4 Simple Steps To Pay Off Debt Quickly
Are you feeling stuck under a mountain of debt like you’re scrambling every month to keep track and make all your payments?
I get it.
It can be overwhelming carrying your debt around month after month and on top of all your regular monthly bills.
So it’s time to get control of your debt and pay it down quickly, if that’s your goal!
And I respect your time so let’s drive straight into those steps to get you on your way to living debt free.
How To Pay Off Debt Quickly
Step 1: Create your budget
I know doing a monthly budget is everyone’s least favorite task, but if you’re serious about paying off your debt, it’s where we have to start.
So if you don’t already have a monthly budget, then it’s time to create one now.
And before we go any further, grab my free budget tracker here to set up your monthly budget!
We can’t talk about how to pay off your debt until you know how much money is coming in (your income) and how much is going out (your current spending).
Anything currently leftover, after you pay all your monthly bills, can be used to further pay down your debt - more on that in a minute.
I also have a podcast episode to help you get started creating your monthly budget.
Once you have your budget worked out, we’re ready to start looking at our debt.
Step 2: Lay it all out there
Get ready to lay all of your debt out in front of you, and I do mean all of it.
Basically anything with an interest rate when you carry a balance - car, house, furniture, credit cards, just to name a few…
It’s time to be honest with ourselves about everything we need to pay off.
So track down your current balance, the interest rate on each debt and the monthly minimum payment.
Step 3: Set up your debt avalanche
The debt avalanche payment method has you pay off your highest interest debt first so you pay less over all.
So now it’s time to order all the debt you laid out in the last step from highest to lowest by interest rate. We are not looking at the debt balances - frankly it’s not important.
The goal is to get rid of the highest interest rate debt as quickly as you can.
I’ll say it again - The faster you pay off the high interest debt the less you will pay on it over time.
Now my free budget tracker has a debt payoff feature to make this easier for you to see and track so you’ll want to set up this debt tracker.
Whether you download the budget tracker or not, you’ll want to set up your monthly payment for each debt, paying the minimum across all your debt. Then, anything extra you have leftover from your budget will be used to boost your monthly payment on your highest interest debt.
Keep doing that until you have completely paid off the debt. Then, move onto the next highest interest debt. On and on it goes until your debt is all gone!
Now you know all the debt that needs to be paid off and how much you can currently afford to pay on it each month, and this will be your plan to pay it off, unless you can raise your income.
Step 4: Boost your income
Over time as you change jobs, get promoted, or get a raise, your income will naturally increase. But if those things aren’t immediately on the table and you want to pay debt off quickly, then we can get creative to grow our income.
So what can you do beyond your day job to make extra money?
Every little bit helps and can go straight into your debt avalanche plan to pay your debt down faster, but here are a few ideas:
- Start a side hustle and put your skills or hobbies to work building your income
- Use the gig economy like driving ride shares or delivering groceries
- Answer digital surveys through companies like Prometric
- Sell things you no longer need or use
- Freelance or look for part-time work
This list is just that start… Look for the opportunities around you to boost your income so you can pay your debt off faster!
The Key Takeaway
Everyone pays off their debt in their own time but these 4 steps plus my free budget planner set you up to get control of your debt and develop an easy to follow plan to pay it off.
One more thing… Now I’m not discouraging you from paying down your debt, especially your high interest debt - get rid of that debt quickly - but once you get to a place where the debt you do have is very manageable, then it’s time to consider building your savings while continuing your debt paydown.
This is a personal choice based on your own financial situation, but my point is you don’t need to be living debt free before you shift your priorities toward your savings.
But since you’re here, for the time being, use the four steps above to pay off your debt so you can leave the overwhelm and stress behind!