How to pay off debt fast

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Jim Mcnaughton, MBA, CFP®

Financial Advisor
Momentum Independent Network Inc.
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  • To pay off debt fast, you need to exceed your minimum payments every month. 
  • Target the debt with the highest interest rate, also known as the "avalanche method."
  • Lower your interest rate by requesting a lower APR from your card provider or consolidate debt.

Carrying debt for too long — even if you're leveraging it to grow your wealth — can quickly begin to feel like a burden. 

You're not alone in your debt. Most of us don't have immediate access to cash to pay for everything we want, so we borrow money in the form of credit cards, loans, or mortgages.



While this is a problem that many people share with you, it is still a problem. The more debt you have and the longer you hold it, the more interest eats at you and the more expensive it becomes. If you're holding too much debt on your credit cards — specifically more than 30% of your overall limit — this credit utilization ratio can also hurt your credit score and make future borrowing more costly. 

With these consequences laid out, it's clear that the faster you pay off your debt, the better. Here's how you can become debt-free fast.

Preparing for debt repayment

List all of your debt

If you have multiple sources of debt — say several credit cards, student loans, and a personal loan — the first step to paying off debt is determining how much debt you have to pay off. This means keeping identifying all outstanding balances, their interest rates, any minimum payments, and payment due dates. Google Sheets — or a simple pen and paper — can be an invaluable tool for keeping track.

This can be an intimidating exercise for people with a lot of debt, but there's no way to make a clear plan for tackling it without a hard look at the numbers.

Stop using credit cards

Taking on more debt while you're trying to repay a load of other debt can complicate things. While you're in repayment mode, avoid taking out another loan or using credit cards, unless you can absolutely afford to pay off the balance at the end of the month. 

Cutting off credit card spending can be a challenge. It may be worth your time to look into budgeting apps or plans that divide your take-home income into sections like the 70-20-10 budget or the 50-30-20 budget. Ideally, once your budget is laid out, you'll see how much money you can devote toward paying off debts.

Make your minimum payments

At the bare minimum, you should be setting aside enough money each month to make your monthly payments. Missing any of these, particularly missing your payments by over 30 days, will put you in credit delinquency, which can hurt your credit score and stay on your credit report for up to seven years.

Effective debt repayment strategies

Create a debt repayment plan 

Once you've got an idea of all your outstanding balances and made all your minimum payments, you can strategically distribute extra funds money across all your debts. One such strategy is the debt avalanche method, which focuses on paying off debts as fast as possible.

Once you've made all your minimum payments, the avalanche payment method concentrates any extra funds toward the debt with the highest interest rate. Focusing on paying off the most expensive debts first can speed up the entire repayment process as you save money on interest. 

Ask your credit card issuer for a lower interest rate 

Most people don't know you can call your credit card issuer to ask for a reduced APR (annual percentage rate), which can make a difference of hundreds of dollars in interest payments. There's no guarantee that they'll give you a reduced rate, but you'll be more likely to get it if you've consistently made on-time payments. 

Consider consolidation

If you have debt on multiple credit cards, you may consider consolidating your credit card debt onto one card so you can make a single monthly payment. There are two main ways you can do this: 

Balance transfer credit card: A balance transfer card allows borrowers to consolidate various credit card balances onto a new credit card, ideally one with a lower APR. You'll have to pay a transfer fee that's usually 3% to 5% of the total balance transferred, but it should be worth it in the long run.

The best balance transfer credit cards also typically come with a 0% introductory APR that can last up to 21 months. If you're able to pay off your debt within that promotional period (which should be your goal), you have the potential to save a lot of money on interest.

Note: The 0% introductory rate on a balance transfer card is the exception to the avalanche method. Pay this debt off first, because when that introductory period ends, you will be on the hook for all the debt you consolidated.

Debt consolidation loan: If you have other debts in addition to your credit card debt, you can look into debt consolidation loans. These work similarly to balance transfer cards, rolling all your debts into one big loan at a lower interest rate, which will depend on your credit score. Debt consolidation loans often have higher interest rates than other loan types, ranging from 6% to 36%.

Establish a payoff date

Paying off debt is a good goal to have, but paying off debt by a specific date is even better.

Carious online calculators can tell you exactly how many months you have until you're free and clear, according to your current interest rate and monthly payments. If 18 months (or more) sounds like too much, increase your monthly payment by $50 or $100 to start and see what difference it makes.

Avoiding common debt repayment pitfalls

Now that you have paid off your debt, it can be easy to rack up debt again. Those credit cards that once carried debt now have zero balances, and you may fall back into bad spending habits. It's important to set a budget, stick to it, and plan to spend so you'll be prepared for that expense. 

Try to stay motivated by increasing your savings and living frugally. Increasing your savings and establishing financial stability should replace spending unnecessarily and will help you stay out of debt. 

Frequently asked questions about how to pay off debt 

How can I increase my income to pay off debt faster?

You can increase your income by taking on a side job, freelancing, or selling unused items to generate extra income to pay your debt off faster.

Is debt consolidation a good idea?

Yes, debt consolidation can be a good idea. It may be beneficial if it lowers your interest rate and simplifies your payments.

How can I stay motivated during my debt repayment journey?

You can stay motivated during your debt repayment journey by setting clear goals, tracking your progress, celebrating small victories, and having a clear target date for paying off your debt.

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Jim Mcnaughton profile photo

Jim Mcnaughton, MBA, CFP®

Financial Advisor
Momentum Independent Network Inc.
Schedule a meeting