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6 Tips: How to Pay Off Debt Fast Without Going Crazy
Paying off debt can be a stressful and overwhelming experience, and there’s no single way to do it. Often it takes multiple strategies and steps to get that number down to zero. These six strategies will help you learn how to pay off debt fast — without going crazy!
Debt can feel like prison, holding you captive from reaching dreams like buying a house. You’re locked in a cell of distress, from fear and panic to low self-esteem. Debt is normal for millions of Americans, but that doesn’t mean it’s permissible to ignore it. It damages your credit score, can negatively impact your relationships, make your interest rates soar and overall create a financially unstable situation.
So you’ve decided to start your journey to pay off debt. There are the obvious, big strategies:
- Debt consolidation through a credit card, loan or home equity loan
- Federal and private student loan refinancing
- Avalanche Method: paying off largest debts first to help you save on interest
- Snowball Method:1 paying off your smallest debts first to help you gain momentum
- And of course: budget and cut back on expenses
These are excellent solutions for embarking on a debt-free journey recommended by most financial resources, but for some, it’s not enough. Check out our additional tips below … A couple of the tips have proven to be successful!
It Takes Work — Literally
CNBC Millennial Money series profiles millennials in different states and income levels, interviewing them on how they make money, spend and save. For Marek and Kothney-Issa Bush, they were able to pay off $125,000 in debt (12 debt accounts) on a combined income of $56,000 in Dallas! Seems impossible … how did they do it?
Along with cutting down on expenses, they picked up side hustles. “Serving as a waitress was the most lucrative for her and doing pizza delivery was the most lucrative for me,” says Marek. “We really stopped doing anything but working,” adds Kothney-Issa. Looking back, she also says she wished they would have been more serious about building their savings fund after becoming debt-free.
Say Goodbye to Shame and Embarrassment
Debt can be a dirty word, representing bad decisions and irresponsibility. But in some scenarios, you can’t take all the heat. For many careers, a degree is a prerequisite and education comes with a hefty price tag, so loans are inevitable for many. In our COVID era, people lost jobs and income, leaving many in a financially vulnerable position. We’re also living in a society of temptation. We book flights after seeing our peers traveling the world, and advertisements try to convince us we need more to make us happy. Managing debt is stressful enough. To carry shame or embarrassment only exacerbates the emotional and mental exhaustion, so try to let those feelings go.
Plan Strict No-Spend or Spend-Less Challenges
Like in many areas of our lives, balance is a key to success. Without balance, there’s burnout. A debt-free journey can turn obsessive, in which the most committed borrowers start to agonize over every purchase and feel guilty anytime a frivolous dollar is spent. An aggressive approach toward paying off your debt fast is effective, but is it sustainable for the long-term?
One strategy is to set up your overall budget with some leeway. Give yourself a little extra room for pleasures, but then challenge yourself to a no-spend month (avoid anything that isn’t essential). Another type of challenge could be to zero in on a certain category like groceries. Significantly reduce how much you spend on groceries for a week and plan cheap meals. Just make sure that you still stick to a somewhat rigid budget regularly, and you’re not giving yourself a license to splurge post-challenge.
Ditch the Interest with a Balance Transfer
Sara Anderson and her husband were drowning in a cycle of debt. If they didn’t do something drastic, they were never going to escape it. Sara told The Financial Diet2 that their first step was consolidating debt through a personal loan. After paying off the loan, the couple amassed five-figure debt on a single credit card. With a good credit score, the next solution for debt payment was a balance transfer. They transferred half the debt onto a credit card with 0% APR for 21 months, knowing they can pay off that amount within the introductory period.
Practice a Minimalist Lifestyle
It’s simple math — to allocate more money to debt, you need to reduce your expenses. It’s easy, right? Just stop spending money! It’s not such an easy task for everyone after years of spending habits. It may help to explore why you’re a spender and reshape your financial values by becoming a minimalist. In short, minimalism is the philosophy that more, bigger and better possessions won’t make you happier. Things like relationships, experiences and passions become more important than what you purchase and own. As you find joy in non-materialistic ways, spending less becomes a natural side effect. If you’re inspired to lean toward a more minimalistic way of life, check out our guide on What Can I Live Without?
Be Open & Transparent About Your Debt-Free Journey
Keeping your debt and debt-free goal a secret can make achieving that goal even more challenging. Maybe it’s been a weekly tradition for you and your sister to go to Sunday brunch, followed by some shopping — or you and your friends are always planning the next weekend getaway. Let loved ones know about your goal and how you’re making major changes to pay off your debt faster. Ask for their support and understanding! See if there are free activities you’d enjoy doing together. If you’re open about your new financial habits, it won’t be so uncomfortable to say no.
There are many different types of debt, including student loans, car loans, credit card debt and medical bills. Some debt is unavoidable, while others are a consequence of poor decisions. Regardless, becoming debt-free can transform not only your financial situation, but your life, health and wellness. Take one step at a time and stay the course!