The Fastest Way to Pay Off Your Debt

Are you sitting on a pile of debt and looking for the fastest way to pay it off?

Depending on the amount of debt, paying it off can take years.

This might sound frustrating, but think about how long it took to accumulate debt.

Whether it’s a student loan, credit card debt, personal loan, car loan, or a combination of all, we have accrued debt over a long period of time.

So make peace with the existing debt and the time it’ll take to pay it off; it’s what it is, and most of all, give yourself a pat on the back that you’re looking into ways to pay off debt and taking action.

It’s burying our heads in the sand that makes us miserable, depressed, and stressed. 

The moment you decide to take action and tackle debt (as you are now!), you reclaim control of your finances.

You no longer let your debt situation bring you down.

By the time you finish this post and implement the suggestions outlined, you’ll feel more optimistic about paying off debt with an actual plan to make the debt go away in the shortest time possible.

The Fastest Way to Pay Off Your Debt

Here’s the first thing you need to do to pay off your debt quickly.

1. Know All Your Debt

If you have paid little attention to each debt or avoided knowing exactly how much your total debt is, now is the time to get up close and personal with all your debt.

We want to know everything about the existing debt, e.g., the type of debt, the amount, the interest rate, the minimum payment, and the payment due date.

I suggest you dedicate a notebook to this and write down everything.

I use a simple ledger book like this one to record all my debts and the progress I make.

2. Take One Snap Shot of Debts

Expanding on the above, devote a page of your chosen notebook to listing all your debts.

Write them down with details: the type of debt (credit cards or store cards), the amount owed, interest rate, the minimum payment, and the due date.

Now you have a full picture of how many debts you have and the total amount of debt.

This one-page summary tells you exactly where you stand right now.

3. Determine Your Debt Payment Method

There are two schools of thought on a debt payment approach.

Whichever option you choose, you start by making the minimum payment for all debts.

Then you pick one debt to attack at a time.

In choosing which debt to attack first, you have two options: you either pay down the debt with a high interest rate (the debt avalanche method) or attack the smallest debt regardless of interest rate (the debt snowball method).

Method 1: The Debt Avalanche Method

Choosing the debt with the highest interest rate

This debt payment method will save you more money than the debt snowball method since you repay the debt with a high interest rate first.

If saving money on interest rates motivates you, go with this method and work your way down from the high-interest debts.

Method 2: The Debt Snowball Method

Choosing the smallest debt regardless of interest rates

This method of debt payment plays more on our psychology than on a monetary gain.

If you have, say, five credit card debts, paying off the smallest one gives you a sense of victory and achievement early in your debt-paying journey.

It may cost you more money than the debt avalanche method, but encouragement from an early win inspires you to continue attacking the remaining debts.

Know Thyself: Pick One That Suits You

Know your psychological tendency and pick the method that will serve you better in eliminating overall debt.

If you’re an emotional spender, for example, the debt snowball method will highly likely work out better for you.

Remember, there’s no right or wrong.

The one you choose is the right one for you. 

Once you’ve chosen the right method, consult your one-page summary above and pick your first debt to attack.

4. Automated Payment

After making a list of all debts, deciding on the right debt payment method, and picking the first debt to attack, set up an automated minimum payment for all debts so you never miss a payment and incur fees.

It also frees up your mental energy for other important things with one less decision to make.

And it stops you from dwelling on the debt until it’s time to review it.

5. Throw All the Money into One Debt

Having set up a minimum payment for all debts, it’s time to focus on the one debt you have picked to attack.

Throw every spare dollar into paying down the debt.

Whether you receive unexpected money, a bonus from work, or extra income from side hustles, the spare money goes to this one debt until it’s paid off.

And do this relentlessly until you pay off all your debts.

6. Be Realistic with Debt Payments

Yes, throw all your spare money into paying down debt, but make sure you take care of your needs first.

For example, planning to eat ramen every day until you pay off your debt will backfire on your debt repayment plan.

Not only will it make you unhealthy and miserable, but you’ll also most likely give up.

It’s better to have a realistic goal and see it through than to be beaten by an unattainable goal, go back to square one, and feel bad about it.

7. Enjoy Detoxing from Spending

The debt-paying journey is an opportunity to detox ourselves from spending.

Buying quality stuff to enjoy a comfortable life is one thing; attaching so much meaning to material possessions is a whole different story.

By putting a lid on mindless and emotional spending, we regain control of ourselves and our lives, focusing on what’s really important to us.

8. Read Good Finance Books

Learning is always good, but reading finance books during your debt repayment journey is even better.

Good finance books will inspire you to keep up with paying off debt and help you understand why you do what you do.

Besides, we all can benefit from learning the magic of compound interest, which enables us to live a financially independent life.

9. Be Aware of Friends and Family

Keep financially savvy friends close—those who are on the same journey as you—and stay away from friends who encourage you to spend money.

Peer pressure is one of the most meaningless things, but difficult to let go of.

Make it easier for you by hanging out with the right people so you can maintain your debt repayment commitment.

10. Keep 10% for Yourself

This important principle in building personal wealth is based on the “Pay Yourself First” budget.

You might think saving is the last thing you want to do when you’re buried deep under debt, but saving for yourself makes you feel secure about unforeseeable events in the future.

Saving also boosts your spirits because, by saving, you know your life isn’t just about being a slave to debt but about learning discipline, figuring out what matters most in life, and preparing for the future.

11. Ditch Your Credit Cards

If you’ve accrued debt from various credit card purchases, it’s time to reset your money habits and eliminate the temptation to spend.

You can definitely undo bad money habits.

Start by leaving the monsters at home!

Do not carry credit cards. Don’t go shopping online. Don’t get tempted by bargains or sales.

Do not rationalise your spending with:

It’s only $5.

Oh, it’s buy one get one free—I’ll need it six months later…

If not buying it today doesn’t inconvenience you, you probably don’t need it.

Racking up more debt will seriously hamper our progress.

Learn to live without credit cards by practising cash-only challenges regularly.

I can tell you from my experience that it’s not only beneficial to our bank balance, but it’s also fun.

12. Increase Your Earning Power

Hustlers are everywhere.

You can be one helluva hustler too.

Start hustling while keeping your day job.

Not only will it make you money, but you’ll also discover a new passion or talent.

You’ll be more conscious of the way you spend time, learn tons of stuff, increase your skill sets, become a more valuable and highly skilled employee, have a better chance of promotion and a pay increase, or, who knows, become a millionaire!

Most of all, you ain’t got time to check out what the next shiny thing to buy is!

Final Thoughts

If you follow the suggestions outlined in this post and take immediate action, trust me, your money worries will go away as you take control of your finances.

Look at your one-page summary, think about your motivational factor as mentioned, set up an automated payment for all debts, choose your first debt to attack, throw all the spare money into it, and repeat the process until debt is history.

With a solid debt-payoff plan in place, you’ll start enjoying a stress-free, money-free life even if you have debt.

Debt no longer brings your spirits down because you’ve taken control of it.

You start shifting your attention to things that bring you joy and start living.

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