How To Get Out of Debt Faster: 5 Trusted Strategies Made Easy

In one sense, the solution to getting out of debt is simple: pay it off. But that’s easier said than done. Way easier.

When you have limited income, finding the money to tackle debt is tough. And even when you do free up some extra cash, where do you put the money? Credit card debt? Personal loans? Student loans?

To pay off debt faster, pick a strategy that works for you and stick with it. Choose from the tried-and-true methods or think outside the box. The most important thing is to get started. Here are five trusted options to consider.

1. Debt Avalanche: Pay Off Your Most Expensive Loan First

What is the debt avalanche method?

The debt avalanche is a repayment strategy that targets the debt with the highest interest rate. By paying off your most expensive loan first, you make the most efficient use of your debt payments. To do it, you’ll need to be sure you can cover all your debt payments and be able to put a little extra toward your most expensive loan.

How does the debt avalanche work?

To use the debt avalanche, start by creating a list of all your debts and their interest rates. For instance, let’s say you have the following debts you want to pay off:

  • Car loan: $4,000 at a 5% interest rate
  • Credit card: $6,000 at a 20% interest rate
  • Student loan: $15,000 at a 7% interest rate

Because your credit card debt has the highest interest rate, begin there. Pay the minimum on all your debts and use any money leftover to pay down your credit card debt.

Once your most expensive loan is paid off, take the amount you were paying toward it and add it to your payments on the next most expensive loan (in this example the student loan.) Once that’s paid off, put everything you were paying toward your last debt. It will look a little something like this:

  • Monthly Payments
    • Credit card payment + a little extra
    • Student loan minimum payment
    • Car loan minimum payment
  • Monthly Payments
    • Credit card payment + a little extra = paid
    • Student loan minimum payment + amount you were paying toward your credit card
    • Car loan minimum payment
  • Monthly Payments
    • Credit card payment + a little extra = paid
    • Student loan minimum payment + amount you were paying toward your credit card = paid
    • Car loan minimum payment + amount you were paying toward credit card + amount you were paying toward student loans

Once you get going on this type of repayment plan, you’ll see results quickly. You’ll gain speed as you continue paying off debts and before you know it you’ll be debt free.

Pros of the debt avalanche

  • More efficient than other debt repayment methods.
  • Reduces amount paid in interest.
  • Faster than other debt repayment methods.

Cons of the debt avalanche

  • May take longer to pay off individual debts.
  • Requires discipline and commitment.

2. Debt Snowball: Pay Off Your Smallest Loan First

What is the debt snowball?

The debt snowball is a repayment strategy that targets your debt with the lowest balance. While not as efficient or fast as the debt avalanche, it offers quick wins that can create a psychological boost. For this reason, the debt snowball is considered to be more manageable than the debt avalanche and a good option for those who feel overwhelmed by debt.

How does the debt snowball work?

To use the debt snowball method, begin by organizing the debts you want to pay off. This is similar to the debt avalanche, but instead of paying off your most expensive loan first, you’ll start off with the smallest loan.

We’ll stick with our previous example:

  • Car loan: $4,000 at a 5% interest rate
  • Credit card: $6,000 at a 20% interest rate
  • Student loan: $15,000 at a 7% interest rate

Instead of beginning with paying extra toward your credit card, you’ll start with the loan for the least amount — the car loan at $4,000. Again, allocate enough to meet each of the lender’s minimum payments, but put whatever else you can toward your car loan. After it’s paid off, you can add that amount to the payment of the next smallest loan, and so on until your debt is paid off.

This style of repayment can be helpful if you have some bigger amounts to repay and the numbers seem a little daunting. Once you’ve taken care of your smaller obligations, you can put the extra toward that big number and watch how quickly it falls.

Pros of the debt snowball

  • Psychological boost — it can be encouraging to see smaller debts get settled quickly.
  • More quickly reduces the total number of debts.

Cons of the debt snowball

  • Depending on the amount of debt you have, it can take longer than other methods.
  • You could end up paying more in interest compared to the debt avalanche.

3. Consolidate Your Debt

Debt consolidation could help you as you work toward paying off your debt. A debt consolidation loan is a loan you take out to pay off all of your other debts. You could also do a balance transfer by paying off old credit card balances with a new one that has better terms. This can help you streamline your finances and maybe even lower your monthly payments — but there are some factors you need to consider before choosing this route.

Pros of debt consolidation

  • It streamlines your finances — Debt consolidation can make keeping track of everything so much simpler. Instead of constantly trying to remember when that bill is due to which lender and how much each one is, you’ll just have one loan to keep track of.
  • You could lower your monthly payments — Your future payments are likely to be spread out over a longer period of time, meaning your monthly payment could be reduced. This can help you get back on track and give your budget some extra breathing room.
  • It might improve your credit score — When you pay off our old loans and credit cards, it could give your credit score a boost. Plus, if you’re diligent in repaying the consolidation loan and maintain other healthy credit habits you’ll also see an improvement on your credit report.

Cons of debt consolidation

  • Your total cost of borrowing may go up — What are the interest rates on the debts you want to pay off? If they’re low you may not want to use the debt consolidation strategy. When you take out a new loan, be sure to consider whether the interest rate is higher or lower. Even with a lower interest rate, you could still end up paying more in the long run. This is because the payments start over at day one, meaning you could be paying interest for the next few years.
  • It may not help you get out of debt quickly — If you’re looking to get out of debt quickly, this isn’t the strategy for you. This strategy can help you streamline your finances and lower your monthly payments, but you’re essentially starting over on payment day one. Personal loans and other loans used for debt consolidation can have terms lasting several years.
  • It may encourage increased spending — It can feel good to wipe the slate clean and see a $0 balance on your credit cards and only one loan payment due each month. But in order for this strategy to work you’ll need to adjust your spending habits and maybe do a little credit counseling to make sure you don’t end up back where you started.

4. Reduce Your Spending The Easy Way

Reducing your spending can help you find more cash to put toward your debt. And it doesn’t have to be hard. You don’t need to make dramatic changes to save a little dough. Sure, you could sell your car, never eat at restaurants and never take vacations — where would the fun in life be without those things? Balance is the key and maintaining a balance can help you stick to your path.

Here are a few easy ways to reduce your spending:

  • Check your subscriptions — A survey found that 42% of Americans forgot about a subscription they’re paying for and no longer use. These things can add up quickly, so go through your bank statement and make sure you’re not paying for things you don’t need. You can put that money toward your debt and you won’t even notice it’s gone!
  • Track your spending habits — Write down the purchases you make throughout each day and how much they were. This can help you be more intentional with your spending. When you see how much the little stuff adds up and you make yourself write it down, it can help you stop and consider if you really need it.
  • Stick to your shopping list — Grocery stores and other big box retailers are masters at making you buy stuff you don’t really need. From the layout of the items, to enticing sales on things you weren’t going to spend money on anyway to the music they play in the background. Don’t let them trick you — stick to your list!
  • Plan for fun — You don’t need to cut fun out of life to save money and reduce debt, you might just need to plan it out a bit more. Save nights out for special occasions or make a deal with yourself that you’ll only eat out once a week. Look for fun, free stuff in your area — or start an automated savings account to put a little money in a “fun fund” to use when you need a break. This way you’ll have an account to use for fun while your other income can go toward debt repayment.

5. Boost Your Income: Opportunities You Didn’t Know About

Another way to get a little debt relief is to boost your income. Any extra money you make can go toward repayment. Here are some clever ways to boost your income.

  • Get a part-time job — Local businesses are often looking for some extra help. Look in your community to see if anyone is hiring.
  • Pet sitting — People love to travel, and they’re often looking for someone trustworthy to watch their pets while they’re away.
  • Dog walking — While people are at work they often need someone to come check in, walk and play with their dogs. If you’ve got a flexible schedule, this could be a lucrative opportunity.
  • Drive for a ride-share or food delivery service — You can sign up to be a driver and make money on your schedule with these apps. (Just be sure your car insurance covers it.)
  • Become an online assistant — There are a ton of opportunities that you can take advantage of online. You can freelance, become a tutor or even become a virtual assistant.
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