How to Pay Off Debt Faster Than Ever
If you’ve got debt, you’re not alone. And if debt stresses you out, you’re also not alone. Almost three out of four Americans say they’re burdened with debt.1 So, yeah—debt is common. But you don’t have to be part of that majority if you don’t want to be. You can get ahead of your money instead of feeling behind. And with these six tips, you can start paying off your debt faster than ever.
1. Write down all your debt.
Some people want to ignore this step more than anything. But listen: Ignoring your debt doesn’t make it go away.
Don’t feel bad if this step scares you. But don’t let that fear stop you from moving forward. It’s time to look every last dollar of debt in the eye and get real with it.
You do that by writing down every single debt you have. Name them. Write down how much you owe. And write down each minimum monthly payment. Then move to tip two.
2. Make a budget.
Where will you find the money to pay off all that debt? It’s time to budget.
Budgets can seem intimidating to new budgeters. And even the pros sometimes have trouble keeping track of every dollar they spend—but it’s an absolute must for a debt-free life. With EveryDollar, you can budget from your desktop or your phone with our mobile app.
If you already budget regularly, that’s awesome! If you don’t have a budget, now’s the perfect time to get started. In either case, keep reading. We’ve got more to share.
3. Save a $1,000 safety net against debt.
You’re determined to leave debt behind for good, and you’ve got a budget. Woo-hoo! Now, the next step is key. You need to save up $1,000. We call this a starter emergency fund—or Baby Step 1 of our seven-step plan for taking control of your money. Pay only minimum payments on your debt until you get this $1,000 saved.
What this money does isn’t magic. It’s logic. But it’s bound to feel magical. When you have this safety net for life’s curve balls (because you know they’ll come), it means you don't have to turn back to debt. You have cash ready to go. That’s the logic.
The magic is the feeling you get when you pay cash. You have the money you need for emergencies. You don’t have to rely on someone else or something else to cover them.
4. Create a debt payoff plan.
So, you’ve identified all your debt, and you’ve got that savings safety net. Now it’s time to plan your attack for paying off your debt (which we call Baby Step 2).
First, get back into your budget. Tighten your spending, cut extras, and free up money so you can get debt out of your life forever.
Second, you need a debt payoff plan—like the debt snowball method. Why the debt snowball? Because it freaking works! Here’s how you do it: Find your smallest debt. Pay minimum payments on everything else while you throw all you’ve got at that small one. When it’s gone, move all the money you were throwing at it to the next-smallest debt. Keep doing this, gaining momentum all the way, until you become debt-free. You can even use this handy printout to get started.
Forget about those interest rates for right now. Mathematically, you may think you should go for the highest interest rates first. But this isn’t about mathematical formulas. This is about motivation.
The debt snowball is successful because it builds on small wins. When you pay off the smallest debt first, you see progress right away and stay motivated until you've paid off every single debt.
Be intense about tracking and tightening your spending—like a gazelle sprinting for all it’s worth from becoming a cheetah’s lunch. Because a gazelle can outrun the fastest land animal when it’s got the right motivation.
Don’t stop running from debt—paying it off hard-core—until you’re free. Until it’s out of your life forever.
This is a great time to use the BabySteps app inside Ramsey+. You get to throw virtual snowballs at your debt until it's 100% gone. Forever. This awesome, interactive tool helps you track and attack your debt payoff plan.
5. Never go back to debt.
To most people, living without debt feels impossible. Everyone has a car loan. You can’t get a degree without debt. Credit cards are necessary to manage money. You’ve most likely heard these things. Maybe you’ve even said these things. But these things are not true!
The truth is this: You can pay cash for a car, graduate with zero student loans, and get by in life just fine (even better, actually!) without credit cards.
Move forward with this truth. Keep paying off that debt, and once you’re debt-free, never go back. Period.
6. Celebrate every win along the way.
Beating debt is a mind game—and to be honest, it’s a heart game too. You need both your brain and your heart on board. And you need to reward both a little along the way.
Now, we don’t mean you should book a luxury bungalow on a private island to reward yourself for paying off that $150 personal loan to your Uncle Scott. But your favorite scented candle, a fancy coffee drink (don’t hold the foam, barista—double it!), or a pizza night with the family—those are great ways to celebrate any win during Baby Step 2. It’s a reminder to yourself (and everyone who’s in the debt payoff game with you) that the debt won’t win. You will.
If you want to crush these tips even faster, try taking the journey with Ramsey+. This all-access membership gives you the EveryDollar budgeting tool to track your spending and the BabySteps goal tracking app to crush your debt. And while some budget products have a hidden agenda to drag you further into debt, that’s not us. We want you to win with money. Always. So, give Ramsey+ a free try today.
Hey. What do you have to lose? Just debt. Sounds perfect to us.