Have you finally decided that it’s time to pay off your debt? I sure hope so! I had the realization that I needed to pay down my debt 3 years ago, and today I am completely debt free except for my home mortgage, and I expect to get rid of that by the end of next year. This elimination of debt payments will allow me to live on about $1,000 a month and will free up a ton of cash for future investments. By sacrificing a few out-to-eat dinners in the next year, I will soon be able to increase my net worth by tens of thousands, and then hundreds of thousands of dollars per year. After just 10 years or so, I will have the option to do whatever I want during the day – and it all started with paying down some debt.
You can get here too, and I hope that you make the choice to very soon. Once you decide to take the path of prosperity, use this post as a guide on how to pay off debt fast.
How to Pay Off Debt Fast
If you are truly ready to pay off debt fast, then this is the way to go.
1) Don’t Take on Any New Debt – This may seem obvious, but many people head to a debt consolidation company for help and the company convinces you that you not only need to consolidate your debt, but you should also take out a loan for an extra thousand bucks or so to get you through these hard times. Instead of helping your situation, this debt consolidation move often hurts you. I would recommend staying away from them completely.
2) Sell As Much Stuff As Possible – When I got serious about getting out of debt, I sold my PlayStation2, my surround sound, and even my television! If you really don’t need it and it’s a time waster, I suggest that you get some money for it and you get rid of it. If you believe that your television is going to help you get out of debt, then you probably aren’t ready for this segment: how to pay off debt fast. Selling your stuff should yield you anywhere from $50 to $1,000.
3) Put The Money Toward Your Emergency Fund – If you have very little money in the bank, do NOT immediately put your newfound cash toward your debt. Instead, put it into your savings account for your emergency fund (which you should fund with about $1,000). Things are bound to break in your future, and rather than taking on more debt to fix them, you should just pull the cash out of your emergency fund. This little fund will help you stay out of debt throughout your debt payoff time.
4) Pay Your Smallest Debt First – After you set up your emergency fund, you can start paying off your debt quickly. After your first debt is paid, then you use that monthly payment amount and put it toward your second largest debt. This is called the debt snowball because just like a snowball gets bigger and bigger as it rolls down a hill, so too your debt payoff will gain momentum with each debt that you pay off. This is how to pay off debt fast.
5) Increase Your Income to Pay It Faster – While the debt snowball is an effective way to pay off your debt, I would recommend that you take on some additional work to add some cash to that payoff. Heck, just an extra $200 a month would do wonders! During my debt payoff days, I would dog sit and would also write articles for websites. It didn’t seem like a ton of money, but it was all extra and helped me pay down my debt with incredible speed!
If you follow these 5 steps on “How to pay off debt fast“, you can get rid of your debt faster than you ever thought possible. I was able to get rid of over $20,000 in debt in less than 6 months! If you put your mind to it, I bet you could get rid of your debt quickly too. Best of luck to you!
Are you working to pay off your debt right now?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.