5 Strategies to Pay off Debt Faster

Debt can cause undue financial stress. As a significant portion of your income goes in debt repayment which is burdensome for you at times. If you are buried in debt, you are likely to search for tips and tricks to pay off debt faster. Paying off debt faster means that you are saving a substantial amount of money that will help you fulfill your broader financial goals.

Below we have listed the 5 key strategies to pay off debt faster. These tips and tricks are crucial to comprehend in order to get rid of the debt

Key Points – Pay off Debt Faster

•  If you eager to pay off debt faster then you have to exceed the minimum payments every month
•  The key strategy is to target the debt with the high-interest charges first and then move towards debt with lower interest charges
•  Try your best to lower your APR charges from your card issuer or try to consolidate credit card debt

How to pay off debt faster? 5 Key Strategies 

Paying off debt faster does not mean that it will take few days. It is still a long process dependent on what you owe. There are multiple ways to pay off debt faster but we will discuss the important ones here.

1. List all your debt

If you have various debts to pay off such as student loans, personal loans, and credit cards, the integral step is to figure out how much debt you owe and in what way you are getting rid of it. This means that you have to do detailed calculations on the outstanding balance, interest rates, minimum payment, and the due date to make the payment. Excel or Google Sheets are the best way to keep track of all the data.

This one is a difficult task for most individuals as it requires a lot of attention from the debt payer to make accurate calculations. Unfortunately, there is no other way to make a full-fledged plan to pay off debt faster without a hard look at the numbers.

2. Keep your credit utilization ratio low

Most of the time we have desires to make bigger purchases that are even bigger than our pay cheques. There is a famous saying that says “ Don’t bite off more than you cannot chew”. Many people are buried in debt will stay in debt for a longer duration if they don’t pay heed to what they want and when they want . Not even millionaires can buy all the stuff in this world , therefore if you want  anything don’t buy unless you have the budget. In this way if you control your desires and wishes and is satisfied with less, than you can pay off debt faster.

The research shows that people are likely to spend more when they have credit cards in their wallet . So if you are planning to spend less and pay off debt faster , try to leave your credit card at home. This way you can keep the credit utilization ratio low and have higher chances to pay off debt faster.

3. Stop using credit cards

Taking out more debt while you have the existing debt to repay can complicate things for you . While you have made your mind to pay off debt , it is preferable to avoid taking another loan unless you have the ability to make monthly payments at the end of the month.

Trying to cut off credit card spending is a challenging task. As it consumes a lot of the time to look at the budgeting plans and divide your home income into multiple spending’s. Ideally once you have finalized the budget , you can have the overall estimate on how much money you can devote to make monthly payments to pay off debt faster.

4. Find the debt pay-off method and stick with it

Paying off debt is a long-term commitment and needs the strong determination of the debt payer. The viable way is to figure out the method that works for you.

If small achievements make you happy and boost your courage, then debt snowball is the right approach for you. With this strategy, you pay off smaller debts first and further roll the money to pay the next biggest debt until all your debts are paid off.

How to get out of debt with Debt Snowball Plan

To know about the detail process , pros and cons of the debt snowball method , you can refer to this detailed guide. This blog list down the process in detail to provide a complete pathway to follow this approach.

But if you prefer saving money and are satisfied b the delayed gratification then debt avalanche method is best for you . With this approach, you pay off debt faster as you start with high-interest rate first and then further move toward the smaller debt. Through this approach you save substantial amount of money and get rid of debt faster.

5. Don’t let your debt hit collections

If you fall way behind the monthly payments, then there are higher chances that your debt may go to the collection. Collection can be a costly price and will consume a lot of your time. Also, late payments means that you have to pay penalty APR on your monthly payments . Additional charges will pile up as you have to face collection agency fees and legal action fees to further carry forward with the process.

If you are unable to pay off debt faster and debt hit the collection , you could experience wage garnishment , credit score will become lower. This will further take you years of effort to obtain another line of credit.

 Frequently Asked Questions