Image of woman looking down on computer, tackling her debt payment plan.

How To Pay Off Debt Fast: 10 Strategies To Consider

Miranda Crace4-Minute Read
UPDATED: June 14, 2023


Debt can build up fast and prevent you from enjoying your best life, but you don’t have to live buried in a sea of debt. If your financial situation allows for it, you can pay down your debt over time by attacking it head on or even making simple lifestyle changes.

Let’s take a look at several ways you can effectively pay off your debt.

How To Pay Off Your Debt: The Basic Approach

Your debt won’t go away overnight, but you can take steps to get the ball rolling toward a debt-free life. The process below will put you on the right path.

1. Figure Out How Much Debt You Have

The first step is to sit down and add up all your debt. You should also determine your good and bad debt so you can know what to target first. Next, calculate your debt-to-income ratio, or DTI, to determine a starting point. As you pay down your debt, you can compare your new DTI to this number to understand how much you’ve paid off.

To illustrate, let’s say you make $4,000 a month and have a $300 monthly car loan payment and $1,500 in other monthly debt payments (mortgage, student loans, credit card minimum payments, etc.). In this situation, you could add your payments ($300 + $1,500) and divide by your gross monthly income ($4,000) to get your DTI, 45%.

2. Create A Budget

If you’re serious about getting out of debt, you’ll need to make a budget so you know where every dollar you earn is going. To do this, you’ll need to figure out exactly what you must spend – on food, utilities, transportation costs, your mortgage payments, etc. – and devote every other dollar to reducing your debt.

3. Build Up Your Emergency Fund

Part of your new get-out-of-debt budget should go toward increasing your emergency fund. Having at least some money tucked away will give you security while you’re paying down your debts.

4. Increase Your Monthly Savings

You can increase how much you save each month by looking through your monthly bills and deciding which are necessary and unnecessary expenses. For example, monthly subscriptions – like streaming or delivery services – may be extras that you can live without. Factor into your debt repayment plan any money you save by cutting expenses.

To continue our example, if you’re able to reduce your monthly debt payments to $1,000, your DTI would become 32.5% ($1,300 ∕ $4,000). This would free up more of your income to go toward paying off your overall outstanding debt.

5. Earn Some Extra Cash

Increasing your income can also help you start repaying debt. Pick up a second job or a side hustle if possible, but use those extra earnings just for debt payments or your savings account.

For instance, if you could increase your income to $4,500 in our second example above, your DTI would be 29%. You’d also have $3,200 left over each month to contribute to your total debt sum, regular bill payments (utilities, groceries, car insurance, etc.) not included in your DTI, and/or an emergency fund.

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10 Ways To Pay Off Your Debt Faster

If you want to pay off your debt fast and feel financially secure enough to make this attempt, try adding at least a little more money to your payments each month. Consider the following ways to pay more and lower your debt.

1. Make Biweekly Payments

You can pay off your debt faster by paying every 2 weeks instead of every month. You’ll end up making the equivalent of one extra payment each year.

When you pay off debt with a biweekly payment, you may not initially see a dramatic change in your monthly expenses. However, you might see dramatic savings as you pay off debt over months or years since you’re reducing the amount of interest you owe.

2. Make Extra Payments

You can make a lot of progress on reducing debt by paying more than the minimum amount you owe every month. And one practical way to pay more than you owe is by making a second payment.

Let your lender know that the extra payment is to go toward the principal loan balance, which is the original amount of money you received from your lender. Making payments toward the principal also means you’ll pay less in interest over time.

3. Round Up Loan Payments

Even though it may seem like a small change, rounding up your minimum payment each month is a great start to paying more toward your debt. You don’t need a ton of extra cash, and you probably won’t notice the extra amount, given that it’s so small.

Next time you make your payment, just round it up to the next couple of dollars. For example, if your credit card payment is $112.23, add an extra $7.77 to make it an even $120. Within a year, you’ll have paid an extra $93.24.

4. Ask For Discounts

Some lenders offer rate discounts if you sign up for autopay or online bill payments. Some even do so if you opt for paperless statements.

It never hurts to ask your lender whether your payment history qualifies you for a lower rate. Even a fraction of a percent off your interest rate can make a huge difference in how much you’ll save.

5. Make A Debt Snowball

The idea behind a debt snowball works like this: You organize your debts from the smallest balance to the largest, without regard for interest rates. For all debts except the smallest, you pay the minimum amount due. For the smallest, pay as much as you can afford until it’s paid off.

Compared to other debt-repayment methods, the debt snowball often reaps the most noticeable rewards by quickly liquidating smaller debts in their entirety.

6. Create A Debt Avalanche

Another approach is the debt avalanche method where you organize your debt by highest interest rate to lowest and target your most expensive debt first. You can save money in the long term by getting rid of your most expensive debt, but you may forgo the quick wins that the debt snowball method can offer.

Loans that tend to have the highest interest rate include payday loans and credit cards. Loans like federal student loans or your mortgage tend to have lower interest, meaning it’s okay for now to hold off on trying to pay them off early. Plus, federal student loans offer programs like loan forgiveness or income-based repayment plans, which can lower or eliminate part of your debt.

7. Gather Debt Snowflakes

Continuing with the snow metaphor, the debt snowflake can be a complementary strategy to the snowball or avalanche method. The idea behind debt snowflakes is that you take any amount of money you may happen to find and allocate it toward your debt goal.

For instance, if you find a $5 dollar bill emerging from the melting snow, it goes toward your snowball or avalanche target. These micro-amounts can add up more quickly than you might think and help you reach your goals faster.

8. Consolidate Your Debt

The debt consolidation process is a great way to simplify your debt and save money at the same time. Consolidating your debt means you take out a debt consolidation loan, like a personal loan, to pay off your credit card debt. You’re then left with one loan payment at a fixed, and usually lower, interest rate.

Consolidating your debt can make it cheaper and more convenient to pay off. It also allows you to plan your budget around a payment that won’t vary unless you choose to pay extra so you can pay the loan off faster.

Options for debt consolidation include:

9. Negotiate A Debt Management Plan

Some credit counselors may recommend you enroll in a debt management plan, or DMP. This plan won’t lower the balance you owe, but your counselor can help you schedule out a monthly payment and get your money where it needs to go. Your counselor may even be able to negotiate on your behalf for a lower interest rate.

Debt management plan costs can vary, but you can probably find an option with a setup fee of $75 or less and a monthly fee of $50 or less. This is in addition to the monthly payments you must make toward your debt.

10. Settle Your Debt

A debt settlement plan is similar to a debt management plan in that it likewise requires negotiation with creditors. But with a debt settlement, a creditor agrees to take a lump-sum payment (usually somewhat below the balance you owe) as payment in full.

Typically, creditors will only undertake these negotiations when they’re convinced you’ll end up with no choice other than bankruptcy, in which case they may get nothing.

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Final Thoughts: Pay Off Your Debt The Best Way You Can

Freeing yourself from debt can create new opportunities to live life to the fullest, but it’ll take some work to get there. Think about ways you can tackle your debt and choose the plan that works best for you.

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Miranda Crace

Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years.