Have you ever had the unpleasant experience of being stuck in traffic? I think it’s safe to assume that we all, at some point, have had the experience of being stuck on a freeway or road somewhere with traffic moving very slowly if at all. And during that experience, you may have had the thought to exit the highway or take an alternate route that would get you to your destination faster. Whether you waited through traffic or found a way around it, you probably eventually got to your destination. But, if you are anything like me, it was probably a frustrating, long, unpleasant experience. Sometimes debt repayment can feel that exact same way. It can take a really long time. It can be slow. And it certainly can be frustrating. If you could pay off debt faster, just like if you could find an alternate way out of traffic, would you want to try it? Here are 8 ways you can pay off debt fast.
Pay off highest interest debt first.
One way to pay off debt fast is to start by paying off your highest interest debt first. That means that any extra payments that you intend to make on your debt should all be directed to your highest interest debt. Of course you will have to continue making minimum payments on your other debt, but prioritize your highest interest debt first by making extra payments and it will save you the most money. Saving money on your debt will make it possible to pay it off faster, since you won’t be paying as much debt off (i.e. you will accrue less interest and therefore pay less and therefore pay it off faster). Paying off your highest interest debt first is one of the smartest steps you can take to paying off debt quickly.
Use the snowflake method.
Another way to pay off debt fast is to use the snowflake method. Under the snowflake method, any unintended savings or earnings that happen to you throughout the month are immediately applied to debt. For example, a last minute babysitting gig earns you $40 one night. Rather than just letting that cash sit in your wallet where you can easily use it, you immediately deposit it and make a $40 debt payment. These small snowflake payments can really add up and help you make a huge dent in your debt. Read more about the Snowflake Method here.
Make more money & throw it at debt (side hustle, second job, whatever)
Besides the snowflake method, you can hunker down and take on a regular commitment to make more money that you can apply to debt so that you can pay it off even faster. This can be a second job, a small side hustle, or selling things you are no longer using, as a few examples. [Related: How to Earn Money Without a Job].
Use personal loans or balance transfers for credit card debt.
Similarly, you can pay off debt even faster by taking out a personal loan or considering a credit card balance transfer to pay off your credit card debt. Rather than paying interest on your current credit card which likely has percentage rates well above 15%, you’ll earn 0% interest for a short period of time on a balance transfer, or a lower percentage, usually around 7%, on a personal loan. I personally like personal loans because it puts all of your credit card debt in one place (i.e. one payment), without having to worry about the complicated aspect of opening a new credit card. You can keep your old credit cards open and simply pay off the balances with your personal loan, that way it doesn’t harm your credit score. You can compare interest rates with multiple lenders using Credible with no impact to your credit score. I’ve personally used them many times over the years– they make it easy to find the best deal.
Refinance for lower interest rates.
Another smart way to pay off debt fast is to refinance your high interest debt for lower rates. Student loans and mortgages are the most commonly refinanced debt. You can check your rates with no impact to your credit score to see if you qualify for a lower student loan interest rate here.
You can check your rates to see if you qualify for a lower mortgage rate here, but please do keep in mind that unlike student loan refinancing, with mortgages, you’ll pay closing costs, though they may be rolled into your new mortgage. You can see whether mortgage refinancing will save you money in this post.
Carefully budget and reduce unnecessary expenses.
Creating a careful budget and reducing unnecessary expenses is another great way to pay off debt even quicker. Your budget doesn’t have to be anything fancy, and you don’t need to spend money on expensive books, apps, or excel sheets to get it done (though those can certainly help!). You can set a very easy budget of “I don’t spend X amount of dollars each month” and stick to it. The important part of budgeting is sticking to it– not spending hours writing things down in an excel sheet. Read about the Easiest Budgeting Method Ever here.
Track your debt & share your progress.
Have you ever tried tracking your weight and or counting calories or macros to lose weight? Numerous studies have shown that tracking your progress helps you lose weight faster, and the same is true for debt payoff. Tracking your payments and progress will help you pay it off fast. You can use free apps like Paidback to track all of your debt in one easy to see place. You can also use Paidback to share your progress with other like minded people for accountability and motivation.
Try other methods.
If you find yourself getting stuck and making extra payments isn’t going as planned, you can try other methods, such as the debt snowball. That’s where you pay off your smallest balance of debt first (i.e. not focusing on its interest rate). The idea is that paying off those smaller balances will give you the boost that you need to keep going and chipping away at your bigger balances. Mixing things up can be just the motivation you need to pay it off fast.
Paying off debt doesn’t have to be as frustrating as mulling through traffic. It can go a lot quicker than you think as you implement these tips. One of hardest parts about paying off debt is staying motivated, but by doing things like tracking your debt, sticking to your budget, and looking for ways to save, you’ll be debt free in no time.
Find these tips helpful? There’s probably someone in your life who could use them too. Share on Facebook, Twitter, and Instagram.