Getting tired of being in debt and living paycheck to paycheck? It is totally possible to get out of debt fast with these simple ideas…
How To Pay Off Debt FAST
I’ve heard hundreds of suggestions on how to pay off debt fast and most of them are just ridiculous. If one more person tells me to stop buying Starbucks and I’ll save $500 a year… I’m gonna scream.
I don’t even buy Starbucks! Ok, maybe I do once in a while because I do like those Pumpkin Spice Lattes. But I definitely don’t drink them every day. And for sure not enough to make any kind of dent in my budget.
You might also be interested in 25 Things Frugal People Don’t Do!
Finding ways to pay off debt needs to be easier… and attainable for everyone. A lot of people don’t even drink coffee. So once a specific idea like that just isn’t going to work for most people.
Paying off debt fast is not going to be easy. It will require sacrifice and sometimes even a little creativeness. But if you can do it for a year, or even a few months, you CAN make a big difference in your debt.
Don’t tell me you didn’t know this already. I mean, come on. How are you going to find ways to come up with extra money to pay your debt off, if you don’t have a budget for your finances in the first place?
Try my simple suggestion on How to Start A Basic Budget for Beginners. Once you figure out where your money is going, it will be a lot easier to figure out how to cut back and find a little extra dough each month.
Pay yourself first
Typically what this means is that you should automatically put money towards savings before anything else. This is similar to Dave Ramsey’s first step, save up a thousand dollars for emergencies. Put a little aside each money so you have a little money in case something happens.
If a car breaks down, or a medical expense pops up, then you have money set aside to pay for these things without having to go in debt over it. A lot of times it’s the unexpected expenses that put us into debt in the first place.
Cut down on expenses to save money up
You might also hear this referred to as “Cut Down to Save Up”. What that means is that you should find ways to cut down extra or unnecessary expenses (like that Starbucks). Use the money you save from cutting expenses to either save or put towards debt.
You may not want to hear that you don’t NEED that large cable bill. But switching to Netflix or Hulu will save you tons. If it really pains you, do it temporarily and bring the cable back as a reward for paying off all your debt.
Find other income
You may not want to hear this, but the single best way to save money or pay off debt is to find another source of income. This often means finding a second job. I know, there goes your Saturdays in pajamas. But seriously, even just a few hours every weekend will add up nicely.
Having a small part-time job is the best way to pay off debt. It’s extra income so you don’t need to cut expenses somewhere else. You can keep living the life you live with your cable and Starbucks. Just make sure you put ALL of that extra income towards debt.
Use the snowball method
Snowball or Debt Avalanche. It’s really your choice. I’m partial to paying off your highest interest debts first and not so much the smallest debts. If you have a big debt with a big interest rate, you’ll never get out of debt. You’ll also be more likely to give up as you won’t really be seeing your debt being reduced at all.
Talk to a financial advisor
This is one of the best-kept secrets I don’t know why people don’t take advantage of. Meeting with a financial advisor is a great opportunity to talk to an expert about paying off your debt. They will take a look at everything from your income to your expenses and your current debt. They also listen to your goals and help you come up with a financial plan to get there.
“But I’m in debt… I can’t afford a financial advisor!” WRONG! Most large companies actually have this as a part of your benefits plan. They give you one free meeting with a financial advisor a year. But if your company doesn’t have this option, it’s still super easy to do. Most financial advisors will offer free consultations. And oftentimes, that’s all you need.
Pay more than the minimum
There is no faster way to stay in debt than to only make your minimum payments. The credit card company just loves this. Because you end up paying them a ton of money in the end. Seriously, even if it’s an extra $20 or $4o over your monthly minimum, it could make a BIG impact.
Use Credit cards with perks
I only suggest this if you can be trusted with your credit cards. If you can’t be responsible with them, then skip this one! But, IF you can pay off your credit cards every month and not misuse them, then this could come in really handy.
Find a credit card with a perk. Discover does cashback. And a lot give points towards gas, groceries, even airfare. Don’t plan on going anywhere for a while? Well, what if sweet Grandma passes away and you need an airline ticket home? Use points and you won’t have to dip into your budget.
Switch to 0% loans and balance transfers
Credit cards are always offering 0% interest if you do a balance transfer. For years while I was in debt, I would have 5 credit cards but only one with a big balance on it. It was the 0% one. It typically goes for 12-18 months and when the time was up, I would transfer my entire balance to another 0% interest card for the next 18 months.
I kept doing this for years and was able to pay off all my credit card debt faster than average… because I NEVER paid any interest.
Put all extra income towards debt
Anything that comes in over your normal salary should go towards your debt. That includes any overtime worked and part-time income. That also includes things like bonuses and tax returns, even birthday money from mom and dad. If it isn’t in your day to day income… put it towards debt!