10 Strategies For Paying Off Debt

10 Strategies For Paying Off Debt

I’ll be real with you guys.  I hate debt.  To be fair, I hate certain types of debt more than others.  For instance, I hate credit card, car loan, and student loan debt more than mortgage debt.  I think these feelings come from the fact that I’ve spent the majority of my adult life living in debt.  For instance, I signed up for a credit card my first week in college.  After college, I financed a new car even though I still had a balance on my original credit card.  Although I was able to pay off my car loan in four years, I was still carrying around high interest credit card debt.  Enter medical school and even more student loan debt.  Fast forward to today and I will have lived 20 years with some type of debt burden.  Needless to say, I’ll be happy when I no longer owe anyone else money.  The following are 10 strategies that you can use, in no particular order, to help pay off debt.

Stop The Bleeding

Simply put, stop spending borrowed money.  Specifically, stop spending HIGH INTEREST borrowed money.  I’m looking at you, credit cards.  Unless you get a handle on your spending habits, you won’t make much progress when it comes to paying down your debts.  It’s like bailing water out of a boat that has sprung multiple leaks; you’re doing all this work but getting nowhere fast.  One thing that you can do to help curb credit card spending is to leave your card at home and pay with cash or a debit card.  That way you’ll actually see the money you spend rather than have it charged away to some magical, unseen place.

Take Stock of Your Liabilities

Take a moment to write down all of your debts, their associated monthly payments, their balances, and their interest rates.  This will give you a sense of your entire debt picture and will be good information to know as you formulate your plan to pay off your debt.

Use Debt To Pay Off Debt

While I personally am not a fan of taking on more debt to pay off debt, this can be a viable option when it comes to paying less in interest.  For example, there are a lot of credit cards that offer $0 balance transfer fees and introductory 0% APR on all transfers.  This can be a good way to move your credit card balance from a high interest rate to a low/zero interest rate card.  For homeowners with built up equity, you can use an equity loan or line of credit to pay off high interest debt.  The reason why I am not a fan of these strategies is that they can be dangerous.  It can be tempting to transfer a balance from credit card A to credit card B, then go back to using credit card A as you’ll have no balance on it.  Also, if you’re unable to pay off the balance transfer before the introductory period is over, you’re now stuck with a high interest credit card balance and essentially back to square one.  Same goes for the HEL/HELOC.  The key in these scenarios is to pay off the new, lower interest rate debt without taking on any more debt in the process.

Trim Your Budget

If everyone sat down and wrote out their monthly income and expenses, I’m sure they would find areas where they could cut back and save some extra money.  In fact, if you only spend money on needs rather than wants, I’m sure you’ll uncover even more savings than you thought possible.  More importantly, working out and sticking to a budget can help you develop good financial habits.  Eventually, you won’t need a budget at all as spending less and saving more will have become second nature.

Make More Money

Let’s face it, the more cash flow you have every month, the more you can allocate to paying off debt.  There are a number of ways to earn some extra cash.  You can declutter and sell some of your stuff on eBay.  Have a creative side?  Maybe you can sell some of your creations on Etsy.  Random Gal and I actually dog-sit through Rover.com from time to time.  One month we were able to earn an extra $200 just by doing stuff that we already do with our Random Dog.

Pay More Than The Minimum

This is an obvious strategy, but one that many don’t follow.  Every additional payment helps, both in paying off your debt sooner and paying less in interest.  In fact, you can think of those extra payments as generating a guaranteed return on your money.  For instance, if you pay off $500 worth of a credit card balance at 15%, you’ll essentially save $75 a year on interest.  What’s more, that savings is guaranteed simply by making your payments, and the more you pay, the more interest you’ll save.  It can be hard to see this as a “return on investment” since you don’t receive any money, such as in dividends or capital gains.  One way to see the effects of making extra payments is to track your net worth.  Much like investing, paying off debt results in your net worth going UP.

Pay Off High Interest Debt First – Debt Avalanche

If you’re faced with multiple debts that need to be paid, it can be tough to figure out which one to tackle first.  One method, known as the debt avalanche, suggests that you allot any extra payments to the debt with the highest interest rate while making minimum payments on the remaining debt.  Once the debt with the highest interest is paid off, you funnel the extra payments to the debt with the second highest interest, and so on and so forth.  The main advantage of using this method is that it minimizes the interest that you pay.  One potential drawback is if your highest interest rate debt is also your largest, it can feel like you’re not making much progress in terms of paying off your debt, and you might become frustrated and quit altogether.

Pay Off The Smallest Balance First – Debt Snowball

Another method, known as the debt snowball, says that you make extra payments toward your smallest debt first while making minimum payments on the others.  Once that one is paid off, you then progress to the second smallest debt while leaving the debt with the largest balance for last.  Dave Ramsey is a big proponent of the debt snowball method, and I can see why.  The thought is that as you pay off your smaller debts, you generate momentum and motivation to continue paying off your remaining debts.  I can see how this method would work on a psychological level.  After all, it does feel good when you pay off a debt or loan in full.

Stick With Your Plan

Whatever plan you choose, whether it’s the debt avalanche method, the debt snowball method, or your own personal plan, the most important thing is to stick with it.  Otherwise you’re just short-changing your efforts.  For instance, if you use the debt avalanche or snowball method, you need to funnel ALL of the extra payments to your debts as you go along.  The plan won’t work as well if you divert a portion of those extra payments toward other purchases.


So there you have it, 10 strategies that I think can be helpful in paying off debt.  What do you think?  Do you prefer one debt payoff method over another?  Any other strategies that have worked for you?  Feel free to share and comment below.



10 thoughts on “10 Strategies For Paying Off Debt

  1. I hate debt and I think the budget is a big piece of the puzzle for me. I’m not much of a budgeter/tracker, but I have been able to drastically cut down the big costs most people experience such as housing and cars.


    1. I agree with you in that having a budget is pretty important, especially if you’re trying to pay off your debt. I didn’t use one when I had the college credit card debt and the new car loan. I really didn’t know what I was doing back then. That’s great that you don’t have big car or housing costs. Those can definitely have an effect on one’s cash flow. Thanks for stopping by!!


  2. I’m a huge fan of the debt snowball just from the psychological point of view alone. Having those wins along the way keeps me motivated more so than watching the total balance drop.

    On paper I know it makes more sense to do the debt avalanche but I haven’t been able to convince myself to follow it 🙂

    Thanks for the excellent write up!!!


    1. Yeah I like the debt snowball, too. I actually used that method for some of my private student loans. It felt good to have a loan paid in full, and it definitely gave me more motivation to continue paying off the remaining loans aggressively. Thanks for stopping by!

      Liked by 1 person

  3. Argh I hate debt too! I cannot wait to finally have my debt paid off and never owe a penny elsewhere again! For me, sticking to a budget has been key but also setting short term goals keeps me motivated. I completed a no shopping month, and I hit my first goal for my savings, and these little milestones keep my money habits in check. It takes a while but you are right when you say you can’t let your debt bleed or continue to spend borrowed money. Great post!


    1. Thanks for the comment!! Congrats on achieving your goals! Staying motivated is pretty important, especially when it comes to paying off debt. A lot of times we have to make lifestyle and spending adjustments that can be painful, so any little “win” that keeps you going forward can be really helpful. Thanks for stopping by!


  4. Great post. I loved all the strategies especially paying down the higher interest debt first.

    That being said…I do have a car loan from a new car I purchased last year, but the interest rate is very low (1.49%), so I don’t feel as bad having it. Although it is weird to finally have debt on my books now haha!


    1. Thanks for stopping by. That’s a great rate on a car loan! It’s hard to pay that down too aggressively given you can definitely earn a better return by investing the extra payments instead. Thanks for the comment!


  5. The types of debt that I hate are all the debt that I currently have sadly. Credit card debt is such a huge headache but what has really helped me out is the 0% introductory rates. I was able to pay off three of my cards this way and I am currently tackling my last this way as well.


    1. Thanks for the comment! Yeah, credit cards are a killer given their high interest rates. Using 0% balance transfers can be a great way to get your debt under control and save on interest payments. Sounds like you did well using this strategy!! Thanks for stopping by, and good luck on your debt free journey! Happy New Year!

      Liked by 1 person

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