13 Easy Ways To Pay Off Your Debt Fast!

Last Updated October 15, 2023 by Davina Kelly

Are you looking for ways to pay off your debt? I know having debt can feel overwhelming so deciding to do something about it is a step in the right direction.

As someone who has been stuck in the debt cycle, I will share what helped me get out of debt and improve my relationship with money.

This post is all about how to pay off your debt.

How To Pay Off Your Debt:

1. Make a List Of Your Creditors:

The first step in paying off your debt is to have a clear picture of who you owe money to. You can do this by making a list of all of your creditors.

Doing this may seem obvious, but it is important as seeing everything in one place will put it into perspective.

This will be very helpful if you have multiple creditors and only have a rough idea of how much you owe each one. Creating a list will make everything clear and easier to keep track of.

Your list should include the following.

Creditors name (Company you owe the money to)
Debt type
Balance owed
Due date
Interest rate

You can make this list on a notepad if you prefer writing things down, or you can use an Excel spreadsheet. I recommend the latter as you can make changes easier.

2. Decide How Much You Can Afford To Repay:

Once you have a clear picture of your debts, you need to assess your finances to see how much you can afford to repay.

The easiest way to do this is to review your income and expenses, doing this will also show you your spending habits. When reviewing your income and expenses, pay close attention to the money you spend on non-essential expenses. This will show you any spending you can eliminate and put towards your debt payments.

For example, if you have $2,000 in income and $1,800 in expenses, and you spent the remaining $200 on shopping you will know that you can now use that $200 a month to put towards your debt.

To do this you can log into your bank online, go to your bank statements and review all of your transactions. I recommend reviewing 3 – 6 months of transactions if you haven’t done this before.

This way you can see your spending habits over some time.

You want to go through this with a fine tooth comb and be honest about which expenses are essential and non-essential. If you can see that you are spending a lot of money on shopping, takeaways, and eating out these are things within your control. You can stop or cut back spending on these areas to free up more money to put towards your debt.

3. Create a Detailed Payment Plan:

It is important to have a plan when repaying debt, this will keep you motivated as you will have an end date and it will also keep you accountable.

There are two common strategies when paying off debt. They are the debt avalanche and debt snowball methods.

Debt Avalanche:

This method prioritises paying off the debt with the highest interest rates first. Once that debt has been paid you will move on to the debt with the second highest interest rate and so on until all of your debts are paid off.

The benefit of this method is you pay less interest over time. This is because debts, especially consumer debt such as credit cards, personal loans, and payday loans come with high interest rates. So the longer you have this debt the more interest you will incur on top of your principal balance. Over time you will end up paying a lot more than you borrowed.

Debt Snowball:

The debt snowball method prioritises paying off the smallest debt first. You would sort your debt in order of amount regardless of interest and prioritise paying off the smallest debt first.

While you are paying off the smallest debt you will make the minimum payment on your other debts. Once you have paid off the smallest balance you will move on to the second smallest debt and so on until you have paid off all of your debt.

The idea behind this method is you build motivation because you are paying off your debt faster and these small wins will keep you going. You can read more about both of these methods here.

How To Choose The Best Method:

Both of these strategies are good options and have many pros, but you need to decide which method is best for you based on your financial situation.

The type of debt you have will be a factor in deciding this as well.

For example, if you have $2,500 credit card debt at a 22% interest rate and $15,000 car loan debt at a 4% interest rate it may be more beneficial to prioritise paying off the credit card debt first.

Doing this will mean you can pay off the credit card debt faster and avoid having to pay more interest. While you pay off your credit card you can make smaller payments toward the car loan.

Continuing with this example once you have paid off the credit card debt you can then use some of the money to invest in the stock market and put the rest towards paying down your car loan debt.

Although in this example you still have car loan debt, it is at a low rate so I would be happy to continue paying it off while growing my money in the stock market at the same time.

As I mentioned, you should do what is best for you and your financial situation. If getting out of debt is the most important thing for you then you should focus on that and get into investing later.

You can use these strategies as a guide and tweak them to work in the best way for you.

4. Contact Your Creditors:

It is a good idea to contact your creditors to let them know your situation and that you do plan to pay off your debt.

You could also try to negotiate and settle your debt for less than you owe or you could agree on a payment plan. This has worked for me in the past. I was able to negotiate with the creditor and reduce the amount of debt I had to repay. I am not a skilled negotiator lol I was just honest about my situation and it worked out.

Creditors would rather take less money than they are owed than nothing at all so it is in your best interest to at least try. It is important to note that this option will affect your credit score as it will show as a partial repayment on your credit file. This is something to think about especially if you plan to take out credit for something like a mortgage in the near future.

I understand that not everyone is comfortable with doing this, so if you don’t want to negotiate you should still make contact as ignoring your creditors will only make matters worse, they will continue to chase you and may even add late payment fees.

Doing this will also relieve you of stress as it will constantly be playing on your mind.

5. Create a Budget:

Having a budget in place is an important tool when repaying debt. A budget will give your money direction and ensure that each month when you get paid you have a plan and know exactly where your money needs to go.

Once you have assessed your income and expenses and decided how much you will pay towards your debts each month you can include the amount in your budget.

Making the debt repayments part of your monthly expenses will simplify the process and make it a habit.

While on your journey to pay off your debt, you want to make the process as easy as possible and part of this is being organised. I recommend making a note of the due dates and amounts in your budget. You want to stay on top of this as late payments can incur fees and that will be a step backward.

You should also include any important details in your budget relating to your debt such as reference numbers and login details if you have to make payments online.

Or you could set up a direct debit to make it even easier if you feel comfortable doing that.

6. Overpay Your Balance:

Paying more than the minimum amount on your debt will save you money. This is because the faster you pay off your debt the less interest you will have to pay.

I know that in the snowball method mentioned above it is recommended that you make the minimum payment while prioritising paying off the smallest amount of debt first, but I don’t agree with this.

Making the minimum payment is fine if that is all you can afford, but if you have the option to overpay even if it is only by a small amount, it is worth it. Over time it adds up and you will be able to pay off your debt faster.

7. Consider Making More Money:

When it comes to paying off your debt you really only have two options. You can either increase your income or reduce your expenses.

If you have reviewed your budget and cut back as much as you can, it might be time to consider making more money.

There are lots of ways to make more money. You can take on another job like Amazon delivery, you could start a side hustle by creating a YouTube channel or opening an Etsy store, or you could do freelance work if you have a skill that is in demand. Another option is to resell unwanted clothes on eBay, this is a great way to make money using what you have.

I know that it can feel overwhelming to think about having to make more money, but it will help you to pay off your debt faster. It can also be helpful if you want to work on other things like saving while paying off your debt.

Having another job or starting a side hustle won’t be easy, it will require work and you will have to make sacrifices. But don’t focus on the things you will have to sacrifice in the short-term and the things that you think you will be missing out on (I say think because you really won’t miss out on anything unless you have kids as that will be time away from them).

Instead, think about what you will gain in the long term. You will be debt-free and will have more money to save, invest, and eventually have more freedom.

8. Work On Your Money Mindset:

Something that is often overlooked when you are on your journey to debt freedom is why you got into debt in the first place and the relationship you have with money.

Understanding why you got into debt is important as this can show you where you need to improve.

It can also help you to realise the mindset you have with money. If you got into debt because you lived paycheck to paycheck and spent more money than you made, you could have a scarcity mindset.

Other signs of a scarcity mindset are feeling overwhelmed by your finances, living in the short term, and believing there isn’t enough money to go around (in terms of jobs and opportunities).

In the past, I had a scarcity mindset towards money which led to me being in debt. I lived paycheck to paycheck, I didn’t have any goals for my money and I spent a lot of money on things I didn’t need.

This left me in a bad cycle so I decided I wanted to get out of debt and change my relationship with money. To do this I had to be honest with myself about the way I viewed money and work towards changing it.

How To Shift Your Money Mindset:

You can do this too, the fact that you want to pay off your debt is already a step in the right direction. The changes you make don’t have to be drastic, you can start small and build from there. Here are 3 simple things you can do.

Live below your means
Create goals for your money
Create a savings pot

I have learned that the amount of money you make isn’t necessarily the most important thing. Of course, it is a factor as the more money you make the more you can spend. But the most important thing is what you do with it.

If you choose to spend money on essential expenses like bills, food, transportation, etc and you make saving and growing your money a priority. These are shifts towards an abundant money mindset.

9. Consider Getting Help:

If you are really struggling and thinking I can’t pay my debts what options do I have? You may want to consider getting help. There are many ways to get help with debt such as debt consolidation, debt management plans, and individual voluntary arrangements (IVA). There are also some government schemes to help you clear debt, you can read more about them here.

I have worked with a debt charity in the past to consolidate my debt, it was very helpful at the time. The way this worked was we looked at my budget and agreed on an amount I could afford to pay each month. This amount was then divided amongst my creditors and paid to them equally.

This meant that each month I just had to make a payment to the charity which took the stress off of me. The charity I worked with was Step Change, you can read more about how they work here.

Although this was very helpful to me at the time I knew it would take me longer to get out of debt, so once I got a job earning more money I stopped working with the charity and created a plan to repay my debt. If you are just getting started and do need help you could work with a charity to consolidate your debt until you are in a better financial situation.

10. Find Areas To Cut Back Spending:

As I mentioned before to get out of debt you either need to increase your income or reduce your expenses. Or you could do both.

Cutting back doesn’t have to be drastic, it doesn’t mean you have to walk everywhere and live off noodles lol If you can you will save more money, but you don’t have to.

You can find small ways to cut back such as the following.

Reduce the amount you spend on groceries – Food is one of our biggest expenses so you could cut back on the amount of money you spend on groceries. You can do this by creating a budget and shopping at cheaper supermarkets like Aldi. You can see more options here.

Eating out less – You could cut back on eating out. If you usually eat out with friends you could reduce the frequency, find cheaper options, or you could cook at home and have your friends over instead. This way you don’t have to cut it out completely, you are just finding alternatives.

Reduce service providers’ costs – Another small way you could cut back is by negotiating better deals with your service providers. If your contract is coming to an end you could try to negotiate a better deal. Companies would always prefer to retain their customers so you should always try this option first. If that fails you could check price comparison sites to see what deals are available and choose the best one for you.

11. Be Patient:

Debt freedom is a journey and journeys take time so you need to be patient. You didn’t get into this situation overnight so you need to recognise it will take some time to get out of it.

The most important thing is that you have decided to work on paying off your debt, so as long as you are consistent you will get there eventually.

Also, give yourself grace. Don’t beat yourself up about being in this situation. We have all made mistakes and done things we would do differently in hindsight, it is all part of the journey in life.

As long as you learn from your mistakes, work on improving your money mindset, and stay consistent with your debt plan you will be fine.

12. Set Goals For Your Finances:

Having goals for your finances is very important. Goals give you something to work towards and keep you motivated.

I recommend having at least one goal for your finances each year. Your first goal could be to get out of debt which is a great goal to start with.

Next, you may want to build up a savings pot for a holiday. Then you may want to start investing in the stock market or save up for a deposit for a property.

Whatever your goal is you should write it down, create a plan and give yourself a deadline. A deadline is important as it gives you a measurable time frame.

13. Create an Emergency Fund:

I recommend having an emergency savings fund while you are working to pay off your debt. This fund will essentially be your backup plan in case your circumstances change.

For example, if you lost your job, were made redundant, or had any unexpected expenses. This fund will support you while you figure things out.

You could save a certain amount like $1,000, but I would recommend saving at least 3 months of essential expenses plus a buffer. If you can save 6 months of essential expenses that is even better.

This fund will allow you to sleep better at night as you know you have a savings pot in case anything comes up that you weren’t expecting.

Benefits Of Paying Off Your Debt:

The benefits of paying off your debt are endless, I have listed some of them below.

More Disposable Income:

Once you have paid off your debt you now have additional money in your budget that you can do what you want with.

You can decide to save that money, invest it in the stock market, or just splurge lol

This is such a great feeling as you will now be able to use this money guilt-free because you will no longer have the burden of debt.

Reduce Stress:

Having debt can be stressful, it is something that is constantly on your mind. It is especially hard at the beginning when you are trying to figure out how to deal with it.

Most people who are in debt are struggling financially and deciding to pay off your debt means you have to confront that and work towards changing the spending habits you have.

This can be hard to do and mentally draining.

Paying off your debt will relieve you of this stress and allow you to sleep peacefully at night. You will also rebuild your relationship with money and improve your financial situation which will lead to more peace.

Gives You More Freedom:

Paying off your debt will allow you to have the freedom to make choices you couldn’t before. For example, you may have wanted to change careers, but you couldn’t do that while paying off your debt as you needed job security and a consistent income.

Once you have paid off your debt you have the freedom to explore this as you no longer have the burden of paying off debt. You also have more disposable income and an emergency fund so you have a backup plan.

Frequently Asked Questions:

Is It Better To Be Debt Free or Have Savings?

In an ideal world, it is better to be debt-free and have savings. In some cases, you can pay off your debt and build up your savings, but this is dependent on your circumstances.

For example, if you have a lot of consumer debt this carries high interest rates so may want to make paying off your debt the priority. But this doesn’t mean that you can’t save at the same time.

If your priority is paying off debt then most of your money will go towards the repayments, but you can still save. It will just be a smaller amount.

For example, if you had a $3,500 debt that you wanted to repay in 12 months and after paying your essential expenses you had $500 left over, you could pay $350 towards your debt and save £150 each month. This way you could repay your debt in 10 months and build up $1,500 in savings at the same time.

This may not seem like a lot of savings, but it is better than nothing. Once you have repaid the debt you can put $500 towards your savings.

As I mentioned in one of my tips above I recommend that you have an emergency savings fund before you start paying off your debt as this will cover you in case your circumstances change.

How To Clear 30k Debt?

The best way to get out of 30k debt is to review your budget to see how much you can afford to repay each month. Once you have done this you should create a detailed budget plan to pay it off over a realistic time frame.

To pay off the debt faster you need to pay off more than the minimum amount. You can use the tips below to help you do that.

Contact your creditors
Create a budget
Overpay your balance
Consider making more money
Work on your money mindset
Consider getting help
Find areas to cut back on spending
Be patient

I go into more detail on each of these steps above.

Final Thoughts:

I know that having debt can be stressful as it can play on your mind constantly. Once you have decided to pay it off you can find some peace in knowing that you are actively working towards it.

On your debt-free journey, it is important to work on your money mindset and learn from your mistakes so you don’t end up in the same situation in the future.

Give yourself grace, stay consistent and you will reach your goal.

Have you found these tips helpful? Which method will you use to pay off your debt?