A research estimates that every American owes over $7,000 on their credit cards alone, and the average overall debt loan per person is over $15,000. Moreover, every college graduate is already burdened by loans crossing $35,000 when they leave college. Do the stats surprise you?
Most of you owe debt amounts worth thousands of dollar. And every month, you pay an interest over the money borrowed – interest that adds over time. So why not pay off all the debt as quickly as you can? Once debt free, you neither would have to pay any monthly payments nor any interest amount.

Sounds tough? How’re you going to pay off your loans? Difficult as it may be, if you’re determined, you can take a good a control over your financial situation. We’ll share some amazing tips with you that allow you to pay off your debt soon, and then we’ll talk about what you should do once you’re debt free.

1. Pay more than the minimum amounts

This is a tip that applies to your credit cards, student loans and other personal loans. Considering credit cards, the average balance of any individual is around $15,000 as we already mentioned at the start. If the APR is 15%, it means that the minimum payable amount to the bank is only $625, which you’ll be paying back in around 13.5 years. Isn’t that too long? Plus, let’s not forget, it will take longer for you to pay off the borrowed amount if you continue to use you credit cards for other purchases during this time.


Rather than paying the minimum amount, your monthly payments should be as big as you can possibly afford. This will help you save thousands of dollars in interest and let you pay off your loan much faster. But before you utilize this tip, reach out to your bank and ascertain there are no penalties for prepayments.

2. Try out the snowball method

The snowball method is a popular strategy for paying off your debts, which is again based on paying more than the minimum monthly amount. List down all your debts starting from the smallest one, which is the one you’ll be tackling first. Use your excess funds and pay off more than the minimum amount for the smallest debt. For your other larger debts, you would still pay the minimum amount.

Now when you’ve paid off the smallest debt, you can go onto the next debt on your list and start paying more than the minimum amount for that one. In this way, you can continue to pay off all the debts one by one. As your small balances disappear, you free up more dollars which would allow you to pay off your bigger debts more quickly. The basic goal throughout is to use up all your extra money for the debts, beginning from the smallest one, until you’ve paid all of them.

3. Try to increase your income streams

How many income sources do you currently have? If you’re only doing one job, how about indulging in other part-time businesses or ventures so as to earn more money. Doing so will give you more control over your finances, making it easier for you to become debt free.


Ponder over your strengths and see how can utilize them. Create an account on websites, like Upwork, where you can work as a freelancer in a diverse range of industries. And even if you aren’t a technical maestro, it’s absolutely okay. You can still babysit someone, mow yards or take on a cashier job at a local store. So earn some extra money and use it for paying off your debts. And once again, do this through the snowball method which we’ve already discussed.

4. Create a bare bone budget… and stick to it

One of the best and most effective ways to pay off your loans is to cut down all your expenses and spend only on the bare minimum that is required. As tough as this can be, it is all one of the fastest ways to become debt free, and definitely worth a try for improving your financial situation.
You can create a bare bone budget that will allow you to reduce your expenses as much as possible and live only on what is absolutely necessary. Since all of you have different needs, your bare bone budgets will also be different. But one common thing would be the fact that the budget would be devoid of luxuries like eating out or watching movies. Avoid all unnecessary spending, and use the amount you safe for paying off your debts. By the way, when you’re debt free, you can revise your budget and increase your spending, but only as much as your income allows you to. Don’t take on more debt to satisfy your cravings and desires.

5. Sell off items you don’t need

A simple way to get some quick cash that you can use to pay off loans. Go through all your belongings and set aside the things that you really need and use regularly. Now sell off all remaining things and then use the money to become debt free. The easiest way to sell items is probably a garage sale. But if you aren’t allowed to conduct one in your neighborhood, you can sell online on various websites like eBay.

6. See if you can get a lower interest rate on your credit card

What’re the fees and interest rates on your credit card? And how much money goes into them? Generally, these amounts are on the higher side, often eating up a large portion of your spending. But sometimes lenders can budge and revise your rates, if you’ve got a good credit history and have made timely payments. So talk to your credit card provider and try negotiating more favorable terms.

7. Negotiate your bills

Did your credit card provider not agree to lower interest rates? Don’t worry – try and negotiate your other monthly bills now. Yes, you can talk to your utility providers, and they’d usually be more than willing to offer you a better deal. Begin with your satellite TV and cable service provider because they are usually the most eager to negotiate. Prepare yourself for the meeting, find out about rates offered by other service providers and then present your case. What if it doesn’t work out? You’ve still already done your research, right? Switch to a provider who offers a lower fee for a similar package. You can also negotiate your internet bills in a similar manner. And by the way, bundle your internet and TV bills together if you haven’t already done so, because you can get better rates when you choose the same provider for both. Also try your negotiating your medical bills, insurance premiums and rental amounts.

8. Consider transferring balances

Another strategy that you can try out if your credit card provider doesn’t agree on lower rates. Balance transfer options are quite common, and if you do some research, you can even find an option that allows you to avail 0% APR for around 12 or 15 months. There may be a small fee involved, usually around 3% of the transferred amount, but then this is still a good option. In the long run, you do get to save money which you can use for paying off your debts faster.

9. Consolidate your debts

Debt consolidation, credit consolidation or bill consolidation allows you to simplify all your bills by combining all your debts into a single monthly payment. Not only is the loan easier to manage, but you can also get a lower interest rate. The option can be availed for multiple debts, multiple creditors and multiple payments. All these bills are settled through a debt management program, after which you pay a single payment every month for the next 3 to 5 years. When you pay off all your debts with a new single loan, you enjoy several benefits such as lowered monthly expenses, better cash flows, greater savings and reduced stress. Before you sign up for any program or loan, it may be a good idea to discuss all possible debt consolidation options with a financial advisor.

10. Use up your bonuses or raises

Did your employer reward you with a bonus or a raise this year? Or maybe you got a tax refund. Whatever kind of extra money that you get, avoid spending it on anything unnecessary. Instead, use it for your loans, paying more than the minimum amounts.

11. Get rid of your expensive habits

Are any of your habits too expensive and take up a significant portion of your monthly spending? If you’re in debt, you should try and get rid of all your costly habits. Figure out how you’re spending money daily and then evaluate if these purchases are actually worthy or not.
Drinking and smoking are habits that you should definitely quit, not only to reduce your expenses, but also to improve your health. If you eat out frequently, avoid that as well.

12. Avoid using credit cards

When you are aiming at paying off your debts sooner, you should completely stop using credit cards so that you don’t increase the owed amount. Seems hard? Leave your cards at home rather than keeping them in your wallet. If you do have to use them for an emergency, then make sure you pay the full amount the very next time so that no interest is added. Another option could be to use a debit card, which funds the transaction from the amount in your bank account. You’re only using your own money so you don’t add onto your debt.

Now that you’re debt free

Act on our advice, and you’d be able to pay off all your debt. And when you have achieved this goal, what do you do next? Here is what we suggest.

Treat yourself

Because you really deserve it after all those efforts at successfully minimizing your spending to become debt free. So allow yourself to relax, but don’t do anything too lavishly.

Revisit your budget

Until now, you were paying off all your extra money for eliminating your debts, but now that the goal has been achieved, you can utilize the money for something else. Think you’ve been burning yourself off at work? Take a vacation then. Or you could use the money for a home improvement project.

But whatever you do, come up with a proper financial plan. And this plan shouldn’t be based on borrowing more money. Because if that’s the case, there wasn’t any point in becoming debt free.

Increase savings

Since you’re debt free now, you can think about increasing your emergency funds. If your savings accounts are already impressive enough, then maybe you could start saving for a new car or down payment if you live in a rented unit.

Boost up your retirement accounts

How much money have you set aside for retirements so far? Come up with ways to improve your retirement plans. You could either increase your monthly contribution or sign up for a different plan.

Keep in mind that if you increase your contributions by a mere 5% or 10%, they will all add up in the long run, and become significant when you retire.

Consider alternative investments

Because some extra income is always desirable, right? Invest your savings in a new project or venture. You could enter the real estate market, the stock market or any other industry. It all depends on the amount that you’re willing to put in. Whatever you choose, analyze the risks and come up with effective mitigation strategies.

Establish a side business

You can even establish a side business if you have enough time and entrepreneurship skills. Go about it correctly, and if you’re lucky enough, there may not be a need for you to work any longer.

Keep following our blog for more great financial advice.

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