Before we get too far ahead of things, let’s take a step back to make one thing clear: the title of this guide is 8 Ways to Pay Off Debt FAST; it is not 8 EASY Ways to Pay Off Debt.
This is a crucial distinction to understand before you move on to actually learn how to pay off debt FAST.
Nothing about these tips and steps will be easy, but if you commit to taking them seriously and make an earnest effort—even when you make mistakes—all of the hard work will be worth it and will pay off faster than you might think.
So, if you’re truly ready to take the plunge and finally get yourself on the path to financial security, please read on, and we’ll have you living the sweet debt-free life in no time at all!
1. Look Your Debt in the Eye
This might be the most crucial step you will take toward financial freedom. There simply is no way to get a handle on your debt until you actually confront it head-on.
This means you must do something you have probably been dreading and avoiding for a long time: you need to get out all of your financial statements, assess them all, and get to work.
A major part of this step is organizational in nature, so start by sorting through all of your financial statements and compiling them in a way that makes sense to you. We recommend two methods in particular:
- Print Everything Out: Many of us love the convenience of electronic statements and online banking, and those luxuries have their place; however, we have found that seeing the physical manifestations of your debt and financial situation in paper form helps the gravity of the situation really sink in.
Additionally, while there are plenty of excellent resources for organizing financial information and documents electronically, we find it much easier to start out the old-fashioned way. Once you’re free of all that suffocating debt you’ll have plenty of time to try out different apps and software to help keep your financial house in order.
- Create a Master Document: This is one area where some electronic assistance can be very beneficial. If you know how to use spreadsheet software like Excel or Apple Sheets, you can use that knowledge to create a document that lists all of the important information for each of your accounts in an easy-to-read format.
Of course, if you aren’t as tech-savvy, you can always write out this information longhand. You could even use designated ledger notebooks or other stationary designed to function similarly to a spreadsheet.
Just remember, without taking a long, hard look at your debt situation, you’ll never even get to the more direct steps to learn how to pay off debt.
2. Make a Workable Budget
One of the most important things to do when learning how to pay off debt fast has little to do with your debt itself. Rather, it has to do with effective budgeting. In order to even start making payments on your debt, you need to first make a budget that lays out clearly and honestly the absolute necessities you need to get by.
Once you’ve completed a budget, you’ll need to determine which payment type can help you stick to that budget. We’ll cover debt payments below, but for now, just keep in mind that you need to find a way to work in your debt payments in such a way that it won’t derail your budget.
3. Cut Out (Almost) All Unnecessary Spending
This point really should go under the umbrella of the third point above, but it’s so important to learning the best way to pay off credit card debt that it bears repeating in another way. You absolutely cannot pay off your credit card debt if you’re still spending money you don’t have on things you don’t absolutely need.
Now, there is one caveat in that heading: “almost.” Even though we said his process would be hard, we don’t expect you to live the life of a hermit, never enjoying any luxuries or diversions. If you want to get out of debt without going crazy, you’ll have to find somewhere in your budget to work in some fun now and then. We’re not monsters, after all!
4. Stop Using Your Credit Cards. Period.
What is the number one best way to pay off credit card debt? Simple. Stop using your credit cards. Completely. Entirely. For good. How can you expect to make any progress in paying down your credit card debt if you keep adding to it?
We know it’s hard—that’s how you got into this mess to begin with. But this is where you have to dig deep down and find those reserves of willpower you left for dead long ago. They’re still there, and you can do it! Hide the cards, give them to a trusted friend of family member. Do whatever you have to do to keep yourself from using them. This truly is half the battle.
5. Get More (or Better-Paying) Work
Now is the part where eyes are really starting to roll. Yep, that’s right: you need to find new or better sources of income. Whether it’s freelancing work on the side, doing chores and odd jobs for friends and family, or even picking up a shift flipping burgers.
If you want to know how to pay off credit card debt fast, the answer is easy: make more money in any way that you can! It’s the doing part that’s hard. Just try to reflect on some of the things that you’re good at or activities that are available to you and find a way to monetize them.
6. Pay as Much on Your Debts as You Can Each Month—Starting with Those with the Highest Interest Rates
This is where we reach the real nitty-gritty of how to pay off debt fast: the actual payments. You must strive to pay as much as you can every single month in order to get those balances down quickly.
The best advice from experts has long been to focus on making payments on the accounts with the highest interest rates first. This can be frustrating, as these higher interest rate accounts are probably going to take a lot longer to pay down than those with lesser rates. That’s ok! Just stick with it and keep reminding yourself that you’re making progress, that it will only get easier with each dollar you pay down.
7. Sell Stuff
One last tip for how to pay off credit card debt fast: sell your junk! You know you have a lot of it lying around. After all, most of us get into all this nasty debt by buying and buying and buying tons of stuff!
These days, it’s simple to find buyers for your unneeded stuff. You can use Gumtree, eBay, Facebook marketplace—practically everywhere you go online anymore is chock-full of people who want to buy things at discount prices. And lucky for you, you have a lot of stuff to get rid of.
Heck, you can even go old-school and have a garage sale. Anything that will help you get rid of those icons of your past spending habits and generate a little income is going to be good for your debt-reducing project as well as your state of mind. Why not declutter that garage or spare closed while you’re decluttering your finances?
But Avoid These Traps Like the Plague!
We hope you have found these tips and tricks helpful as you start your journey toward escaping the clutches of crippling debt, but we would be remiss if we didn’t also give you a couple of warnings against some dangerous traps that can set you back even further.
If you want a surefire way to stay deep in the trenches of debt even longer, you can give debt consolidation a try. Not!
The idea behind debt consolidation is a tempting one: you bundle up all of your other debts into one giant debt and then just make one monthly payment on it.
Sure! Except you’ll find out fairly quickly that that consolidation loan has a longer lifespan than most of your previous individual debts.
It might keep your head above water for a while, but remember you still have to pay back essentially the same amount of debt, but now it could be at a less-friendly overall interest rate and is likely for an extended-term compared to your individual accounts before.
There is nothing good to say about debt settlement or debt settlement companies. This financial scam is a racket if there ever was one! Essentially, a debt settlement company will offer to negotiate with your debtors on your behalf…for a small fee, of course.
But the vast majority of the time, you just end up paying fees, while your debt remains as crushing as always. Avoid!