10 Ways To Get Out of Debt Faster
9 MIN READ
Published November 17, 2023 | Updated November 20, 2023
Having a lot of debt with high interest rates can eat up a lot of income, leaving you struggling to pay bills and save an emergency fund. With credit card balances topping $1 trillion in Q3 2023. With average credit card balances at $6,000 and delinquencies rising, debt is something a lot of Americans have in common.
If you’re wondering how to get out of debt fast, we have ten tips to help you save money, pay off debt faster, and get your finances under control.
10 Tips To Get Out of Debt Fast
Before exploring ways to get out of debt, make a list of all your debts, along with the total amount you owe, monthly payments, and interest rates. Understanding your debt situation will help you identify a solution that works for you.
Whether you’re struggling to keep up with minimum payments or just need to know how to prioritize debts, one of the methods we provide below will likely be a good fit for you.
1. Make a Budget
A budget will help you get a handle on your income and expenses so you can see how much you have to pay towards debt each month. We recommend the 50/30/20 budgeting system due to it’s ease of use and effectiveness, where you allocate 50% of your income to essential expenses, 30% for discretionary expenses, and 20% for debt repayment and savings.
If you’re looking for one of the fastest ways to get out of debt, make extra payments. Use money from your discretionary spending category for extra payments to speed up the payoff timeline and keep interest costs down.
2. Save Money
Every dollar counts. Find ways to save more money by cutting expenses, increasing your income, or both. Your budget will provide you with a deeper look at expenses that you can put on hold or eliminate entirely, such as takeout for dinner, streaming services, and shopping.
The more money you save, the faster you’ll be able to get rid of debt. Use all the money you save to make extra payments on your debt to bring down your balances.
3. Stop Using Your Credit Cards
If you want to get out of debt fast, another tip is to stop taking on any new debt. An easy way to do this is by not using your credit cards anymore. If you have a lot of credit card debt, not adding to your credit card bill will make it easier to pay it off.
Leave your credit card at home and try to pay for your purchases with a debit card or cash. As you pay down your credit card balance, your credit utilization ratio will improve, which, in turn, can raise your credit score.
4. Look for extra income
One of the fastest ways to pay off debt is by generating extra income and using it to pay down balances. Look for side hustles and part-time jobs that can be done after work. If you have any skills, use those to start freelancing on the weekends to earn extra cash.
Use that extra cash and any windfall you receive, such as bonuses and tax refunds, to make a lump-sum payment on your debt.
5. Consider Debt Consolidation
Another way to pay off debt fast is through debt consolidation. You can use a personal loan at a lower rate to pay off your high-interest debts, so you’ll have a single monthly payment at a fixed interest rate. With a lower interest rate, you’ll be able to get out of debt faster and save money.
You can also apply for a balance transfer credit card and transfer balances from other cards to it. Many credit cards come with an introductory 0% APR for up to 18 months. If you’re confident you’ll be able to pay off your entire balance during the introductory period, this can be a very effective way to save money on interest charges.
6. Consider Debt Settlement
If you’re struggling to make the minimum payments on your debt or have missed a few payment due dates, it may be time to consider some serious debt relief measures.
If you’re wondering how to get out of debt quickly, debt settlement is one of the fastest options available. Debt settlement involves negotiating with your lenders to settle your account for less than you owe. With average borrowers saving 50% before fees, you’ll be able to get out of debt much sooner by making a lump-sum payment.
7. Pick a Debt Payment Method and Stick to it
You’ll need a concrete plan to prioritize which debts to pay down first. Use a debt repayment strategy like debt avalanche or debt snowball.
With the debt avalanche strategy, you’ll make minimum monthly payments on all debts and use any extra money you have towards your highest-interest debt. Once you pay it off, you shift your focus to the debt with the next-highest interest rate. This method will help you save the most money in interest charges.
The debt snowball strategy involves focusing on paying off the smallest balances first, offering you quick wins and a boost of motivation. You’ll make minimum payments on each debt and use all the extra money towards the smallest debt before you move on to the next.
8. Hire a Financial Expert
Sometimes, handling debt on your own can be challenging. If you’re spending a major portion of your income on debt payments, are struggling with monthly bills, and need guidance on how to get rid of debt quickly, it may be time to get some professional help.
Consider seeking help at a nonprofit credit counseling agency. Credit counselors can take a look at your budget, income, and debt and help you create a get-out-of-debt plan that works for your financial situation. Another option is a financial advisor who can help you create a realistic monthly budget and repayment plan, evaluate and prioritize debts, and make a long-term financial plan.
9. Use Online Resources
Using online tools and resources can give you a head start in your repayment. Use an online debt payoff calculator to calculate how much you’ll need to pay each month to get out of debt quickly.
We recommend using Unbury.Me if you want to take the guesswork out of creating a debt repayment plan. T is a free tool that allows you to list all your debt and create a payment plan using the debt snowball or debt avalanche methods.
If you’re looking for ways to bump up your savings, Oportun has an app that analyzes your spending and auto-saves money to meet your savings goal. It only transfers small amounts you won’t notice to the in-app account, making reaching your savings goals easier.
10. Apply for Grants
Check to see if you qualify for debt relief grants that may help with debt repayment. Grants offer you money that you don’t have to repay, and if you’re a veteran or have student loans, there may be a few options for you to explore.
Check to see if you qualify for the Federal Pell Grant, Public Service Loan Forgiveness (PSLF) program, or Total and Permanent Disability Discharge.
The Right Method for You Is One That Helps You Get Out of Debt Fastest
Paying off debt is an important step towards sustainable financial health. There are many options to get out of debt faster, such as making a budget, earning extra income, and using debt consolidation or debt settlement. The right option for you will depend on how much you owe, how much you can pay each month, and what method you’re likely to stick to.
Once you’ve picked a method that helps you get out of debt faster, practice good financial and credit management. Keep track of credit, build an emergency fund, and start saving for your future goals.