How to Pay Off Debt Quickly: 
Create a Plan That Works for You

If you're looking for a plan on how to pay off debt, you're not alone.

According to the 2019 Experian Consumer Debt Study, the average American has $6,194 of credit card debt, which is up 6% from the prior year.

Erase DebtErase debt forever!

If you find yourself in debt as a result of accidental overspending or an unexpected emergency, don't feel bad about your situation.

After all, where you currently are does not matter as much as where you're going. 

Debt is a problem that can be fixed, especially with a solid plan and actionable steps to meet your goals.

Take control of your financial future with these easy ways to jump-start your debt-repayment journey.

Create a Budget

The all-important first step in how to pay off debt is to create a budget.

Understanding how much money is coming in and how much is going out each month is essential to developing your strategy on how to pay off debt.

Just like you wouldn’t build a house without a blueprint or you wouldn’t set off on a road trip without a map, it would be very difficult to pay off debt and stay debt free without a budget. 

You can use a free budgeting tool like the one at or develop your own spreadsheet for a more customized approach.  Start by listing all your monthly income sources as well as your monthly expenses. When you subtract your income by your expenses, the goal is to have a positive number so that you can apply this extra cash towards your debt.  If your expenses exceed your income, then you are left with one of two choices:

  1. Make more money
  2. Spend less

Perhaps you could work some overtime or take on a side hustle in order to earn the money you need to pay off debt. See our page on how to earn extra income for different ideas that you can put into action today to start seeing more money in your wallet every month. 

Otherwise, you can start by cutting unnecessary spending like the cable bill, streaming services, or magazines (seriously, why pay for magazines when all the same information is available online?). Then you could also try to tackle typically fixed costs like shopping around for a different phone carrier, renegotiating your car insurance, or perhaps finding a cheaper place to live.

Reduce Unnecessary Spending

The next key step in how to pay off debt is to reduce unnecessary spending.

No, you don’t have to completely cut out buying your favorite coffee, just do it in moderation.  A small expense here and there won’t derail your progress; it’s the big expenses that will.  Remember, if you buy coffee every day, these small expenses will add up to a big expense.

This philosophy applies to many things in life: everything in moderation. I won’t tell you to stop going to the movies, to avoid treating yourself to a nice meal, or not to buy that round of drinks for your friends.  If its something you enjoy doing and you can manage to pay for it while staying in budget then by all means indulge. You’re less likely to reach your goals if you feel that your strategy on how to pay off debt is too restricting.

That being said, the more you can cut back the faster you will reach your goals. In order to stay in budget, cutting unnecessary expenses is far easier than taking on a second job or finding a cheaper place to live.

Pay Off the Most Expensive Debt First

Essentials of paying off debt

To survive in the jungle, you would need to prioritize securing the essentials first like water, food, shelter, and fire.

Similarly, you should aim to repay debts with the highest interest before tackling other projects.

A high interest rate like the ones you’ll find with most credit cards make it hard for you to get out of debt since much of your paycheck each month is spent paying interest with little progress towards your original purchases.

Therefore, definitely prioritize paying off high-interest debt and target the mortgage, student loans, etc. later.

Highest Interest Rate vs. Smallest Balance

We know that we should pay off our credit cards before other less expensive debts, but what is the best strategy for paying off credit card debt?

You might be asking yourself, should I... off the highest interest debt first?

It makes the most financial sense to pay off the cards with the highest interest rate first so that you can pay the least amount of interest as possible. 

But what if the account with the highest interest rate also has the highest balance?

A huge amount of debt can seem intimidating and sometimes leads people to give up if they feel that overcoming the obstacle is impossible. So that’s where this trick called the “debt snowball method” comes in to play…

...or pay off accounts with the smallest balance?

Debt snowballMake the debt snowball method work for you!

The “debt snowball method”, popularized by author and radio-host Dave Ramsey, approaches debt in a different way.

Instead of targeting your account with the highest interest rate first, it advises paying off the account with the lowest balance first.

Once the account is paid off, you can take the payment you were making towards this account and apply it to the next smallest account, and then the next account, and so on.  

By paying off credit cards with the smaller balance and then channeling monies that would have gone towards paying them towards the next smallest balance card, you are able to make bigger and bigger payments each month.

Every time you pay off a card, the amount you have available to pay the next one gets bigger, just like a snowball would if you rolled it down a hill. 

Knocking out these smaller accounts quickly allows you to achieve little victories along the way towards your ultimate goal which might help to keep you motivated.

No, this method does not minimize the amount of interest you have to pay.  However, constantly seeing yourself make progress towards your goal makes it seem more and more doable.

At the end of the day, who cares if you spent a little more in interest if it made reaching your goal a reality?

Pay More Than the Minimum Amount Due

Do you pay only the minimum amount due each month towards your credit cards?

If so, you are probably paying way more than you think for the stuff you are buying.

Let’s say you decided to treat yourself to a really nice pair of $300 shoes. If you are only making the minimum payment, those shoes would end up costing you almost $400 and take over two years to pay off (assuming a 25% interest rate)! That’s extra money leaving your pocket that could have been put to better use somewhere else.  

I don’t know about you, but whether I’m using that extra money to invest, pay off debt, or even splurge on a fun night out, I’d rather get some use out of that money instead of handing it over to the credit card companies and getting nothing in return.

If you are serious about learning how to pay off debt, this is one of the most important lessons. 

Pay more than the minimum amount due each month. Trust me; you won’t regret it.

I used the Credit Card Minimum Payment Calculator from to generate the numbers above. Feel free to check it out and model how long it will take you to pay off your credit card debt.

Earn Extra Income to Pay Off Debt

Not enough money left over at the end of each month to pay off debt?

Or do you just want to get out of debt faster? 

Earning an extra income is without-a-doubt one of the best strategies on how to pay off debt quickly. As discussed previously, making more than the minimum payment each month is crucial to reaching your goals, and a side income would help to make that a reality. 

After all, there is only so much you can cut out of your budget.  Sometimes, generating a little extra income might be the easier option. 

Check out our page on how to earn extra income for ideas on how to put more money in your wallet each month.

Use Bonuses Towards Debt

If you get bonuses at work, put in some overtime hours, or earn any extra money that you don’t ordinarily get each month, consider paying off debt with that extra cash.

Since it is money that is outside your normal monthly income, pretend that you are not receiving that money and send it towards paying off debt as soon as it hits your checking account.  

I know it’s tempting to use that money on something nice for yourself and your loved ones, so a good compromise is in order.  Spend a bit of it on whatever you like.  You earned it. Then use the rest towards your goals.

Set Goals

One of the most useful strategies on how to pay off debt is setting realistic goals for where I want to be debt-wise at a certain time.

Goal Without a PlanSet a reasonable, measurable goal and make it happen!

I usually do this at the beginning of the year to forecast where I want to be in December, but I also do this throughout the year whenever I make big purchases.

Let’s say my goal is to pay off those $300 shoes we talked about earlier much sooner than originally planned.  Instead of making the minimum payment, I could pay $100 per month for three months, and then pay whatever interest has accrued in the fourth month. 

This would shave years off the time it would normally take to pay off the debt, and seeing this progress happening sooner helps keep you motivated.

Reward Yourself

Don’t forget to treat yourself! Not just when you are debt free, but along the way.  

If your goal is to pay off $6,000 worth of debt, set mini goals throughout and reward yourself with something nice to help keep you motivated (maybe at every $2,000 or so that you pay off).  If you get a prize every so often, paying off your debt will feel like you are climbing a small hill instead of Mt. Everest. 

You should feel accomplished at each milestone you set because learning how to pay off debt and then reaching your goal is no small feat.  Millions of people struggle with this, and you are making measured steps towards ridding yourself of debt forever. Treat yourself!

Do you have any other tips on how to pay off debt?

How to pay off debt quickly is a struggle that sometimes takes creative strategies and fresh ideas to keep you motivated.  

Do you have any tips on how to pay off debt that have worked well for you?

If so, please share with the community below! Help us grow the community and let’s navigate the financial jungle together.

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