How to Get Out of Debt Fast: A Step-by-Step Guide

50 Plus Hub Research Team

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Debt feels like a weight, holding you back from achieving goals and enjoying life. Whether it’s credit card balances, medical bills, or student loans, being in debt strains finances and creates stress.

The good news? With focus and commitment, you can get out of debt fast. It starts by facing your situation head-on. Understanding the root causes, forming a payoff plan, and changing habits leads to freedom.

This step-by-step guide will walk you through the debt payoff process. With these proven strategies, you can destroy debt for good and reach financial peace of mind.

Step 1: Assess Your Debt

You need clarity on what you owe. Pull credit reports and list all debts with balances, interest rates, and minimum payments. This overview enables you to make a payoff plan.

Types of Debt

  • Credit cards: High interest debt that grows quickly with compounding interest and fees.
  • Personal loans: Installment loans from banks, creditors, or peer-to-peer lending sites.
  • Medical debt: Bills from doctors, hospitals, and other health services.
  • Student loans: Education debt with varying repayment plans. Federal loans offer more flexibility.
  • Mortgages: Loans for purchasing a home. Interest rates are lower than other debt.
  • Auto loans: Financing for a new or used car purchase. Rates depend on credit score.
  • Other debt: Collections, payday loans, personal lines of credit, etc.

List every debt you owe no matter how small. Ignoring debts won’t make them disappear. You need to know the full picture.

Find Your Exact Debt Amount

Log in to lender accounts and document:

  • Total current balance – Do not rely on your memory!
  • Interest rates – Usually expressed as APR or annual percentage rate.
  • Minimum monthly payments
  • Due dates

Recording this gives you clarity on what you owe and helps create your debt payoff plan.

Pull Your Credit Reports

Get your credit reports from www.annualcreditreport.com. This government-authorized site lets you access reports from Equifax, TransUnion, and Experian for free once per year.

Credit reports provide your full debt picture including:

  • All open accounts – credit cards, loans, mortgages, etc.
  • Account balances
  • Your payment history
  • Any collections or delinquencies
  • Inquiries made about your credit

Reviewing your credit reports ensures no debts are missing from your list. You can then begin tackling them.

Recap Total Debt Owed

Add up all balances due on every debt account. This total debt amount is likely overwhelming. That’s okay! Many people face large amounts of debt. The key is having a plan.

Seeing your grand total provides motivation to start eliminating it. You’ll begin chipping away at it using specific payoff methods.

Step 2: Understand Root Causes

Before diving into payoff plans, reflect on what behaviors or circumstances led to debt. Was it overspending? Job loss? Medical bills? A habits overhaul paired with paying off debt prevents recurrence.

Common Causes of Debt

  • Living beyond means – Spending more than you earn
  • Loss of income – Job loss, reduced hours, death of a spouse
  • Poor budgeting – Not tracking spending or sticking to a budget
  • Overuse of credit cards – Relying on credit to fund lifestyle
  • Financial emergencies – Unexpected car/home repairs, medical bills
  • Student loans – College costs exceeding scholarship/savings
  • Predatory lending – Payday loans with high fees and rates

Think through when and why debt started accumulating. The more self-awareness you have, the better you can create habits to avoid debt long-term.

Ask Yourself Key Questions

Reflecting helps you identify changes to make while paying off debt:

  • What originally triggered my debt?
  • Did I use credit cards to supplement low income?
  • Do I rely on debt to fund an unrealistic lifestyle?
  • Was debt caused by a crisis outside of my control?
  • Did I lack budgeting skills or financial knowledge?
  • How can I prevent debt recurrence in the future?

Taking responsibility for debt through self-reflection empowers you to destroy it.

Step 3: Make a Debt Repayment Plan

Now it’s time to make a specific plan for repaying debt fast. First, pick a payoff strategy based on your debt type mix and timeline goals. Then list debts from highest to lowest priority.

Choose a Payoff Strategy

Consider two popular methods:

Avalanche Method: Focus on highest-interest debt first while making minimums on rest. This saves the most money long term.

Snowball Method: Focus on smallest debts first regardless of interest rate. Gives motivation through quick “wins”.

Most experts recommend the avalanche method for fastest payoff. But pick the one that motivates you most to build momentum.

List Debts by Priority

Use your chosen payoff strategy to list debts from most important to least. Include:

  • Balance amount
  • Interest rate
  • Minimum payment
  • Extra payment allocated

This list guides which debt you pay off first. Update it as you eliminate debts.

Allocate Extra Money

Commit any extra money in your budget to debt repayment. Even small amounts like $25-$50 a month make a difference. Automate extra payments if possible.

Set a Payoff Goal

Establish a total debt freedom timeline, such as 15 months or 2 years. This gives urgency to stay focused until every debt is gone.

Track Progress

As you pay down debts, update your list with new balances. Crossing out eliminated debts keeps you motivated! Seeing balances drop raises your confidence.

Step 4: Reduce Expenses

Freeing up money to accelerate payoff requires cutting excess spending. Building a lean budget and downsizing expenses gives you more cash flow to put toward debt.

Make Budget Cuts

Review recent bank/credit card statements to identify potential budget cuts:

  • Dining out
  • Entertainment, hobbies, recreation
  • Shopping splurges
  • Travel/vacations
  • Subscriptions and memberships

Temporary frugality in these areas redirects money toward debt repayment.

Cut Household Expenses

Assess options to trim housing, utility, insurance, and transportation costs:

  • Downsize housing or get a roommate
  • Renegotiate rent/mortgage
  • Call insurance providers for cheaper rates
  • Reduce utility use
  • Lower internet/cable bills
  • Use public transit or carpool

Even $20-50 less in these fixed costs makes an impact.

Avoid New Debt

Put a freeze on unnecessary purchases that require financing. By not taking on new debt, every dollar can go toward existing debts.

Find Additional Income

Boost income with side jobs, freelancing, or selling valuables you no longer need. Extra earnings accelerate payoff.

With creativity and discipline, you can find hundreds in potential monthly savings. Redirect this to debts.

Step 5: Change Money Habits

Along with your debt payoff plan, adopt habits that enable you to pay off debt and stay out of it long term. Making smart money moves builds financial strength.

Budget Regularly

Track income and spending to align with values, save, and have money left for debt repayment. Apps like Mint, YNAB, and EveryDollar help create budgets.

Boost Your Income

Increase your earning power through raises, promotions, new jobs, freelancing, or monetizing skills. A fatter paycheck speeds up payoff.

Use Cash Only

Using cash instead of cards for purchases makes you hyper aware of spending. The physical exchange of money clicks your brain to spend less.

Monitor Your Credit

Watch credit report changes using a site like Credit Karma. Good credit saves money on loans and insurance.

Build Emergency Savings

Save $500-$1000 for emergencies so you avoid new debt during crises. Only use this fund for true emergencies.

Live Below Your Means

Spend less than you earn and avoid debt-fueled lifestyles. Cook at home, drive used cars, and buy secondhand.

Practice Intentional Spending

Pause before purchases and ask: Do I really need this? How will this move me toward goals? Intentionality prevents mindless spending.

Pay With Cash

Use cash for most purchases. It’s tangible and limits spending to only what’s in your wallet.

With new money habits, you avoid repeats of past money mistakes.

Step 6: Increase Income to Accelerate Payoff

Though expense cutting is crucial, extra income aligns perfectly with the goal of getting out of debt fast. The more dollars you can direct toward debt repayment, the faster it will disappear.

Side Jobs

Freelancing, driving for a ride share service, tutoring, or doing tasks on TaskRabbit brings in extra cash without a huge time commitment. Even 5-10 hours a week at a side gig makes a difference.

Try freelancing skills like:

  • Writing, editing, proofreading
  • Web design, programming
  • Graphic design
  • Bookkeeping
  • Consulting in your industry
  • Transcribing

Use creativity and skills to earn extra hundreds per month to demolish debt.

Second Job

Working an extra part-time job on nights and weekends could pay off an entire debt within months. For example, working 25 hours a week at $15 per hour brings in an extra $1,500 monthly!

Look for flexible opportunities like retail, restaurants, hotels, and delivery driving. This doubles your income and debt repayment.

Sell Unneeded Items

Sell unused electronics, jewelry, furniture, clothes, and household items. Facebook Marketplace and eBay make this easy. Use money earned to fund your debt payoff plan.

Rent Out Extra Space

Rent out a mother-in-law suite, unused rooms, or your garage/driveway through sites like Airbnb and Swimply. Passive rental income sets you up for success.

Additional income combined with an airtight budget = freedom from debt faster than you imagined!

Step 7: Automate Payments and Savings

Autopay and automated savings help manage your money hands-off so you don’t miss any deadlines or spend instead of saving. Set it and forget it!

Autopay Minimum Payments

Set up autopay via your bank or lenders to cover at least the minimum payment on all debts monthly. This prevents missed payments and improved credit.

Automate Extra Payments

Many lenders allow you to schedule bi-weekly or weekly extra debt payments instead of monthly. Small frequent payments speed up payoff.

Automate Emergency Savings

Have $25-$50 transferred weekly from checking into a savings account for emergencies only. This prevents you from adding new debt during surprises.

Split Direct Deposits

Automate part of your paycheck directly into savings and debt repayment accounts. Less money in checking tempts you to spend less.

Autopay gives peace of mind that all obligations are handled on time. Saving and paying down debt happen on autopilot.

Step 8: Seek Additional Support If Needed

If you feel overwhelmed by debt, seek help from nonprofit credit counseling agencies or talk to a financial advisor. You do not need to tackle debt alone.

Credit Counseling

Nonprofit counselors help you understand, consolidate, and create a plan to pay off debt through services like:

  • Debt Management Programs
  • Credit repair guidance
  • Budgeting and money management
  • Student loan counseling
  • Housing counseling

They can negotiate lower interest rates and fees with creditors to save money and simplify payoff. Popular options include NFCC member agencies.

Financial Advisors

A professional financial advisor offers guidance for your overall situation including:

  • Reviewing your full financial picture
  • Creating a personalized plan
  • Building wealth while eliminating debt
  • Optimizing investments, retirement, insurance
  • Ongoing accountability and support

Seek a fee-only fiduciary advisor if needed. Eliminating debt improves every aspect of your finances.

Reaching out for help takes courage but creates clarity. You can get out of debt even faster and wiser.

Final Steps to Freedom

Commit to the process fully and refuse to quit until the last debt is demolished. Consistency and focus guarantee success. Then celebrate wildly at the finish line of debt freedom!

Stay Determined

Persistence is necessary during the long process of repaying debt. When you feel discouraged, look back at progress made. Any amount paid off is a step forward.

Make It a Group Effort

Share your debt freedom journey with a partner, friend, or support group. Accountability and encouragement from others helps you maintain intensity.

Reward Milestones

As you pay off debts, celebrate victories with non-material rewards like a picnic, hike, or movie night. Marking achievements builds energy.

Learn From Mistakes

If you slip up, get right back on track. Guilt and shame help nothing. Analyze what went wrong and grow from it. Progress over perfection.

Focus on the Freedom Ahead

Keep the life you desire after debt in focus. Your “why” for becoming debt-free gives strength on hard days. The joy ahead makes sacrifice worthwhile.

Stay positive and determined until every last debt is demolished. You’ve absolutely got this!

Final Thoughts on Getting Out of Debt Fast

Escaping the burden of debt takes focus, consistency, and belief in yourself. But with a plan and positive mindset, you can pay off any amount of debt faster than you expected.

Let the motivation of reaching financial freedom keep you taking action every day. Imagine the relief you’ll feel when the debt battle is finally won.

Your financial future is bright and filled with possibilities! Stick with the process detailed in this guide, and the finish line will greet you sooner than you think.

Now get out there and give that debt a knockout punch. You deserve a life free from debt!

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