Effective Strategies to Get Out of Debt Quickly

When you’re burdened with high-interest debt from credit cards and loans, paying it off as soon as possible can significantly improve your financial health and stability. However, this can be challenging, especially if you’re managing multiple balances, working with a tight budget, or simply don’t know where to start. Here are some expert strategies to help you prioritize your debts, navigate repayment, and become debt-free sooner.

Track Your Spending

Starting a budget is a crucial step in paying off debt faster. A budget is a plan for how you’ll allocate funds toward spending, saving, and—importantly—paying off debt. However, it’s essential to avoid a common budgeting mistake: not tracking your spending.

“Many families forget an important step to a successful budget—feedback,” says Kassi Fetters, lead financial planner at Artica Financial Services. For your budget to be effective, you need to track your actual spending against your expected spending.

For example, if you plan to spend $250 dining out in a month, you need to track your actual spending to see if you stayed within your limits. “Use a spending tracker where you can categorize your spending each time you make a transaction,” Fetters suggests. Research budgeting apps and select one that works well for your household.

Set Debt Priorities

There are two main methods to prioritize which debts to pay off first: the debt snowball strategy and the debt avalanche strategy.

The debt snowball method involves paying off your debts in order of size, starting with your smallest balance. Make only minimum payments on your other debts, then funnel whatever extra you can afford to the debt with the smallest balance. When that balance is paid off, move on to the next smallest, and so on. The debt avalanche method focuses on paying off balances according to the interest rates on each account, from highest to lowest.

“Both debt repayment methods have advantages,” says Joseph Carpenito, a financial advisor at Materetsky Financial Group RIA. “The avalanche method may save you more money in the long run, but the debt snowball method can be really motivating and give you a sense of accomplishment as you pay off smaller debts first.” Choose the method that best motivates you.

Balance Saving and Debt Repayment

Finding long-term financial stability requires balancing debt repayment with saving.

“It’s important to prioritize debt repayment, but it’s equally important to have some savings set aside for emergencies and future expenses,” says Gabriel Lalonde, a certified financial planner with MDL Financial Group.

Aim to set aside at least three to six months’ worth of essential expenses for emergencies. This can help you avoid taking on more debt in case of an unexpected expense or emergency. Additionally, having some savings can help you feel more financially secure and reduce your stress levels.

Nick Loeffelman, associate advisor at Citrine Capital, adds that you should also check if your employer offers a 401(k) match. “If so, take advantage of this by contributing up to the matching limit,” he says. Doing otherwise is essentially throwing away free money toward your retirement. Beyond that, focus on paying off your highest-interest debts for the best returns on your effort. “Confront anything with an interest rate greater than 6% before anything else,” he advises.

Live Like a College Student

Fetters shares a unique strategy from her experience paying off debt: Live like a college student.

“When my husband and I got married over 10 years ago, we added up all our debt, not including our house,” she explains. “It was $49,000 of credit cards, loans, and cars.” They paid it all off within a year by getting super strict with spending and downgrading their cars.

“No eating out, no travel, and a lot of free outdoor activities,” she says. Her advice to those who want to pay off debt quickly: Your debt will disappear at the same rate you’re willing to temporarily sacrifice your lifestyle. “Be prepared to make temporary radical changes to your budget,” Fetters says. “Anyone can live like a college kid again for a couple of years.”

Consider Consolidation

If you have good credit, you may qualify for a debt consolidation loan. Consolidating your debt involves folding multiple balances into one new loan, ideally with a lower rate than the average rate of your current debts.

“It can help you simplify your finances and reduce your overall interest rates,” says Carpenito. However, he cautions that you should consider all your options before rushing into consolidation. “Remember that debt consolidation is just one tool in your financial toolbox, and it may not be the best solution for everyone.”

Talk to Your Creditors

If you’re deeply in debt, you may need extra help getting back on track. Carpenito advises talking to your creditors to see if they’re willing to offer you a hardship plan. “Communicate with your creditors and be honest about your financial situation,” he says. “Many creditors are willing to work with you to find a repayment plan.”

A credit card hardship program may come with deferred payments, temporary reductions in interest, and reduced fees. While not all lenders offer hardship plans, it’s always a good idea to check in with your lender or credit card issuer if you’re struggling to afford payments.

The Bottom Line

Getting out of debt isn’t easy, but there are places you can turn for help. Consider reaching out to a nonprofit credit counselor for free or low-cost help setting up a budget or getting on a debt management plan to eliminate your debt. For a more long-term approach to structuring your finances, consider reaching out to a financial planner. They can help you make a comprehensive plan for managing your debt, saving, and investing for a financially secure future.

Additionally, start monitoring your credit for free through Experian. When you sign up for free credit monitoring, you’ll be alerted to changes in your credit report and score. This allows you to stay in the loop on how your repayment efforts are helping your credit over time. You’ll also see personalized insights on how lenders are likely to view your creditworthiness and changes you can make to increase your score faster, such as paying down a revolving balance or avoiding new credit.

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