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Thrifty Mommy

20 ways to pay off debt faster

by kellys on March 15th, 2007

We aren’t out of debt completely, but it feels really good to have paid off all our credit cards! 2 more debts and we are home free, well with a mortgage. Want some tips on getting debt free? Here are 20 ways to pay off debt faster.

  1. Create a budget and stick with it!
  2. Figure out why you are in debt in the first place. Do you spend more than you take in? Do you eat out too much? Do you have an addiction that is killing your financial freedom like shopping? Get an accountability partner to hold you accountable to stop whatever you are doing.
  3. If you are in severe debt, go to a debt counselor. It isn’t admitting defeat. It takes a strong person to admit when they need help and most of us are extremely private with our financials and debt. We have to admit we need help.
  4. Live within your means. This will help you keep from getting into more debt.
  5. Pay the little debts off first. This will give you encouragement and keep you going. Use the money on that debt towards the next one.
  6. Don’t get frustrated. You didn’t get into debt overnight. Don’t expect to get out overnight.
  7. Use the envelope system. Budget a certain amount for entertainment, eating out, groceries, etc. and put the cash in an envelope. When the money runs out, you are done for the month. It really works.
  8. Don’t cut every form of entertainment out. This will surely be your downfall as you will not stick with it.
  9. Cut up all but one credit card to start with. I hate credit cards to begin with because they get you into trouble faster than you can blink. Keep one paid off for emergencies and have a low limit on it. The credit card companies will try to increase your limit so you can spend more. Just decline the increase and stand your ground.
  10. Get a second job for a short time frame. Set the time frame and DON’T use the money from that job for anything but paying off debt. The easiest way is to get the check direct deposited and then pay on a particular debt each paycheck. So if you get paid each week, take that amount and pay on your debt immediately!
  11. You have to find a way to pay more than the minimum on the debt you are targeting. Minimums are the debt master’s way of keeping you there.
  12. Do you have equity in your home? Using the equity to get one lump sum to pay off might be more financially responsible as you would probably have a lower interest rate and can deduct the interest on your taxes.
  13. I do not recommend cashing out your savings totally. Usually, if you are in debt, you don’t have any savings. But if you do, knowing that you have a small cushion in case you get in trouble makes you rest a little easier.
  14. Find one thing you want to splurge on that is less than around $20 each month. Your purse strings are going to be tight and you will get frustrated if you don’t allow a treat every once in a while. Just keep it little for a while.
  15. When you are staring out, don’t include your mortgage in the amount of debt to pay off. If you are like me, you will get overwhelmed quickly. We decided to pay off 3 big debts first. That is our goal. After each debt is paid off, we celebrate by paying CASH for a treat. Maybe a new TV that you have been wanting. Be careful though. You need to save and pay cash for it while still making all of your other debt payments. Work on paying off your mortgage last.
  16. Cut out any unnecessary expenses. Cable and cell phones are a luxury in spite of what our culture says. Disconnect for 1 year and take that money and throw it at your target debt. It will be painful for a while but it will feel so good when you can cross another debt off your list! Trust me.
  17. Call your credit card company and negotiate a lower rate. Most will work with you. Especially since they have recently gotten so much bad publicity.
  18. Grocery shop on sale. Use coupons and plan your meals only with what is on sale. Do a little research and find out what is on sale at the grocery store before you go so you can plan a menu. Stick to your list. Impulse buying will kick your budget.
  19. Try to go to the grocery store and Wal-Mart only once a week. Little trips to the store add up and will kill your budget.
  20. Work on planning your debt payments better. People in debt pay millions of dollars each year in late fees due to the fact that they are juggling their money each month. Try to get ahead so that you don’t get caught with a late fee. Chances are, you are already paying too much in interest.

Hope this helps you get out of debt and gain that financial peace we all dream about. I am reveling for the moment in paying off all my credit card debt but have started on the second big debt this week. No rest for the weary. Paying off debt can be done. You just have to be willing to work on it and have some discipline.

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POSTED IN: Top 10 lists, budget, financial matters

20 opinions for 20 ways to pay off debt faster

  • Julie
    Mar 15, 2007 at 9:38 am

    Great list Kelly! The ones that especially have worked for me are #1,4,5,7,13,18 and 19.

  • kellys
    Mar 15, 2007 at 10:15 am

    Thanks, julie. The bank always looks at me funny when I would go to pay the credit card bill( past tense yeah!) and they would ask me for my credit card. I would tell them that I don’t have one and that I don’t use it. My DH does. They are always like, “You don’t use it?” And I respond, “Nope”.

  • bnpositive
    Mar 15, 2007 at 10:33 am

    Thanks for sharing this list. My wife and I and other members of our family are trying to get our debt paid off and live like no one else, so later we can really live like no one else.

  • kellys
    Mar 15, 2007 at 10:49 am

    No problem. Sounds like we listen to the same advice. I want to live that way too!

  • T. Rockmann
    Mar 15, 2007 at 1:05 pm

    Just make sure that when you cut up your cards, not to close your accounts. You want these to age if they have any late’s. It is even wise to use them every so often (and pay off the next month), to make sure they report to the CA.

    Good stuff here.

    T. Rockmann
    http://www.creditdetox.com

  • Ways to pay off debt faster « Cutting Back
    Mar 15, 2007 at 3:29 pm

    […] Ways to pay off debt faster Kelly at Thrifty Mommy wrote a great article on 20 ways to pay off debt faster. […]

  • Julie
    Mar 15, 2007 at 3:43 pm

    Kelly at Thrifty Mommy wrote a great article on 20 ways to pay off debt faster.

    Here are some of my thoughts on the items on her list I am currently doing…
    http://cuttingback.wordpress.com/2007/03/15/ways-to-pay-off-debt-faster/

  • Robin
    Mar 16, 2007 at 6:27 am

    This is fantastic. I’m going to print it out and put it on our fridge.

  • Karen
    Mar 17, 2007 at 7:05 am

    Great list Kelly. I have to say though that I don’t agree with getting an equity line to pay off other bills. Everything else looks good to me. Dave Ramsey suggests putting $1,000 in savings and then doing the debt snowball like you were saying. The emergency fund prevents you from having to charge something if a a real emergency comes up.

  • Karen
    Mar 17, 2007 at 7:07 am

    FYI, a budget usually doesn’t work for the first couple of months. You have to keep at it and keep tweaking it until it works for you. Now excuse me, I need to go follow my own advice. ;)

  • kellys
    Mar 17, 2007 at 12:03 pm

    The reason I like using an equity line for things like paying off credit cards is that you are going to have to pay interest somewhere. Why not pay a lower rate and deduct it on your taxes? Just make sure you only tranfer one at a time so that you don’t use up all the equity at once and find yoruself in a bind if you need to sell your home.

  • Karen
    Mar 17, 2007 at 12:22 pm

    I think you’re right Kelly. You know how to use the equity line. I just felt that for others, I couldn’t encourage it because so many people haven’t learned their lesson about the debt they have gotten themselves into. If people have learned their lesson and know what they’re doing, then it can work for them.

  • kellys
    Mar 17, 2007 at 12:53 pm

    Great minds think alike:)

  • Karen
    Mar 17, 2007 at 1:00 pm

    For sure. :)

    My favorite way to pay down a credit card is to take advantage of the 0% interest offers. We’ve even gotten on the phone with credit card companies and negotiated a longer introductory rate. I told them, “I have a really high credit score. Someone is going to get my business. My question is, is it going to be you?” That’s great negotiating power. There is a draw back and it’s that you absolutely have to make your payments on time or the interest rate will spike.

  • kellys
    Mar 17, 2007 at 4:55 pm

    That is a great idea if you already have a high score. But what about the rest of us? I too have argues with credit card companies to get the interest rate down. It definitely works.

  • rockytop97
    May 31, 2007 at 9:00 pm

    Just payoff the credit cards and cut them up. I would also cancel them. Cash only. I would consider a house debt since it takes money out of your pocket until it sells, or rents for a profit. Anything that you are forced to make a monthly payment is a debt. Especially if there are consequences for not making the payment like a repo or foreclosure.

  • Karen
    May 31, 2007 at 9:25 pm

    Rockytop97: I just paid off another debt this week and will pay off the other when the bill comes in. It will be nice to be out of debt, other than the house. I agree that a house is a debt, but a house is a necessity. It seems senseless to pour money into renting something. At least you know when you are buying a home that real estate increases in value and you can get your money back out of a home (if you do it right). We’re trying to follow Dave Ramsey’s 6 Baby Steps to financial freedom. We’re working our way down the list. If we keep it up, we’ll be debt free (including our home) in about 15 years. It will be awesome to be debt free at less than 50 years old.

    I could be wrong, but I think that financial advisors suggest that you pay off the credit card, cut it up, but not cancel it. It seems I heard that cancelling cards actually hurts your credit score. I’d have to check on that to be certain though.

    Thanks for visiting Thrifty Mommy. :)

  • bmxunc
    Apr 24, 2008 at 9:17 am

    It is absolutely true that closing a credit card, especially an “older” one, really does hurt your credit score, because it “re-ages” your overall credit.

  • Lynn
    Apr 28, 2008 at 3:42 pm

    I owe more each month than I bring home ($). Where do I begin?

  • Karen
    Apr 28, 2008 at 4:27 pm

    I’ve been there before. Do you have a second job? Perhaps we could write some tips this week for your situation.

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