How to Pay Off Debt Fast–The Two Things You Need to Do

This post originally appeared on The Financially Independent Millennial

Are you wondering how to pay off debt fast, if you think you have no money? In this article, I’ll cover some strategies you can do today to pay off debt fast.

The best way to learn how to pay off debt fast, even with no money, is by reducing spending, increasing income, and using the leftover monthly surplus to pay debt.

    Call now for a FREE consultation
    CALL 844-639-6956

    Are you in a far from an ideal financial situation? For example, do you feel like you’re always trying to catch up? If so, you’re not alone.

    In the US, the average household debt is $137,063, including cars, credit cards, mortgages, and other forms of debt. 

    It’s no wonder that millions of Americans are looking to learn how to pay off debt fast. It’s not impossible to pay down debt fast. It’s possible!

      Get everything you need to master your credit today.
      Get started for free

      That doesn’t mean it has to stay that way. Perhaps it feels a bit like a financial crisis. Or, at least we’ve all been trying to catch up, right?

      Becoming debt-free isn’t easy. Plus, becoming financially independent isn’t easy, either. Indeed, both take work. But, once you make it a priority, I assure you it gets easier. No matter how bad your debt situation may seem, master two simple levers, and you’ll get yourself back on track. And, you can pay off your debt fast. 


      Good Debt vs Bad Debt

      The next step when learning how to pay off debt fast is to know the difference between good and bad debt. And, using that when learning how to pay off debt fast. To be sure, debt on its own isn’t the devil. When used correctly, debt can be a wealth-generating tool that pays you back for a lifetime. But, high-interest debt, i.e., from credit cards, acts in reverse. You see, it keeps you broke.

      Here’s an example of what someone’s debt load might look like:

       Amount OwingInterest RateMonthly Payment
      Credit Card A$10,000.0019.90%$100.00
      Credit Card B$4,000.0019.90%$80.00
      Credit Card C$5,000.0017%$100.00
      Car Loan$17,000.006%$330.00

      What about the Mortgage?

      Some might say to get rid of your mortgage and you’ll save a ton of interest. True, but the mortgage is good debt, as it’s secured, or tied to an asset. The interest rate is also very low, making it a cheap source of funds. Also, mortgage debt is good debt as the cheap source of funds allows you to invest in your surplus. And, investing your surplus is the key to becoming financially independent! 

      Further, since a mortgage is a secured loan, if worst really did come to worst, you could sell your home. Then, pay off the mortgage and hopefully keep any remaining equity.

      And the Credit Cards?

      However, you probably can’t say the same about your credit card. Does your credit card come with a 20-25% interest rate?

      So what to do? Work to pay off those credit cards as fast as possible. Start with the one with the lowest balance (Credit Card B). Then, when it’s paid, have a little party. And, the monthly payment that you would have applied towards Credit Card B can now go towards Credit Card C. Rinse and repeat.

      Does it mean you shouldn’t use a credit card? No. By all means, use a credit card that gives you some nice perks like credit card points or cashback. But pay it off every single month, in full! The interest on those cards is just killer, so why not pay it off?

      What about the car loan and the mortgage? Sure, if you absolutely need the car to earn money, keep it. But pay off that debt, and fast. Certainly, as fast as possible. That car payment could then be used to invest in yourself, in a rental property, a side hustle, or your retirement (stocks).

      Lever 1 – Reduce Expenses

      Create a Budget and Break It down into Wants and Needs

      The first step in learning how to pay off your debt fast is to know your monthly income. In case your monthly income varies, then take an average of the last six months, and adjust as needed. Click here for a downloadable budget that you can fill in.

      Decreasing spending is by far the easiest way to generate a monthly surplus. The monthly surplus can then get used to paying off debt. When you reduce your monthly spending, it might feel strange. Sure, you might want to “keep up with the Jones’.” But I assure you, for at least a few months, no one will notice. Not that it even matters!


      Needs are fixed expenses like:

      • Mortgage/Rent
      • Car payments
      • Food
      • Insurance (Home, life, health)
      • Credit cards
      • Lines of credit
      • Other debt payments, etc.

      You might be surprised I included credit cards and lines of credit. Only the minimum payment needs consideration at this point. Also, you must stop using the credit accounts now! And, keep in mind, you  want to pay them off, not add to the debt.


      Start by breaking down your expenses into wants and needs. Indeed, wants are things that are “nice to have.” For example, wants are things like: new clothes, spa treatments, eating (and drinking) out, etc.


      • Cut out the restaurants, and learn to cook at home.
      • Enough of the $5 lattes – make them at home! 
      • Cable / Satellite TV
      • Enough of the 2nd and 3rd car payments – and no, cars are NOT investments! Sell the cars, stick with one, maybe two if you absolutely must.
      • Stop spending on clothes, just for now.
      • Cancel the vacations/holidays, for now.

      Lever 2 – Increase Income

      Increasing income can be a more difficult thing to do. However, it’s essential to tackle this lever. Further, you might be worried that you can’t earn more money. To be sure, anyone can earn more money. You just have to make it a priority.

      Consider a Side Hustle

      In the short term, think about starting a side hustle. To be sure, side hustles are a perfect way to (temporarily) increase your income. 

      For example, you might consider ride sharing or working online. Some of the highest paying jobs available online include teaching English, tutoring, or virtual assisting. You can also do projects on sites like Upwork or Fiverr, or perhaps you might deliver food. 

      No, side hustles don’t need to be forever. However, they should be a temporary means to make an extra $1000 a month, or more to pay off debt, only. Otherwise, you’ll be overworking yourself. And, if the point of paying off debt is to become financially independent, then you’ll need to (eventually) enjoy your time! So, aim to have a side hustle just for the amount of time you need to pay off your debts.

      Ask for a Raise or Get a New Job

      Another way you can increase your income is by asking for a raise. Then, if that doesn’t work, look for a new job that pays more.

      What If You Want to Pay off Debt and Have No Money?

      If you’re a compulsive shopper, one way to (quickly) raise some money is to start selling the things you don’t use. For example, do you have a car sitting in the yard that gets rarely used? Do you have some old technology lying around? Whatever it is, chances are there’s a market for it. Even an old iPhone can fetch some good money. Organize the things you haven’t used in a few months, and put them on Craigslist or eBay. Then, use the money to pay off some debt.

      Pay off Debt by Investing

      You can invest in stocks, or buy a rental property, or start a small business. Sure, it can be a conundrum if you have no money and wonder how to pay off debt. However, with a little creativity, you’ll be surprised at what you can accomplish. Then, the profits from investing can be used to pay down debt.

      Debt Payoff Plan

      Once your budget is set up, and your debts all listed in order of interest rate, make a plan to pay them off. For example, do you first start paying your student loans, or your credit card?

      For sure, your monthly surplus will go toward paying down the debt. But which debt? It depends. There are two methods of attacking debt.

      To get started, we need to determine the interest rate, and the amount owed (not the monthly payment, but the total amount owed).

      In general, your mortgage will likely be your largest loan, and it’ll probably come with the lowest interest rate. By contrast, lines of credit and credit cards will have smaller balances than a mortgage but come at a higher interest rate.

      Snowball Method – An Excellent Way to Pay off Debt, Fast

      The debt snowball method for reducing debt offers quick wins, but mathematically, is not the fastest. For example, with the snowball method, you organize your debts by amount owing, from highest to lowest. Generally, your mortgage will have the highest balance, while a credit card might have the lowest.

      With the debt snowball method, you work to pay off the debt that has the SMALLEST balance off first. Sure, you continue to make your minimum payments to the rest of the creditors. But, the debt that has the SMALLEST balance gets paid off first. Quickly, you’ll have your first win. Then, you work to do the same to your next debt.

      Avalanche Method for Paying off Debt

      The avalanche method happens to be my favorite way to reduce debt. It’s mathematically the fastest way. However, some people prefer the snowball method as it gives you quicker “wins.” But in the end, the avalanche method is the fastest.

      The debt avalanche method works like this. Remember your list of debt and the interest? With the avalanche method, you’ll aim to pay off the debt with the HIGHEST interest rate first, using your monthly surplus. 

      Loans with the highest interest rate often include credit cards and lines of credit. You need to pay the one credit card or line of credit with the highest interest rate. Then, make the minimum payment on all the other debts. Make larger payments on the debt with the highest interest rate using your monthly surplus. Easy!

      After you’ve eliminated the debt with the highest interest rate, pat yourself on the back because. You discovered how to get out of a debt spiral.

      Rinse and repeat with the next credit account!

      Putting It All Together

      To recap: you’ve gotten a handle on what you owe. You know how much is left over at the end of the month. Now, you can start to plan on how to get out of debt fast, regardless if you thought you have no money.

      Remember the levers: decrease your expenses and increase your income.

      Final Thoughts: How to Pay off Debt Fast

      Once you have your budget set up, organized by needs and wants, it’s time to put it into practice. The key to this program is that you stick to paying your debt using your monthly surplus. Day after day, month after month. If you continue to work the levers, you can pay off your debt fast.

      The question is: Will you be using the avalanche method or the snowball method when learning how paying off debt fast? Leave a comment below, and let us know!

        Get everything you need to master your credit today.
        Get started for free

        You Might Also Like

        A hand holds an iphone, open to the home screen with debt management app icons.
        Debt can feel like a terrible thing, but paying off your debts is... Read More

        March 16, 2021

        Managing Debt

        A young woman reviews her credit report to see how much charge offs are affecting her credit score.
        Because 35% of your credit score relates to paying your debts in ... Read More

        March 16, 2021

        Managing Debt

        A man sits on a couch with his laptop in his lap, looking at the phone in his hand.
        A judgment is an order issued by a court of law. When you borrow ... Read More

        March 16, 2021

        Managing Debt receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

        Hello, Reader!

        Thanks for checking out We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

        Our People

        The editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline,, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

        Our Reporting

        We take great pains to ensure that the articles, video and graphics you see on are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

        The editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

        In addition to appearing on, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of in general and they result in more traffic to us as well.

        Our Business Model’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

        Visitors to are also able to register for a free account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

        Your Stories

        Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

        Thanks for stopping by.

        - The Editorial Team