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Debt doesn't only cause undue financial stress. It can also make everyday living less enjoyable when a significant portion of each paycheck goes toward debt repayment. Paying off debt faster can undoubtedly save you money, but it will also allow you to focus on your broader financial goals sooner.

Below, you'll find seven ways to quickly pay off what you owe. If you want to rid yourself of your debt burden as quickly as possible, we also provide three additional tips on how to pay off debt faster.

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7 ways to pay off debt fast

Getting out of debt usually takes a slow, steady payoff approach. However, if you'd rather accelerate your debt payoff timeline, here are seven ways to do it.

1. Pay more than the minimum payment every month

Minimum payments on revolving debt, such as credit cards, typically cover only a tiny fraction of the debt principal, allowing interest to accumulate rapidly. Suppose you have a $5,000 credit card balance with a 20.99% annual percentage rate (APR) and a $138 minimum payment. It'll take you almost five years to pay off that card. However, if you can put $300 each month toward your balance, you'll have it paid off in about 20 months. You’ll also save about $2,000 in interest.

Making larger payments, which puts more toward the principal, means less interest will be tacked onto your loan balance each month. If you're primarily struggling with credit card bills, learn more about how to pay off credit card debt.

You can pay more than the minimum on most loans, but you must determine how extra money gets credited to your home, car and student loans. You want the extra money credited to the principal balance and not toward your next payment. It's important to note that some loans, such as personal loans, can have prepayment penalties. Most lenders don't penalize you for extra payments or early payoff, but you should check your loan terms before prepaying.

2. Tackle high-interest debts with the avalanche method

Two popular and frequently debated debt repayment strategies are the debt snowball and the debt avalanche. With the debt snowball method, you pay off your debts from smallest to largest balance. Those who need quick wins to stay motivated may prefer this method. It can be effective, but it isn't the fastest and it may not not wipe out your highest-interest debts more quickly. If you want to pay off credit card debt speedily, use the avalanche method.

The debt avalanche has you pay off debts in order of interest rate, starting with the debt with the highest interest rate. You'll pay the minimum on every debt except that highest-rate debt. Any extra money you have beyond what you need for the minimums will go to this one debt. Once you pay off your highest-rate debt, you'll tackle the debt with the next-highest rate. Using the debt avalanche method rather than the debt snowball means you'll accrue less interest so you can pay off your debt faster while owing less in the long term.

3. Set up a payment plan

To set up a debt payment plan using the avalanche method:

  1. List out your loans and credit cards, including their debt balances, APRs and minimum payments, in a spreadsheet program.
  2. Prioritize your debts, ordering them from high to low interest.
  3. Check your budget to determine how much you can put toward monthly debt payments. Be sure you're able to make all minimum payments and determine how much extra you'll have to reallocate to your highest-interest loan.
  4. Create a debt payoff plan that outlines how much you expect to pay every month. You can also search online for a debt avalanche calculator that calculates your payoff plan. Some calculators can help you create a spreadsheet.

With this plan, you can start budgeting accordingly. Most importantly, stick to your payment plan and track your progress. Unless your highest-interest debt is also your smallest, you may not have any quick initial payoff wins to motivate you. However, by monitoring your plan progress, you'll see that your efforts are making a significant difference.

If you're juggling a lot of different debts, you may want to consider debt consolidation. In some cases, consolidating just part of your debt can save you money and make it easier to manage your payment plan. If you're considering this option, take a look at our picks for the best debt consolidation loans. If you want to pay off credit card debt fast without a loan, look into a credit card balance transfer and these picks for the best balance transfer credit cards.

4. Put extra money toward paying off your debts

The more money you can put toward your highest-interest debt each month, the quicker you'll get out of debt.

Start by taking a look at your budget and current expenses. Many of these do not have much wiggle room, but you may be able to find ways to trim them. For instance, you might adjust your thermostat by a few degrees, plan meals around sales items in the weekly grocery flyer or shop for cheaper auto insurance. Even if you can reduce some of your essential bills by just 5% to 10%, you'll have that much more to use toward paying down debt. To cut some fat from your budget, consider some money-saving hacks.

Also, plan on any additional money you may receive going toward debt. Whether it's a bonus at work or a rebate on your contact lenses, earmark it to use for debt repayment.

5. Start a side hustle

Coming up with the extra money to use for debt repayment can be a challenge. You can trim your budget only so much. A second job with set hours — even just part-time — may not be a possible source of extra income if you work full-time. A side gig might be much easier to work into a busy schedule. Most people have a skill or the time to provide some service that others are willing to pay for.

Find a side hustle that can earn you money now rather than something you need to build first. For instance, if you’re a good writer consider freelancing rather than creating a blog. You could also make extra money as a rideshare driver, or deliver takeout food or groceries. Look on a site such as TaskRabbit or other side hustle platforms to see how others earn extra cash.

6. Limit unnecessary spending

Another way to find extra money for paying off debts is to cut unnecessary spending, also called discretionary spending. Any spending that isn't essential is discretionary. Some discretionary spending is quite apparent: concert tickets, video games or spa visits. However, some spending may be harder to define.

Perhaps you consider one or two streaming services essential, but more than that — especially if you don’t use them daily — could be considered discretionary. You need to eat, but frequent eating out or ordering in is in fact nonessential spending. When avoiding discretionary spending becomes challenging or monotonous, remind yourself that it's only temporary.

7. Don't let your debt hit collections

If you fall way behind on loan payments or default, your debt may go to collection. Collection can be costly. Late payments will typically trigger higher interest rates and fees. However, you could also face collection agency fees and legal costs if your creditor passes your debt on to a collection agency or decides to pursue legal action against you. You could experience wage garnishment, and your credit score will also take a significant hit, making it harder to obtain another line of credit for several years.

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The benefits of paying off debt fast

Sticking to a tight budget for an extended time isn't easy. Focusing on the following benefits can help keep you stay motivated and working toward your payoff goal. When you feel like extending your debt payoff date or indulging in discretionary expenses rather than putting the money toward your debt, remind yourself of these advantages.

You'll pay less in interest and more on principal

On an accelerated debt repayment schedule, you put a much bigger dent in your loan principal each month and accrue far less interest. Again, consider that $5,000 credit card balance with the 20.99% APR and $138 monthly minimum payment. If you make only the minimum payment each month, you'll pay nearly $3,000 in interest to pay off the card. By putting $300 per month toward that principal balance, you'll pay a little less than $1,000 in interest, saving about $2,000.

If there is a secret to how to get out of credit card debt fast, it's putting as much as you can toward your debt principal. Learn more about what it'll take to pay off your credit card if you're tired of carrying that high credit card balance.

It'll improve your payment history on your credit report

Making on-time debt payments is essential for maintaining or improving your credit score. However, paying down debt fast can also show lenders you're responsible with credit beyond making timely payments. Lenders are more likely to extend credit to you and give you a better interest rate if you have a strong repayment history.

It can help you gain access to more credit opportunities

The faster you pay down your debt, the quicker your debt-to-income ratio will improve, and your credit score will increase. Your debt-to-income ratio compares how much money you owe for debt repayment each month to how much you earn. The healthier your debt-to-income ratio, the more credit opportunities you may have available to you. Not only will you possibly qualify for better interest rates, but you also may qualify for a wider variety of loans and larger loans, making it easier to buy a home or a car.

Tips for paying off debt faster

The seven steps above can make paying off debt faster and much easier. However, if you want to accelerate your debt payoff timetable even more, consider these additional three ways to pay off debt faster.

Don't take on new debts

Every time you borrow more money or add to your outstanding balance, you're prolonging the time it will take to get out of debt, not to mention adding to the cost. Commit to avoiding new debt unless necessary. The only borrowing exception might be for debt consolidation, since it can help you pay off debt faster.

Consider working with a debt relief company

Another option is to consider working with a debt relief company. Debt consolidation is one form of debt relief. However, other forms include:

  • An interest rate reduction
  • A reduction in the amount of principal you owe
  • Changes to your loan terms to make your monthly payment more manageable

Negotiating with your creditors is necessary to make some of these things happen. A debt relief company can create an affordable debt management plan based on your current budget. They may also work with your creditors to get your monthly payments to fit within the plan.

Build an emergency fund

Even the best-laid debt repayment plan can be derailed if you have to use your credit card to pay for a large, unexpected expense. An emergency fund will allow you to cover that big car repair or pay for that tooth filling without adding significant interest to your debt. An emergency fund of three to six months is ideal, but even if you only have $500 to $1,000 saved, it can help protect your debt payoff progress.

How fast does your credit score go up after paying debt?

According to Equifax, one of the three major credit reporting agencies, creditors usually report new information about your credit score every 30 to 45 days. As a result, it could take more than 45 days to see a change in your credit score after paying off your debt.

Also, Equifax notes that your credit score could drop a little when you pay off a loan, depending on how it impacts your credit utilization ratio and credit mix. However, in the long run, paying off debt is still more beneficial than carrying it.

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Summary: How to pay off your debt faster

Knowing how to get out of debt quickly is one thing. Doing it and becoming debt free is another. By following the seven tips outlined above, you can significantly reduce the time and cost of getting out of debt.

If you want to get out of debt even faster, avoid taking on any new debt and build an emergency fund so you don't have to borrow to cover those unexpected expenses. You also may want to look into working with a debt relief company if you think it might help you get out of debt faster than attempting it on your own.

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