How to Pay Off Debt Fast. Managing your personal finances is neither easy nor enjoyable. You have so many other things going on in your life that managing your finances can sometimes be way down on the list of priorities.

All of us have some form of debt, but some of us have enough debt that it is a burden on our life. If you are in this category, you are not alone. It happens and it usually sneaks up on us pretty quickly.

There are some things that you can do to get a handle on your debt and work to cut it down or eliminate it. Let’s take a look at 7 tips that you can start doing now to manage and eliminate your debt.

Know how much you owe (your debt)

To start things off, you need to know your debt. Write down how much you owe and who you owe it to.

So what counts as debt?

• home mortgage or rent
• car payments
• credit card balance
• student loans
• child support and/or alimony
• personal loans
• Any other loan/credit that you pay on monthly

Account for all your monthly spending

Next write down all your monthly spending. Write down who you pay and how much you pay them.

Write down all monthly bills and incidentals such as:

• Electricity
• Water/sewer/garbage
• Internet
• Cable TV and/or streaming services
• Groceries
• Clothing
• Eating out (this includes lunches)
• Coffee shops
• Any other bills and incidentals that you spend money on each month

It is critical that you are honest with yourself and account for everything that you spend money on each month.

Add up your monthly spending and your monthly debt. This is how much of your paycheck is going out each month. If you have any other expenses that weren’t included in your monthly spending and your monthly debt, add it in.

Reduce your spending

After accounting for all your monthly spending and debt, take a hard look at what you are spending your money on.

What are the things that you don’t need and can eliminate to reduce your spending? Do you really need all those cable TV channels and streaming services? How about that morning coffee shop or eating out for lunch and dinner? Can you cut back on the number of times you do this?

Develop a budget so you can see what money you take in and how it is spent. See my post on the 50 30 20 rule for a good and simple budget that you can stick to.

Based on your current income, you will never pay off debt fast unless you reduce your spending. You will need to reduce your spending and apply that savings to your debt.

Make at least minimum payments

If you are unable to pay the full amount of your monthly bills (electric, water, so on) talk to your utility company about making a minimum payment instead of ignoring it and not sending anything at all. Doing this will keep them from turning their service off and adding a late fee to your bill. Explain your situation to them and they will help you.

This won’t help reduce your debt, but it will eliminate them adding late fees that will increase your debt.

Track and reduce credit card spending

Credit card debt is the number one largest debt you can have. Most credit cards charge around 19% interest on credit card balances.

This is the first thing you should look at when trying to pay off debt fast. Credit cards are so easy to use that we don’t realize how much we are spending each month until we get a statement. Knowing what is good debt and what is bad debt is critical. Credit card debt is the absolute top bad debt.

Look at your recent credit card statements and go through them line-by-line. Yes, gas and groceries are on there, but look at the incidental things you are buying each month that add to your credit card balance. Credit cards are usually what we use to buy the wants in our life, but unfortunately, they add up.

Reduce your credit card spending by paying with cash for everything you can. By doing this you realize and feel the expense more than you would swiping a card. It can help you realize that maybe you don’t need the item you are about to purchase. Paying cash will also reduce your credit card balance and make a good start to reducing the balance.

I also recommend using a cash back credit card that gives you money back each time you use it. Although you want to reduce your credit card spending, there are still many times that you need to use it so you might as well get some cash back. I personally use the Capital One Quicksilver Cash Back card and have been happy with it for many years.

Find a payoff method that works for you

Select and attack the portion of debt that you want gone the fastest and the most. For most of us, it is the credit card. At 19% interest on balances, it should at some point be a priority.

There are a number of methods that you can use to pay off debt fast, the Snowball method and the Avalanche method are two options.

According to Nerdwallet, with the snowball method you pay your smallest debts in full first, then roll the amount used to pay your first debts into paying off your bigger ones — much like rolling a snowball down a hill. Small victories upfront — the satisfaction of seeing debts eliminated one by one — keep you engaged.

The debt Aavalanche method prioritizes high-interest debt to save money but may take longer to get the first debt wiped out since they are usually larger balances of debt.

Both of these will work as a plan for you to pay off debt fast or you may want to use a different strategy. The important thing is for you to have a plan to reduce your debt.

Consider debt consolidation

Debt consolidation is kind of a last resort if your effort to pay off debt fast doesn’t work for you. It involves getting a debt consolidation loan to bundle debt like credit card debt, student loans, and personal loans into one loan and pay that one loan off in time. It is not a bad option but make sure you go with a reputable lender (probably not one you see on TV commercials) to avoid being put in a worse situation. Your bank is a good place to start looking.

One big thing to remember though is that a debt consolidation loan won’t help you in the long run if you don’t control your spending. If you get a debt consolidation loan to bundle your current debt then continue racking up a big credit card balance, you are not helping yourself at all. You must find ways to reduce your current spending.

How to Pay Off Debt Fast

I know that you have probably heard of most of the tips covered here on how to pay off debt fast, but using these tips together as a plan or strategy that you can start today will immediately begin to show benefits.

It takes writing everything down so you can see it all in front of you to start taking action. To reduce debt, you must first know what your debt is.

Debt can cause a lot of anxiety and stress as it bears down on us, but you can do this. Develop your plan and stick to it while resisting the temptation of unnecessary spending.

The reward will be great, and you will feel the anxiety and stress start to melt away as you accomplish you goal of reducing your debt.

I have other posts below that can also help you save money. Please check them out.