Tired of keeping up with your debt? Paying it off can be frustrating and discouraging if you’re not sure how to get started. Like most people, you’re probably trying to pay off the monthly minimum payments just so you can stay on top of your debt. Unfortunately, it’s not working. You’re left with almost no money at the end of the month, and you still have a mountain of debt to climb.
While there is no one-size-fits-all way to get out of debt, there are certain strategies to help you get out of it faster. The more of these strategies you can apply, the quicker you can pay down your debt and achieve financial freedom.
Paying Off Debt Quickly: Difficult but Worth It
Here’s the thing: paying down your debt to zero is not an easy path. Anyone who has any type of debt knows this. It’s loaded with hard work and sacrifice, and the fear that the debt will overtake your life. Usually, it takes years – even several decades – to pay off debt, if at all.
The good news is that you don’t have to stay stuck in that loop. With total commitment, drive, and willingness to endure hardship while you’re paying down your debt, it’s possible to regain control of your life in much less time using proven strategies to be debt-free.
6 Tried-And-Tested Ways to Pay Off Your Debt Faster
Once you face the reality of your debt, the next step is to completely commit to eliminating it. The six strategies below have proven to be effective for many people on their road to being debt-free, so consider giving them a go:
- Pay more than the minimum payment.
Whether you’re dealing with student loans, personal loans, or credit card debt, one of the best ways to pay them off sooner is to pay more than the minimum.
Coasting on minimum payments is a surefire way to never get out of debt. One, you’re usually just paying the interest and not making a dent on the principal. Two, you shouldn’t add to the balance at all if you’re paying the minimum, which can be difficult if you use your card for everyday purchases.
Paying more than the minimum speeds up the process. It also helps you reduce the interest you pay on your loan. However, check to make sure your loan doesn’t come with pre-payment penalties before you go this route, to ensure steady progress.
- Roll a debt snowball.
Now that you’re paying off more than the minimum, pay off your debt even faster using the debt snowball method. It has several steps:
- List all of your debts from smallest to biggest.
- Use all of your extra money to wipe out the lowest balance as fast as you can.
- While you’re tackling that one, only pay the minimum on the other loans.
- Once the smallest debt is paid off, take the money you used to pay for that debt. Add it to the minimum payment on the next smallest debt until you pay it off.
- Repeat the process until you finish paying off your biggest debt.
The beauty of the snowball method is that it’s basically painless. You’re simply taking the amount you used to pay your smallest debts and throw it at the bigger ones until you’re done. Beginning with small debts also gives a psychological boost by motivating you with “wins” so that the largest loans feel less overwhelming. It’s one of the most effective strategies to get out of debt quicker.
- Work a side hustle.
Amplify your effort by picking up a side hustle, aka a second or third job, to earn more money you can throw at your debt. It can be anything you can get paid for, such as delivering pizza, mowing lawns, babysitting, becoming a virtual assistant, or cleaning houses.
Take stock of your skills, and search online for gigs that fit. You can also ask for referrals from family and friends. Once you start bringing home more money, stay focused— use every single cent towards your debt.
- Live with a bare-bones budget.
Like we mentioned earlier, paying off debt faster is not a walk in the park. You have to be willing to sacrifice present comfort for tomorrow’s financial freedom.
A powerful tool in this journey is creating and following a bare-bones budget. It involves cutting off as many extra expenses as possible and living off the lowest amount of money you can survive on. This means no leisure for the meantime – no eating out, no buying new clothes, no paying for entertainment like concerts, and no vacations, for now.
It won’t be easy, but to be free from debt as soon as possible, you have to be willing to sacrifice in the present. Just keep in mind that the sooner you can get out of debt, the sooner you regain control of your money – and that means being able to treat yourself, guilt-free.
- Sell everything you’re not using.
Decluttering and minimalism aren’t just for better organization— it’s also a fantastic way to drum up some extra money to pay off debt. Go over everything you own. Which of it do you absolutely need, and which ones can you live without? Everything that falls under the “don’t need” category, sell and turn into cash. You may also donate it to charity if you prefer.
- Throw all your “found money” towards your debt.
You’re likely to come across “found money” several times during the year. This can come in the form of an inheritance, tax refund, gift money, annual raise, or a bonus at your job. For most people, the tendency is to use this windfall to go buy more things or treat themselves.
While there’s nothing wrong with that, you have to stay laser-focused on your goal, which is paying off debt. Found money can really go a long way to shaving off a huge chunk off your total debt. This is especially useful if you’re using the snowball method since it gives you more money you can use to eliminate your smaller debts and move on to the next.
No matter what your overall plan is, incorporating as many of these strategies as possible will help you reach your goals faster.
Tycoono Media Inc. and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. Please refer to our disclaimer for more information.