Mar 9, 2023

How Can I Quickly Pay Off My Debt?

If you want to qualify for new credit, cut your borrowing costs, or just pay down your debt, paying off your debt more quickly could give you a good start on your goals. Here are some tactics to consider while looking at repayment options that can speed up your debt repayment.

You can save money on interest if you pay off your debts as quickly as possible, but this can be hard to do. How fast you want to pay off your debt depends on your budget and how much you are willing to give up each month to make bigger debt payments. Paying off debt takes time, but if you set goals based on how long you think it will take, you'll be done in no time. 

Let's look at how to get out of debt quickly and the best ways to approach it.

1. Know What You Owe

Before you can make a plan to pay off your debts, you have to know how much you owe. Start by making a list of all the debts you have, like credit cards, auto loans, mortgages, student loans, and so on. For each loan you have, you should keep track of the following:

  • The interest rate
  • How much you pay each month
  • What day your payment is due
  • The date when you need to pay all the debt off

After you've counted everything up, determine how much you owe in total monthly debt payments so that you may use that number as a starting point for developing a specific budget. 

Reviewing your free credit report is something you should do if you are unsure of the total amount of debt you owe or what accounts may be open or in the process of being collected on. While reviewing your report, you might notice one or more errors that need to be corrected. If you do, report it to the credit agency that produced the report and the lender who misreported the amount.

2. Make a Budget

A budget is a great way to keep track of your money, but it can be even more useful when you're paying off debt.

The first step in making a budget is to know how much money you have coming in. You can count your side job as a source of income. You can figure out how much money you have to spend by adding up how much you make on a regular basis.

Next, write down everything you spend money on each month. This should include both fixed expenses, like rent or water bills, and optional expenses, like things you don't need to buy. Once you know how much money you make and how much you need to spend each month, you can start to figure out how much you can put toward paying off your debt.

Read more: When Is Your Cost of Living Too High?

3. Cut Back On Spending

With a budget in place, you may more quickly see where you might be able to reduce your expenditure. Think about any expenses you can cut back on or do without, such as a gym membership you seldom ever use or a magazine subscription you neglected. You will have more money available to pay off debt in this manner.

Not using your credit card until you are certain that you will have the funds to pay the bill when it arrives is one simple technique to make spending less alluring.

4. Earn More Money

If you have a tight budget and find it hard to put extra money toward debt payments each month, you might want to think about getting a raise so you can pay off more debt. Even though it isn't always possible, there are some things you can do to get closer to your goal. For example:

Think about asking for a pay raise

If you've been doing a good job at work and it's been a while since you got a raise, you might be able to talk to your boss about getting one. Even though it can be scary to talk to your boss, it's often a good idea. Take the chance if you've recently taken on more responsibilities or gotten good feedback at a review. If you're new to the job or have been doing the same thing for a while, you might want to try a different approach.

Read more: How to Ask Your Boss for a Raise: 5 Tips for Success

Create a side business

A side job is a terrific option to earn some additional cash if you don't think you'll get a raise. Consider how you can use your expertise to earn money. You might be able to find employment as a music tutor, for instance, if you enjoy playing.

Read more: 24 Side Hustles To Make Top Dollar in 2023

Anything you don't use, sell it!

Why not hold a garage sale or sell items on Craigslist or Facebook Marketplace? Selling your used gadgets, clothing, art, furniture, and other items is a terrific way to earn additional cash without putting in a lot of effort, and it can also be a great way to get rid of items you don't need.

Read more: How to sell on eBay: a step-by-step guide for merchants

5. Lower Your Interest Rates

Lowering your interest rates so you may allocate more funds to principal repayment is one approach to get out of debt more quickly.

 There are various methods for doing this:

  • Balance transfer: If you have credit card debt, you might want to think about doing a balance transfer to shift your unpaid balance from one card to another. The interest rate on the second card should preferably be lower. Your debt is combined on one card in this manner.

  • Debt consolidation: Debt consolidation might be a possibility for some loans. In this case, you would pay off many loans with another loan or a credit card to combine them into a single monthly payment. Numerous creditors provide loans for consolidating debt that are intended solely for this purpose. Loans for debt consolidation often have a fixed interest rate and a set duration of payments for more predictable payback terms. But keep in mind that you must still reduce your debt even if you consolidate loans.

  • Talk to creditors about a lower interest rate: If you're having trouble making payments on your credit card debt, you might be able to negotiate with your creditor to come up with a different repayment plan that is more convenient for you. Until you can repay your loan, the issuer may occasionally agree to a lower interest rate or smaller monthly payments. It's worth inquiring about even if this isn't a guarantee with all lenders. If your credit card company does offer to work something out, make sure to have everything in writing so you have a record of your new arrangement.

6. Establish a Payoff Plan

Many debt-reduction techniques exist that can accelerate your debt repayment. Each has advantages and disadvantages, and which one you choose will depend on the person and their commitment level.

Debt Avalanche Method

You'll concentrate on paying off your debts using the avalanche method by starting with the ones with the highest interest rates and working your way down the list until they are all paid off. By doing this, you can pay less interest overall. You'll continue to pay the minimum amount due on each of your loans, but any additional funds will be applied to the debt with the highest interest rate. 

The Debt Snowball Method

Using the debt snowball method, you gradually pay off debt by starting with the smallest balance and working your way up to the greatest. You continue paying the minimum payments on each loan and apply any additional funds to the loan with the smallest debt.

Which One Would Work Best For Me?

Because the obligation with the highest interest rate may also have the highest balance, the avalanche method works best for someone who is patient and ready to wait until the original obligation is paid off before moving on to the next one. During times when motivation is particularly important, the snowball method will give you a sense of control through the use of this strategy. On the other hand, if you use the snowball method instead of the avalanche method, you can find yourself having to pay more in interest over time. 

The avalanche strategy does not necessarily produce the optimum outcomes in every situation. If you feel like you're going to struggle to stay motivated while working toward paying off your debt, you might be better off choosing an alternative approach.

If you feel like your debt problem is too much for you to handle, that’s okay. There is help. 
The team at Vincere Wealth would be happy to help you formulate a strategy that works for you so that you can start living the debt free life you deserve. 

Schedule a FREE 1:1 session here to connect with a #VincereWealth Advisor.

Wrapping Up

Okay, so there is no magic bullet that will wipe out your debt in a single night, but there are things you can do to make the process go more quickly. Creating a budget, cutting back on costs, making a little bit of additional cash, and selecting a method of debt payback that is effective for you are all things that can be helpful. Being patient and maintaining regular payments will help you get out from under the burden of debt even if it might be very frustrating.

I hope this information was helpful! If you have any questions, feel free to reach out to me here. I’d be happy to chat with you.

About the Author

As Managing Partner of Vincere Wealth, Josh assists clients in navigating financial challenges and making sound financial decisions. Having someone guide you in making sensible financial decisions today can have a substantial impact on your future financial wellbeing. Josh takes great pride in guiding customers through the complexities of taxes, real estate, businesses, employer stock and international financial planning.

Learn more about Josh.

More On Our Blog...