Many people don’t realize how quickly debt accumulates. You may feel you won’t progress if you have high-interest credit card debt. If you do things right, getting out of debt much faster is possible. You could also save significant money. These are five ways to pay off debt.

Important points to keep in mind

  • It can be overwhelming to pay off debt, but you don’t need to if there is a plan for debt payoff.
  • The first step is to know where your money is right now. It will allow you to reduce unnecessary spending and use the available money to repay the debt.
  • Start with the best debts to save money and pay off your debts faster using the debt snowball method.
  • A debt consolidation loan may lower your interest rate.
  • A debt management plan can help you stay on track and make the most of your financial situation.
  • Assess your spending habits to identify areas where you can cut back and allocate more funds toward your debt repayment strategy.

1. Make a Budget

Although it can seem tedious, budgeting can be an effective tool to manage your money and plan for the future. You can use budgeting apps such as Mint, You Need a Budget, or PocketGuard to plan your budget. You might not be able to see if your spending is higher than your income if you don’t have one. However, you can also make an effective budget with a simple notepad and pen.

Start by listing how much money is each month. Include income from work and other sources. Evaluate your debt situation and any household debt you carry.

Find out how much you spend on entertainment and dining out. Next, list all your fixed recurring expenses. This section includes your rent, mortgage, utility bills, and insurance premiums. Also, consider your monthly bills and allocate funds for unexpected expenses.

Look for ways to reduce spending if you are spending more than you make or don’t have enough money. Take, for example, utilizing a debt repayment calculator to help manage your various debts and create a realistic debt plan. If you have extra funds after covering all expenses, allocate some towards paying off debts or increasing savings.

  • Carpooling: If your commute is long, find a nearby colleague who offers to carpool. You can save money on gas and car maintenance by sharing your ride. To find a rideshare partner, create a profile.
  • Make a grocery shopping list: While cooking and eating at home are great ways to save money, it’s also smart to list what you need to buy and stick to it. It helps you focus on essential expenses and avoid overspending.
  • Reducing streaming services: If you have multiple streaming services, choose one or two and cancel the rest. The simple step can help you save extra cash each month.
  • Switch to new mobile plans: If you are on a high-end plan, you might be able to upgrade to a lower version from your provider. You can also shop around for a lower plan with more flexible terms to help you manage your bills on time.

2. Increase Your Income

Considering these changes, you can save additional money and work towards your financial goals more effectively.

There are only so many corners you can cut when reducing your expenses. Once you have created a budget and eliminated some expenses from your budget, the next step should be to increase income. You might be able to make extra money using your skills if a promotion or raise is impossible.

You might also consider changing your workplace withholding tax. You may withhold too much money if you get a yearly tax refund. It could help you with debt settlement and pay off your current debts. To reduce your withholdings and increase your take-home pay, ask your employer to provide a W-4 form. If you don’t get your tax refund, use it to establish a debt repayment plan and pay off the debt.

3. The Debt Avalanche Strategy Is a Good Option

Once you have the money you can use to pay off your debts, including previous debts, you must decide how to use it best. For many, the debt avalanche strategy, an accelerated debt repayment method, is the most efficient tool. Utilizing a payoff plan that first targets the highest interest rates will help reduce the overall amounts of debt and save money in the long run.

The Debt Avalanche method allows you to list all your debts, such as medical debt, type of debt, and personal loan debt, and rank them from those with the highest interest rates to those with the lowest. You continue to make minimum payments on each account, then transfer any extra debt money into the account with a higher interest rate.

Switch to the next highest-rate account after repaying your highest-interest debt. Keep going until you have paid off all your debts using this payoff strategy.

You’ll first pay down the highest-interest debt and save more in total interest. Consider additional debt management strategies and assess the impact of loan term on your repayment.

4. Consider Debt Consolidation

Consolidating debt can speed up repayments if you have high-interest debt. You can consolidate your debt by taking out personal loans from a bank, credit union, or another reliable lender. You can use the loan to pay off other debts. You will now only have one loan and one monthly payment to manage.

You may also be eligible for a consolidation loan with a lower interest rate than what you paid for your old debts if you have excellent credit or a friend or family member with good credit. You can use the loan to pay down your debt quicker and help you save money over the long term.

Investopedia regularly updates its lists of the best debt-consolidating loans.


A mortgage or car loan. Not only will you save money on interest, but it is also easier and more affordable to borrow money in the future, such as a mortgage. It lowers your credit utilization, an important factor in calculating your credit score.

How to get out of debt in 5 steps chart

5. Keep Track of Your Progress

It takes time to get rid of debt. You can stay focused by tracking your progress regularly, such as weekly and monthly checks. A visual or spreadsheet of your progress can help you remember what you have accomplished and the goals that you want to reach.

Frequently Asked Questions

What are some effective strategies for paying off credit card debt?

Effective strategies include paying more than the minimum, consolidating debt through balance transfers or loans, creating a budget to maximize payments, negotiating lower interest rates, using windfalls to pay down balances, and avoiding new debt before old debt is paid off.

Is debt consolidation a good option for getting out of debt?

Debt consolidation can be good because it combines debt into one payment with a lower interest rate. But it risks more debt if not managed properly. Evaluate credit impact and fees carefully before consolidating.

How can I create a budget to help me tackle my debt?

Track expenses to identify areas to cut, set specific spending limits for categories like dining out, look for room in your housing/utility costs, and allocate extra income to debt payments. A budget maximizes the amount going towards debt repayment.

What are the potential consequences of not addressing my debt?

Ignoring debt can lead to larger balances from interest, calls from collection agencies, lawsuits, wage garnishment, seized tax refunds, damaged credit score, and increased difficulty getting loans or credit in the future.

Are there any government programs or resources available to assist with debt relief?

Government resources include nonprofit credit counseling, debt management plans, bankruptcy protection, loan modifications on federal student loans or mortgages, and low-interest consolidation loans for qualifying individuals.

Kimberly Chantal Parkes

Kimberly Chantal Parkes is a former contributor to Rixloans. Kimberly Chantal is a freelance copy editor and writer with a specialization in personal financial planning. After having graduated from Kansas State University with a bachelor's degree in journalism, she began her career in media wearing many hats for community newspapers within the Kansas City area: writer as well as copy editor, photographer and coffee runner among other things.