead. Unsubscribe from promotional newsletters from your favorite stores if they tempt you to make unnecessary purchases. Think about the behaviors that got you into debt and change them to get out and avoid debt in the future.
Related: Should You Pay Off Debt or Save Money? Here’s How to Decide
Staying Motivated Is Key to Paying Off Debt Fast
If you find ways to keep yourself motivated throughout your debt payoff journey, you’re more likely to succeed. When you’re feeling like you want to give up, think about what your life would be like without your debt.
Make every effort to be patient, use the success of others you know as motivation, and reward yourself every time you pay off $500, $1,000, or more. A free debt tracking tool can also help you see how far you’ve come and motivate you to keep going.
Remember that nothing worth having comes easy and a debt-free lifestyle is no exception.
Related: Dave Ramsey’s 7 Baby Steps: A Simple Approach to Paying Off Debt
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