How to Pay Off Debt Fast
Debt can feel like an incredible burden. It can ruin your mood and even your relationship. Knowing how to pay off debt fast is important for your sanity as well as your pocketbook.
While no one can get out of debt overnight, there are simple ways to start that lead to a debt-free lifestyle once and for all.1. Create a budget
You can’t get out of debt if you don’t know how much money you have. Pull your bank statements from the last few months and make a budget. See how much money you have free to pay debts after paying your regular bills. Knowing this number will help you moving forward.2. Cut spending
As long as you have your bank statements handy, categorize your spending. Where do you overspend? How can you cut back? Even small changes make a big difference. Saving $50 here or there gives you more money to pay toward your debt, getting you closer to the debt-free lifestyle you want.3. Increase your income
Just because you don’t ‘work’ outside the home doesn’t mean you can’t bring money in too. Start a side hustle either online or in-person. Start a gig on Fiverr, tutor kids online, or answer surveys to bring in a little side cash. If you prefer ‘in person’ tasks, consider babysitting, tutoring in person, walking dogs, or working for Instacart or Shipt.4. Choose a debt payoff method
Once you get your finances in order, you need a plan. I love the debt snowball and debt avalanche methods. Both have benefits and keep you on target to pay off debt fast.
With both plans, you make the minimum required payment to each credit card or debt. It’s the ‘extra’ money you found or bring in now that you’ll use to pay the debt off.• Debt snowball – Order your debts from smallest to largest balance. Don’t pay attention to the interest rates. Any extra money you found, pay to the card with the lowest balance on top of the minimum payment. Once you pay off the first card, take the exact amount you paid to the first card (minimum payment + extra money) and add it to the minimum payment on the next card. Keep going until you’re out of debt.• Debt avalanche – Order your debts from highest to lowest APR. Don’t pay attention to the balances. Any extra money you found, pay to the card with the highest APR on top of the minimum payment. Keep doing this until you pay the card off in full. Take the exact amount and add it to the next card in line, paying it on top of the minimum payment you’re already making. Keep going until you’re out of debt.
If you want to pay off debt fast, you need a plan. Start by organizing your finances and figuring out if you need to bring in more money or cut your expenses. Once you free up some money, choose your debt payoff plan, and stay consistent. Before you know it, you’ll be out of debt.