We’re surrounded by debt in our society. Whether it’s some form of consumer debt, student loans or car payments, we may not want to admit it, but we’re a society that loves debt. The average household credit card debt is north of $15,000.
The average student loan debt is over $30,000 per recent graduate and car payments average roughly $500 per month. Numbers like that make it seem like it’s impossible to pay off debt, especially if you live paycheck-to-paycheck.
Thankfully, that’s not the case. You can pay off debt, even relatively fast, but it takes a plan.
How to Pay off Debt Faster
It took me five years to pay off $50,000 in debt. I wasn’t making much money during most of that time, which made it challenging at times. However, I was able to find ways to maximize my efforts and pay off debt faster.
Not every method worked, but I found some that put my debt payoff on hyperspeed. If you want to get out of debt faster, try using one or more of the following methods.
Consolidate Your Debt
What’s the interest rate you’re paying on your debt? If it’s credit card debt, you could be paying way too much in interest. That holds you back from paying off debt fast.
You can often cut your interest rate by half, or more, with a personal loan to consolidate the debt.
Here are two options for personal loans:
- Payoff is a great option if you have above-average credit (a score of at least 640)
- Avant is another good option if you have average to bad credit (a score of at least 580)
You can also compare lenders to find the best rate and fit possible. Even Financial lets you compare up to 17 lenders to find the best personal loan for your needs. It takes less than a minute to fill out the application, and within a few minutes they provide possible matches.
Another option is to transfer the balance to a 0% balance transfer card to accomplish the same thing. You can click here to find balance transfer options to consider.
If you have student loans, there are similar refinance or consolidation options such as Credible. Credible provides your refinancing options within two minutes, and the average person using Credible saves nearly $19,000 on their student loans!
Find A Way to Make Extra Money
One of the best ways to pay off debt faster is to make extra money. That’s because you can only cut so much and at some point, you have to question if the cut is worth it.
What I like about earning extra money to pay off debt is that it provides an instant motivator as I know the money will go directly towards the debt.
Don’t think you can make extra money? Here are just a few ways you can earn extra cash:
- Ask for overtime work at your day job
- Drive for Lyft in your spare time, and get a $250 bonus when you start
- Ask for a raise
- Deliver meals with Uber Eats
- Mystery shop with Jobs2Shop – they pay up to $85 per shop
You can even monetize your downtime by filling out surveys. You won’t get rich, but they’re a great way to make several hundred dollars per month while watching TV.
Below are a few of the best paid survey sites to make extra money:
- Survey Junkie: One of the best survey sites in the space and they pay cash directly to your PayPal account.
- Pinecone Research: They pay $3 per survey and they pay cash directly to your PayPal account, or you can select from a variety of gift cards
- Ipsos i-Say: Ipsos is one of the oldest survey sites in the market, starting in 1975. Ipsos offers a wide variety of survey and product testing opportunities, with a low redemption threshold of only $5, or 500 points.
There are many ways to make money on the side. Find one (or more!) that works for you and run with it.
Kill a Bill
So often we think there’s no way to get extra money to pay off debt that we don’t realize we have found money right under our noses – our monthly bills.
Find one bill you can kill or reduce and let it build momentum towards your other bills. Take the savings from each and throw it at your debt.
Trim is a great way to do this. Trim is a free-to-use app that cancels subscriptions you don’t use and negotiates bills on your behalf. Take the savings and throw it at your debt.
cut the cord…finally
Paying for cable is a huge waste of money, especially if you’re paying off debt. My pricey cable plan was one of the first things that went when I was paying off debt. I was able put the extra cash towards the debt to help speed up repayment.
If you’re paying anywhere near the average of $110 per month, there are many options to slash that in half, or more. Here are a couple of the top options:
- Hulu Live – Plans start at $39.99 per month, for 60+ channels, after a free 7-day trial
- Sling TV – Plans start at $25 per month, for 30 channels, after a free 7-day trial
Find a plan that works for you and use the extra savings for your debt.
If you want to pay off debt quicker you must first stop the cycle of spending. I know it may be painful. I know it may feel impossible. That doesn’t matter. You must stop spending if you want to get out of debt.
This will require some work on your part, but you want to identify your triggers and remove them. If shopping makes you feel better, get an accountability partner to help you stay on track when you’re tempted to spend.
The less you spend, the more you have to pay towards debt. However, the most important part to this is to track your spending.
We recommend Tiller if you’re looking for a way to track your spending. Tiller lets you view all your financial transactions in one location.
Tiller is a Google Sheets-based service that automatically pulls all your banking and other financial transactions to help you categorize your spending and find opportunities to save.
Tiller is free to use for the first month, then $5 per month.
Make A Plan
I’m a planner by nature. I like to map out what I want to do and then formulate the best strategy to tackle that plan. Paying off debt is no different. When I started paying off debt, I created a plan to follow.
When I was tempted to give up or didn’t know what to do next, the plan helped me visualize my goal and motivated me to continue.
Tally is a service that can help you make that plan. Tally is an app available on both Android and iOS platforms. They issue you a line of credit (with a lower rate) and pays your credit cards for you.
Tally ensures your payments hit your cards on time, going towards the highest interest rate card. This helps you avoid fees and pay off the debt quicker. The only thing you pay to Tally is the rate on the line of credit, which is typically significantly lower than the rate on your cards,
You need to have a credit score of at least 660 to use Tally. If you don’t have access to a balance transfer card, Tally is a good option to create a plan to eliminate your debt.
Don’t Be Minimum
When I was mired in debt, I thought making minimum payments did something to the debt. When you make the minimum payment, nearly the entire amount is going towards interest and little to the principal, and on the cycle it continues.
Take credit card debt, for example. If you have $2,5000 in debt, with a 15 percent APR, it will take you over 15 years to pay off the debt if you only make minimum payments. This is why you should never stop at the minimum if you can help it.
If you can’t make more than the minimum payment, lowering your interest rate is another option to make quickly paying down your credit card debt possible.
Check rates at Lightstream to see how much you can lower your rate and accelerate payments.
Throwing extra money each month at the debt knocks down the principal, saving you money on interest and helping you pay off debt faster.
Make Your Own Food
If you’re up to your eyeballs in credit card debt, the last thing you should be doing is eating out on a regular basis. Every meal you buy out is likely going to cost more than it would to make something similar at home.
Coming up with your own meals doesn’t have to be challenging, especially with meal planning.
$5 Meal Plan is a great way to help you start. They provide meal plans, including ingredients, to help you to save money and make great meals – and starts with a 14-day free trial.
Get Rid of That Habit
We all have habits or things we enjoy. Take a look at what habits you have, even ones you may want to give up, and think about how that money could be better applied towards your debt.
This isn’t to say you can’t enjoy life but it does require looking at whether or not the expense is worth staying in debt longer. I’d argue in most cases that it isn’t.
With a plan it’s possible to pay off debt faster. It may feel impossible, but with some work, 2019 can be the year you become debt free for good!
What are some other ways you can think of to pay off debt faster? If you’ve paid off debt, what was the one painful thing you gave up to kill your debt? What’s the craziest thing you’ve done to pay off debt?
Source: Frugal Rules