Name: 10 Best Ways To Pay Off Debt Fast - Stack Your Dollars
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10 Best Ways To Pay Off Debt Fast - Stack Your Dollars

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Skip to contentA family of four could reduce their monthly expenses by $2,174 and use that to pay off $26,088 of debt in a year! Here, I’ll show you the best ways to pay off debt fast and reach financial freedom.Are you drowning in debt? Many people are and can’t seem to find a way out. Debt can hinder your dreams of living the way you want to; whether it’s being able to afford a home or go on vacation.&nbsp;“The secret of getting ahead is getting started.” -Mark TwainHowever, it’s not as impossible as it seems to get rid of your looming debt. With a little budgeting and smart money management, you can be on the way to your goals. To do so, these are the 10 methods to pay off debt:Create A BudgetReduce Your Monthly PaymentsLive On One Income&nbsp;Create An Emergency FundDon’t Create More DebtIncrease Your IncomeSell Unused ItemsPay More Than The MinimumPick A Payment Method: Debt Snowball or AvalancheDon’t Give UpTable of Contents“If you don’t know where you’ve come from, you don’t know where you’re going.” -Maya AngelouWithout knowing where all your money is going to, it’ll be hard to make any lifestyle changes. Make a list of all your expenses, even the small ones, so you can determine where you need to cut back on spending. Then, create a budget to help manage your money.“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” -James W. FrickI’ve researched and gathered information from people online and across the web to compare what their monthly expenses are for a family of four.In this chart, I show the average high amounts that they pay monthly. Then, I show how much can be saved based on what others budgeting in the same area pay. Those that pay these amounts could be reducing their spending by over two thousand dollars! Of course, these are only guidelines for reduced costs and everyone’s situation is different.Related: 10 Things To Stop Buying To Save MoneyThis is one money-saving tip that saved me over $12,000 in a year. In the post showing my actual budget, my small apartment was only $1,000 while many people I knew paid over $2,000 per month in San Diego.Here are more ways to lower your monthly spending.“The quickest way to double your money is to fold it in half and put it in your back pocket.” -Will RogersOne of the best ways to pay off debt is to live on one income. As a couple, if you spend one paycheck on your daily living, you’ll have another one to utilize for debt repayment.&nbsp;This means that if you both make $50,000 a year… you’d live off 50k and use the other 50k towards paying off debt faster.There are also great benefits to it such as being able to save much more and having financial security in case one partner gets laid off.&nbsp;Look at these Tips For Living On One Income And Thriving.“By failing to prepare, you are preparing to fail.” -Benjamin FranklinYou may want to start aggressively paying off your debts, but don’t forget to save as well. If you have no money left over when an emergency arises, you could end up in more financial trouble. Try to have at least $1,000 saved, but a good goal to reach is saving 3 to 6 months of your expenses.“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.” -Will RogersDon’t dig yourself a deeper hole… Stop using your credit card! The goal is to pay off debt, it’s counterintuitive to create more. So do what you need to do, hide your credit cards, or literally freeze them in the fridge. Also, don’t be tempted to finance things in the store, if you can’t buy it with cash, you can’t afford it.“Opportunity does not knock, it presents itself when you beat down the door.” -Kyle ChandlerIn addition to cutting back on your expenses, increasing your income will also help you pay off debt quickly. Apply the extra money you have coming into your household so you can reach your goals faster; this also includes any unexpected money or bonuses from work you receive.&nbsp;For ideas on how to make extra money, look at “Side Hustle Ideas: Ways to Make Money On the Side.”“It is not the man who has too little, but the man who craves more, that is poor.” -SenecaIf you’re like me, you probably have a closet full (or more) of things you don’t use anymore. Have you thought of how much you could earn by selling all those items? Take the phone you had before upgrading, for example, you could sell it online for maybe $100. Even some things as small as a $5 flowerpot makes a difference. Sell enough, and you’ll have a nice chunk of change to apply to your debt!“If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.” -Edmund BurkePaying extra money on your loans won’t only help you pay off the debt faster, but it also results in you paying less. The longer you take to pay off a debt, the more interest is added to it each month.Let’s say you have a debt of about $5,000 at a 25% interest rate. If you take 2 years to pay this off, you’ll also be paying $1,404.58 in interest. If you quickly pay it off in 1 year, the interest would be half that amount, $702.65.“Setting goals is the first step in turning the invisible into the visible.” -Tony RobbinsThere are two popular debt repayment methods, the debt snowball and debt avalanche. The snowball method is very popular right now due to Dave Ramsey’s course; however, you would pay less interest with the avalanche method in the long run.My examples will show 4 loans for a total debt of $25,000. I’ve set the loan terms all as 24 months, to make it easier, and adjusted the minimum payment to that timeline. Now, I’m not the best at math, so don’t quote me on these numbers, but I’ve checked calculators and they are pretty accurate.With the debt snowball method, you order your debts from the smallest to the largest and pay off the smallest one first. Like a snowball, you keep rolling the smaller payment into the next, making larger payments.In this example, one would start off paying an extra maybe… $500 on their loans every month. This is money you have earned from saving with the tips above, or making extra money on the side.So instead of paying the $48 minimum on your personal loan, you start paying $548 monthly. After paying it off in about 2 months, you can then apply that $500, plus the $48, and the $213 to pay a total of $761 each month on the credit card. Bam! 7 months and it’s paid off!Keep in mind that you should still be paying the minimum amount on all your other loans at the same time.&nbsp;Next up, you’ll be paying $984 on the auto loan and pay it off in 11 months. By the end of 16 months, you’ll have paid off all your loans.With the debt avalanche method, you order the loan by interest rate with the highest to lowest one. You pay off the loan with the higher interest rate first, then move on to the next highest.Like the debt snowball, I used an example of paying an extra $500 every month on the credit card, while still making minimum monthly payments on the other loans.&nbsp;After paying about $713 every month on the credit card, it will be paid off in 6 months. After that amount of time, only about $774.56 will be left on your personal loan, and you can pay that off in a month with the extra money freed up.At the end of using the debt avalanche method, you’ll also have paid off $25,000 in loans (plus the interest) in about 16 months.There are many arguments as to which of these methods are better. While the debt avalanche will result in lower interest paid, the debt snowball might keep you motivated with quicker results.With the examples shown, your first loan with the debt snowball is paid off in 2 months versus 6 months with the debt avalanche. However, with both methods, you will be able to pay off debt fast in about 16 months.On the other hand, you will be paying about $50 less interest with the debt avalanche. However, the longer amount of time to see results may make some people fall off track and want to quit early.Whatever method you decide on, use what would be best for you. At the end of the day, the results were still over $1,000 saved on accrued interest, and my fictional person got out of debt faster!Also, note that the results could vary based on your particular loan amounts and interest rates. Though, I have tried out different amounts and the avalanche method resulted in less interest paid.“It does not matter how slowly you go as long as you do not stop.” -ConfuciusThe most important thing is to keep pushing and keep tackling your debt. It’s only with consistency that you will start to see a change and get out of debt.Set goals and don’t be afraid to celebrate your milestones either; they’ll help keep you motivated.If no one else, I’ll be here to cheer you on as you continue on your journey! Share your accomplishments in the comments below.Which debts should I pay off first? You can pay off your debts from the smallest amount to the largest, or by starting with the higher interest rate loan. It depends on if you’d prefer to see progress quicker or pay more interest over time. Is it better to pay off debt or save money? While it’s good to get rid of your debt, you shouldn’t forget to save money as well. Having no emergency savings when tough times come will only leave you in further need of debt relief. Before you start tackling your debt head-on, try to save about 3 to 6 months of your monthly expenses. What is the quickest way to pay off debt? Pay off debt quickly by not creating more, saving or earning more money to apply to it, and rolling your payments from one loan to the other.From what I know, these are the best ways to pay off debt fast. If you think others would benefit from this post, pin or share me! If you have any other tips, please let me know.&nbsp;TwitterFacebookGoogle+BufferLinkedInPin ItHello, I’m Martina! As a Financial Coach and budget-savvy military wife, I love showing others how to make the most of their money. My aim is to help you gain the knowledge you need to manage your personal finances better. Read more about the site here.

Skip to contentA family of four could reduce their monthly expenses by $2,174 and use that to pay off $26,088 of debt in a year! Here, I’ll show you the best ways to pay off debt fast and reach financial freedom.Are you drowning in debt? Many people are and can’t seem to find a way out. Debt can hinder your dreams of living the way you want to; whether it’s being able to afford a home or go on vacation.&nbsp;“The secret of getting ahead is getting started.” -Mark TwainHowever, it’s not as impossible as it seems to get rid of your looming debt. With a little budgeting and smart money...

10 Best Ways To Pay Off Debt Fast - Stack Your Dollars

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