25 Smart Ideas to Pay Off Debt Fast (A Complete Guide)


What would you do if you were walking in a forest when suddenly you took the wrong step and found yourself in a hole?

Chances are you would do everything in your power to get out!

While the likelihood of you falling in a hole on your next nature walk is low, the likelihood of having debt, or being in the “hole” financially is pretty high.

In fact, as of late 2017 according to the Federal Reserve's numbers featured on USA Today, the average American household carried $137,000 in debt.

On average, each household had the following in debt:

Household Debt:Amount:
Credit Cards$17,000
Auto$30,000
Student Loans$50,000
Mortgage$182,000

So what does that mean for you?

Whether you have a little bit of debt or a lot of debt, here are is how to pay off debt fast in 25 steps!

  • Learn how to pay off your debt fast in 2021!
  • Get tips for staying on track mentally
  • Use these creative ideas to help you pay off debt fast!
  • Join the FREE 5-Day Debt Free Boot Camp here!

How to Pay Off Debt Fast in 25 Steps

pay off debt fast

Here is a list of ways to help you pay off debt fast in 2019. Be sure to first figure out how much debt you owe and list each amount down individually by categories:

  • Credit Cards (List out individually)
  • Student Loans (List out individually)
  • Auto Loans (List out individually)
  • Other (Personal Loans, etc)

List the amount of principal debt owed, the monthly minimum payment, and the interest rate for each debt.

Need a Budget Sheet? Get a free copy of my Google Budget Sheet here and use it to figure out your monthly spending, debt payments, and income!

1. Use the Debt Snowball

Made infamous by Dave Ramsey, the debt snowball approach is the simplest way to pay off debt fast, no matter the depth of your knowledge is when it comes to money.

Here is how the debt snowball works:

  1. Take all debt (Besides your mortgage) and write them down from least to greatest based on the remaining principal balance
  2. Figure out how much extra each month you contribute to paying off debt (Pay Yourself First #4 below).
  3. Once you have your number, put it towards the smallest principal debt amount
  4. As you pay off a debt item, thus freeing up cash flow, roll that into the next one the list (See the picture below).
debt snowball picture
How to use the debt snowball to pay off debt fast: Roll each amount into the next.

As you can see in the example above after each debt item is paid, the money that is freed up is rolled into the next. Hence the name “Snowball.”

The power of the debt snowball is that the amount that is going to a targeted debt item increases every step of the way. Another option is to use what is referred to as the “Debt Avalanche.”

2. Debt Avalanche

The debt avalanche a powerful strategy that can be implemented to pay off debt.

How the debt avalanche differs from the debt snowball is in that the debt avalanche is based on interest rates, not the principal amount owed.

For example, if you had $5,000 in credit card debt at 24% and $2,000 on a car loan at 4% using the debt avalanche you would the first pay off the credit card because of the larger interest rate.

debt avalanche photo

How to use the debt avalanche:

  1. Line up all debt starting with the highest interest rate to the lowest
  2. Pay extra money towards the debt with the highest interest rate
  3. As you pay off debt, roll the newly freed-up cash into the next debt item.
  4. Wash, rinse, repeat until the debt is all gone!

The Pros: Can tend to save more in interest and be quicker than the debt snowball

The Cons: The debt avalanche can be harder to manage and more challenging to stay motivated. See Debt Snowball vs. Debt Avalanche.

3. Cash Windfall

cash windfall to pay off debt fast

From time to time you may find yourself with a nice sized tax return. Or maybe you recently got cash from your wedding or from an inheritance.

Either way, this sudden injection of cash into your checking account wasn't accounted for in your monthly budget, so treat it like it doesn't exist and immediately use it to pay off debt.

For example, one Money Life Wax reader's wife got a performance bonus at work and they used the $1,200 bonus to pay down a student loan.

Don't treat the extra cash like it's free money to spend, use it to pay off your debt following your selected strategy. Whatever you do, don't be like the youngest lottery winner ever and blow through 1.8 million in a matter of months.

4. Pay Yourself First

Selecting a debt payoff strategy is simple, however making sure you guarantee you pay a specific amount towards debt each month can be the challenging part.

Luckily, you can just use the pay yourself first strategy (Which pretty much explains itself with title).

Here is how the pay yourself strategy works:

  1. Figure out your monthly fixed expenses (Bills)
  2. Calculate what is leftover from each paycheck after bills.
  3. Determine how much from each check you will contribute to debt
  4. Once you get your paycheck, immediately pay off your debt with the predetermined amount
  5. Whatever is leftover you can spend

Most people do the opposite approach, they spend first. Followed by paying bills and then lastly paying themselves (Investing, saving, paying off debt).

The pay yourself first approach is perfect for putting your debt first then saving more down the road!

5. Rent a Room Out

Housing is the big ticket item in most household budgets. As a general rule of thumb, no more than 30% of your income should be going to your living situation.

However, that is not always easy to reciprocate, especially if you live close to a metropolitan area for work. In that case, subletting a room in your home or apartment isn't a bad idea.

Consider renting a room to earn some extra money to offset living expenses. In turn, you will free up money in your budget to use towards your debt. While living with another person might not be your idea of fun, it is nice when you see the living expenses drop.

Pros to renting a room out :

  • $600 for a room x 12 = $7,200 annually
  • Split monthly utilities & internet
  • Easy to accept payment with apps like Cahapp and Venmo
  • Passive income

6. Move Back Home

Moving back home after college is bad enough, but in order to pay your debt fast, you might have to consider moving back with the O.G roomies – your parents.

Depending on where you live, housing can run you $12,000 (and likely way more per year. 80% of millennials attribute student loan debt to not being able to buy a home, so staying with the parents to pay off your debt is actually really strategic.

Ask if you can pay for a utility or offer to clean, stay at home and use the money you planned on spending each month for housing to pay off your debt fast. The faster you pay down your debt, the faster you can move out!

Just make sure to tell everyone how you met your roommates – they brought you home from the hospital 20 some years ago!

7. Downsize Your Home

If you find yourself living in a home that is preventing you from getting ahead of your debt, (AKA house poor) it might be time to temporarily swallow your pride and downsize.

Chances are your home has appreciated since you first bought, so selling it will actually net you some income that you can use to pay off debt. Live below your means for a year or two to clear your debt, then you can buy a new home that is affordable!

Another option is to move to a cheaper part of the country to reduce the cost of living. Just use this link to compare cities and the cost of living. Also, see #15 on how to leverage equity to pay off debt.

8. Sell Your Car

After mortgage debt and student loan debt, auto debt is #3 just ahead of consumer debt. Here are a few things about paying off your debt fast and car ownership:

pay off your debt fast sell your car
  1. The purpose of a car is to get you from A to B
  2. Your car's purchase price should never be more then 25% of your annual net income (If you make $40,000, your car's value should be $10,000 or less)
  3. If you want to pay off your debt fast, selling your car is a quick way to do it.

Do the math:

The average car payment is $350 for 5 years or about $21,000 over the life of the loan. Just cutting that in half and riving a more fuel efficient car can save over $10,000 to go towards your debt.

Related: Car Buying Guide

9. Adjust Your Insurance

Insurance is on of those fixed expenses we need, but we also forget about once we sign the documents.

But if you're looking to pay off your debt fast, you need as much money as possible to make those extra payments. Shopping around for better insurance packages is a quick way to get some money back each month.

Insurance companies are always looking for business, don't be afraid to shop around every year, or use something that does it for you:

Have you heard of TRIM? Consider using Trim in 2022 to help you save money on your monthly bills and subscriptions. I used TRIM to help cut out unnecessary spending and negotiate our bills. It's how I am now saving hundreds on car insurance this year!

10. Cancel the Gym Membership

The average adult who has a gym membership pays $72 per month. Save $865 per year just by canceling your gym membership.

Take the extra $72 and use it to pay off your debt. Once you are debt free, then you can get a gym membership again. There are plenty of ways to stay fit and not have a gym membership which includes:

pay off your debt fast gym
  1. YouTube workouts
  2. Fitness apps
  3. Community gyms
  4. Run outside
  5. Join exercise groups
  6. See if work will pay for your membership

11. Stop Eating Out

Make a pact with yourself when it comes to eating out:

I will not eat out until I payoff $1,000 in debt.

If eating out is something you enjoy, make it a reward each time you accomplish paying off your debt. It is amazing how fast you will start paying off your debt when you use eating out as a reward.

Adults are spending $18,000 per year on non-essentials, most of which comes from food and drinks. Cutting back on your eating and drinking habits will help you pay off your debt fast and even get in better shape in the process!

12. Cut Your Credit Cards Up

pay off debt fast by not using credit cards

Cut up the plastic that got you into debt in the first place!

If you're someone who is paying off debt because you overspent, it is time to say goodbye once and for all to those credit cards.

In fact, even if you're paying off debt that wasn't acquired through spending, a good practice when becoming debt free is removing all temptation to spend.

The simple act of physically cutting up your credit cards will give you the upper hand and motivation you need to pay off your debt quicker!

13. Work Backwards to Pay Off Debt Faster

When it comes to changing your mindset on how you think about money, sometimes it starts with the unique approach of working backward.

For example, let's say you want to run a half marathon. Now, work backward and come up with a plan to get you there…

  • How much will you need to run to get there?
  • What will you need to eat?
  • What will you adjust with your time?
  • How often will you train?

This same approach can be used when it comes to paying off your debt. Simply start with a target date and work backward!

14. Use Apps to help you pay off debt fast:

Perhaps you have heard of Qoins, but have you ever heard of Trim or Truebill?

Trim and Truebill are apps that basically help you save money! Here is how they do it:

  • Negotiate bills (Think cell phone, insurance, internet, etc)
  • Cancel unused subscriptions
  • Look for better deals

The key difference is that Truebill takes 40% of what you save and Trim takes 33%. Either way, you're saving and both offer free versions!

Truebill – Personally used this to save $1,000 per year on car insurance (I actually called my current provider and negotiated over the phone). Has an app and the free version just contains adds.

Trim – Free to sign up, no app – online version only.


What about spare change apps?

Qoins and Acorns are spare change apps that help you pay off your debt without even thinking about it. Here is how they work:

  1. You link your cards to the apps
  2. You decided on a goal, for example paying down your student loans.
  3. Every purchase you make gets rounded up to the nearest dollar
  4. As your round-ups accumulate, they're used to pay off your debt.

Qoins – specifically designed for debt.

Acorns – designed to invest round-ups, but you can cash out at any time then use that money to invest!

15. Use a HELOC

Leverage your home's equity to pay off your debt…. wait, what?

Using a HELOC to pay off debt is unconventional, but in certain situations, it is ingenious.

Robbing Peter to pay Paul as the saying goes is how the concept works. Essentially, leveraging your home's equity (Which is dormant) to pay off high-interest debt – such as student loans or credit cards – saves you time and streamlines the process.

Remember, the title said “Smart Ways to Pay Off Your Debt Fast!”

For a step by step guide, use this link: How I Made a $40,000 Student Loan Payment With A HELOC.

16. Start a Side Hustle

When it comes to getting out of debt, paying off debt revolves around two concepts:

  1. Making money
  2. Not spending money

Both are designed to help you pay off your debt faster so you can get ahead of the interest charges. In 2019, it has never been simpler to make money online or with a side hustle.

You can start a blog, ride-share, do deliveries or work online in some capacity. See this list of 50 Side Hustle Ideas to help you get started!

17. Make Money Fast

Make use of free time to make money on the side to quickly pay off your debt. Next time you're sitting on a bus, riding the metro or doing your best job to stay awake at work fill out a survey.

Maybe those aren't options for you, but there are plenty of ways to make $500 extra each month, just check out this list here.

18. Ask For a Raise

On Monday, walk into your boss's office and ask them for a raise and if they don't do it tell them you're quitting.

Just kidding, don't do that...!

The quickest way to make more money is to simply ask. In most cases, the worst thing that can happen is you will hear the answer, “No.”

But what if you hear yes? Take your annual raise or newly acquired pay raise and roll all of it into your debt snowball/avalanche plan!

See also, How to Ask For A Raise!

19. Stay Focused

Living on a budget and picking a strategy to pay down your debt is the easy part. The hard part when it comes to paying off debt?

Staying focused and disciplined.

Managing your money is all about behavior. The natural human tendency is to get excited about something. But like many things we get excited about, as we progress on our journey sometimes we might lose our focus.

To help you stay focused you must create a really big WHY for getting out of debt. For example, maybe you will take one trip a month for a year after you pay off all our debt!

20. Stop Comparing Yourself

Don't compare yourself and stay off social media.

Now you might be wondering why this has to do with you paying off your debt fast, but this could be more important than any debt strategy because finances are mostly behavior.

If you are on social media platforms and you're constantly comparing what you have (Or don't) to others, it will be harder for you to stick with your plan to be debt free. Learning to say no is a big part of becoming debt free and comparison sometimes makes us say “Yes” instead.

Learn how to stop comparing yourself financially here.

21. Eat Less Food

Want to know how to pay off your debt fast?

Go on a diet and stop eating so much, not kidding. This might sound extreme, but being debt free when it is estimated that 300 million have debt is also extreme.

Sometimes to get the results we want, we might need to adjust some things in our lives. Not only will cutting back on our caloric intake help us with our fitness levels, but it will also help us save money at the store.

Avoiding processed foods is typically less expensive and with the average household spending $12,000 per year in food, meal planning can help you save money to use towards debt each year.

22. Make Gifts

When you begin to assess your debt, you might find that your consumer spending spikes during the summer and around holidays.

Between birthday parties, Christmas, and other holidays – it is really easy to fall off the budget wagon and start spending more on the credit cards.

But what if you're someone who loves to give gifts? It might be time to make some gifts if you're serious about paying off your debt.

Simple gift ideas you can make:

  • Mason jar candles
  • Photo books
  • Wooden coasters
  • Personalized items (People love seeing their name)
  • Bulk items split into mini-gifts
  • Wreaths
  • Homemade soap

23. Assess Wants vs Needs

By now you have realized that most of these steps are designed to help you free up money or reduce expenses so you can make extra payments towards your debt each month.

Making cuts to your budget is one step, but making sure you're not spending your money on things you really don't need is the next.

Thoroughly assess a want vs a need:

NeedWant
– Transportation– New luxury car
– Food & Shelter– Luxury apartment & eating out
– Clothes – Designer fashions every season

24. Shop Online 1x Per Month

Going back to the whole wants vs needs debate, one-click shopping has most likely made your life easier, but also more complicated when it comes to money.

The sheer fact we can grab our cell phone and buy whatever we may want in a matter of a few clicks is convenient… and conveniently scary.

To help you curb your spending online, only check out 1x per month from all your online shopping websites. Simply add items to a car all month and checkout on a planned date. You will limit impulse buys and things you truly don't need.

Adopt the mindset that:

**If you need something bad enough to go to the store to get it – then you need it**

25. Stay Out of Debt

The best way to pay off your debt is to never get into debt in the first place. Whether you recently became debt free, or you don't have any debt, do your future self a favor and STAY OUT OF DEBT.

You can avoid most debt by being strategic when using credit cards and buying cars. If you have student loan debt, once you pay it off don't make the mistake of taking more loans out unless you do the cost analysis of the potential raise.

Bonus: How to Track Debt Payoff

Now that you have a complete guide to paying off your debt fast, the real trick is making sure you stick to it so you can get debt free like this family!

Just like monitoring any habit – what you eat, what you say, how much you pay off – it starts with tracking. Luckily, the internet and your cell phone have made this really simple.

Track your debt pay off with apps like Mint (Free) or Personal Capital. If you don't like using apps, you can go old school with an excel sheet. Some will even create a graph and hang it somewhere in their kitchen!!

Now go crush some debt and live life on your terms!

Question: What are your biggest tips for paying off debt fast?