How to Get Out of Debt – 5 Ways to Pay Off Debt Quickly

Pay off debt fast

How to get out of debt and take control of your financial life. 

If you are like many Americans, chances are, you are drowning in debt and unsure how you’re going to get out of it. 

No matter how big your pile of debt seems, getting out of it is possible. And deciding to become debt-free is a life changer. 

Granted, the journey to pay off your debts is not exactly a walk in the park. This is especially true if you have no money, no assets, and no idea where to start. 

But it’s the best thing you can do to take control of your finances. Not to mention, it helps you build a stronger financial future and give you money freedom. 

 As frustrating as it is to be in debt, by committing to a few simple steps, you can be on your way to be debt-free. 

How to Get Out of Debt Faster

Getting out of debt is a quite simple process. 

It can take a lot of commitment and planning, but the debt payoff process is pretty straight forward. Spend less than you make and put the extra towards paying off debt. 

In practice though, there are more ways than one to accomplish the goal. 

 Good news. There are several debt payoff strategies you can use to pay it all off most effectively and efficiently. 

 While we’ll go over each, most are differences in priorities and organization styles. It’s a matter of personal preferences as much as methods that fit your situation the best. 

 Regardless, all these methods are well-tested and proven. If you are ready to tackle your debt like never before, let’s get started on the 5 best debt payoff methods. 

How to Pay Off Debt the 5 Smart Ways

When it comes to becoming debt-free, coming up with a game plan is a step you can’t miss. 

 Whether you plan to save and pay off at the same time or tackle the smallest debt to the largest, take the time to plan. 

 With that, you can tell your money where it needs to go. 

And most importantly, it automatically puts you in control of your finances. 

 It may take a while to adjust to your new way of approaching your finances, but you’ll get the rhythm. 

If it’s taking time to get a hang of it, don’t worry. It’s part of the process. 

You can always revise where it’s not working to make your plan work for you. 

Before further adieu, here are my five best debt payoff methods you can use to get rid of all your debts. 

1. Debt Snowball Method

My favorite beginner-friendly method to pay off debt is the debt snowball method. From my personal experience, I would say this is hyper-effective for many beginners. 

You’ll experience triumphs early on, giving you the motivation and confidence you need. 

Let me also say that this is the first method my husband and I used to pay off over $10,000 of our debts. 

The way Debt Snowball Method works is that you pay off your debts from the smallest to biggest. 

Once those cards with smaller balances are paid off, you move on to pay off your larger accounts. 

The reason this works is because it’s easy to gain momentum. Each time you conquer one debt, you experience a victory. 

The sense of accomplishment is very motivating. And it makes you that much more eager to tackle the bigger ones. It reinforces positive cycles while effectively reducing your debt. 

This especially works if you have multiple cards and the size of your piling debts is scaring you off. It’s one less-intimidating way to face the lion, so to speak and start conquering. 

To start, here are simplified steps to pay off debts using the Debt Snowball Method.

1. Make a list of all your consumer debts and their remaining balance. This includes credit cards and stores credit cards. 

Now, order them from smallest to largest based on the balance each carries. 

2. Make a minimum payment on all cards. On the smallest account, pay as much extra as you can to aggressively pay it down. 

Keep making larger payments on your smallest debt while paying the minimum on the others. Do this until your smallest debt is completely paid off. 

3. After the smallest is paid off, apply the payment you were making on that to the next smallest. So if you were paying $300 on the smallest, as soon as the debt is paid off, roll it over to the next. 

You do this until your 2nd debt is paid off. After you finish with the 2nd one, you roll it on to the 3rd one and so on. 

You can now really see how this method got its name “Snowball”. 

4. Repeat this process until you pay off all your consumer debts. 

It’s a great method to use if you are just starting out and need a boost of confidence in the process. It lets you focus on one card at a time and experience small victories along the way.


2. Avalanche Method

When you have multiple credit cards with a varying interest rate, here is a method you’ll enjoy. 

The Avalanche Method!

Avalanche method is also known as debt stacking. It is a debt payoff strategy where you pay off accounts from the highest interest rate to the lowest. 

By tackling heavily on the highest interest debt first, you reduce the time and money it takes to pay off all debts. 

Compared to the snowball method, it’s certainly a shorter and cheaper way to become debt-free. 

And if you are a person who needs to be efficient at everything, this is the one for you. 

Here is how the avalanche method works in 3 easy steps:

1. List all your debts in the order of highest to the lowest interest rate. 

2. Pay the minimum on all accounts on the list. Pay extra towards the highest interest debt. How much extra depends on how much you can afford and how aggressive you want to be on this debt payoff journey. 

Continue this payment pattern until the highest interest account is paid off. 

3. Once the first one’s balance hits zero, roll its payment to the next highest interest account. Continue this until all your credit card debts are paid off. 

I really like the efficiency of this payoff method, and I’m using it right now to pay off my remaining credit cards. It works like a charm, and I personally like this as the long-term strategy. 

There are a couple of reasons why it works so well:

  • One, it’s thrilling to see your highest interest credit cards getting paid off. It’s a huge load off your shoulder, and you’ll feel lighter emotionally and financially. 
  • Two, as each debt gets wiped out, you can make a bigger payment towards the next one. This accelerates your debt payoffs and helps you stay motivated. 
  • Three, you pay least in interest with this method. And like you, hundreds, even thousands saved in interest makes me feel so good. I am a money saver in nature, so this element is huge for me. 

Needless to say, this avalanche method is my go-to long-term strategy. 

In the beginning, I used the snowball method to tackle smaller credit card balances. Once all those little ones were done, I switched over to the avalanche to take care of all my larger debts. I did this so I can be more cost-effective in the long-run. 

In addition to these two methods, you can also use a couple of other payoff techniques to conquer your debts. Some may be used as an add-on to the snowball and avalanche. 

3. Balance Transfer 

If you have a high-interest credit card you want to pay off, one money-saving option is to transfer your balance. If you’ve never heard of a balance transfer, don’t worry. It’s pretty simple. 

You transfer the balance of your high-interest credit card to a card with a low-interest rate. 

Let’s say you have a 22% interest rate credit card with $5,000 in the remaining balance. 

You open another credit card with a 0% APR for the first 12 months. Transfer all your $5,000 to the next 0% APR card and pay off as much as possible within the first year. It’ll allow you to save hundreds in interest. It’ll also stop your balance from growing uncontrollably because of the high APR. 

Another scenario where this makes sense, even more, is when your high APR credit card has an annual fee. With a balance transfer, you can knock off the fee and the high APR. 

Before you do this, there are a few things to note. 

This method requires a good to excellent credit score. This is because you need to get approved for a new card with far better financing terms. 

Another is that even with a 0% intro APR credit card, there is a hidden fee. It’s called ‘transfer fee’. Many credit cards charge at least a few % in transferring fee. This is separate from the interest they charge on the balance you transfer. 

One last thing to note is how you go about doing the balance transfer can have effects on your FICO score. Generally, opening a new credit card increases your credit availability. This is a good sign for your credit rating and often boosts your credit score. 

But if you close your old card, it’ll lower your available credit and tank your creditworthiness. Before you close any credit cards, be sure to keep your available credit in mind and make a mindful decision. 

4. Open a Personal Loan 

Taking out a personal loan to pay off other debts is often called ‘debt consolidation’. 

With this strategy, you consolidate your multiple debts into one by taking out a loan. The idea is that you use a low-interest loan to pay off your other high-interest debts. 

This payoff strategy has a merit, but I’m not always so keen on borrowing more to pay off other debts. 

With that said, it can be a viable option. Especially when you are struggling to manage multiple credit cards and their payments. 

When your credit card balances are piling up, it’s easy to get out of control. It’s intimidating and overbearing. Not to mention, remembering different due dates can be a hassle. 

If that’s you, consolidating them using a personal loan can help make it more manageable. 

The way it works is that you take out a personal loan in an amount that covers your multiple credit card debts. Once you get the money, use it to pay off those debts.

Once all your credit cards are paid off, all you are left with is your loan payment. 

It’s far easier to remember one due date and a lot simpler to budget for one loan payment. 

But this is a road with many pitfalls. 

As much as I believe this method can work to your advantage, it can also backfire. Especially if you cannot be responsible with your credit card usage. 

I highly advise against getting a loan to pay off your other debts if are reckless with your spending. 

Here are some of the pros and cons of this payoff method. Be honest with yourself and evaluate if this is the route you want to take. 


1. Save you money in interest 

Most personal loans carry a lower interest rate than credit cards. By getting a loan to pay off your credit card debts, you can pay less in interest. 

2. Help improve your credit score

Personal loans are most likely installment loans. On the contrary, credit cards are revolving loans. 

Thankfully, installment loans don’t affect your credit score as long as you pay on time. 

So by paying off your credit card debs using installment loans, you can help boost your score. It drastically reduces your credit usage and ups your available credit. Both are incredibly effective ways to improve your FICO score. 

3. Reduce stress

Dealing with multiple credit card bills and due dates is stressful. By simplifying your payments, you can reduce some of your stress and stay focused. 

No doubt, getting a personal loan in an attempt to pay off credit card debts bring benefits. 

But there are some pitfalls that can potentially put you in deeper debt. If you are considering this method, be sure to review some of the dangers of this approach too. 

Please move forward with at most caution. If unsure if this is right for you, consult with your local financial planner. 


Easier to get deeper in debt

Once all your credit cards are paid off, it’s easy to let yourself a little loose on spending. A little usage of credit cards may seem harmless and it may even seem well-deserved. After all, you did pay them off. 

But this false sense of victory can quickly get you in financial trouble. Unless you learn to not use those paid-off credit cards, you find yourself back in credit card debt again. 

And mind you, that’ll be on top of the personal loan you took. 

It can hurt your credit score

As discussed, installment loans like personal loans don’t negatively affect your credit scores. But that’s only if you keep making on-time payments. If you fall behind on your payments, your credit score can go downhill. 

You may have to pay more per month for the loan

Installment loans work in a way that you pay off your debt in a pre-set length of time. This may mean you will be responsible for much higher monthly payments than credit cards. Upon discussing your loan terms with your banker, be sure to confirm your payments. 

Depending on the loan term, you may or may not be able to reasonably afford your monthly installments. And defaulting on those loans can cause further damage to your finance. 

5. Create a Budget

Creating a budget should be the first thing to do in your debt payoff journey. 

It’s where all the process of solving your debt problem happens. 

To tackle your debts and aggressively pay them off, you need to establish a monthly budget. By laying out all your income and expenses are how you determine how much you can pay on your cards. Not to mention, it’s the first step in taking control of your finances and finding extra money to pay off your debts. 

If you are in credit card debt due to overspending, budgeting takes even a more prominent role. You need to find where you are overspending and how you can scale back. 

It’s important in avoiding to go into a deeper financial hole 

And more importantly, how you can take control of your finances and find out where you can cut back. And if you are in financial trouble and going red every month. 

To establish a budget, check out this post I did recently on creating a budget in 5 easy steps. The 50/30/20 Rule of Budgeting

Misato Alexandre


Misato Alexandre is a mom, wife, blogger, and a big saver living in Hawaii. She holds B.A. in Finance and formerly worked at Nomura on Wall Street in NYC.

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