How to Aggressively Pay Off Debt

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Last Updated: 05/20/2022

Learn how to aggressively pay off credit card debt and other obligations.

How To Eliminate Debt Fast

Being in debt can prevent you from reaching financial goals like buying a house or retirement. The stress and anxiety of having too many debt obligations take an emotional and physical toll.

It doesn’t matter if it’s so-called good debt, such as a mortgage or medical school debt, or bad debt like high-interest credit card debt, payday loans, or other consumer debts. Being in debt often leads to struggle and financial hardship.

Here are 12 ways you can pay off debt aggressively:

1. Always Pay More Than the Minimum Payment

Paying only the minimum on credit cards and other debts will keep your account in good shape and prevent you from paying late fees. That’s all it does, though.

Making only the minimum payment every month will cost you hundreds and possibly thousands of dollars. Paying just the minimum also keeps you in debt much longer.

2. Make Budget Cuts

Review your budget. Look for bad spending habits and budget categories or expenses you can lower or eliminate.

By revising your spending plan, you might be able to free up some additional cash. Use that money for making extra payments or paying as much as you can toward your debt.

You might find that the only ways to lower your monthly expenses involve making short-term sacrifices or lifestyle changes. Reaching your goal of getting out of debt makes even huge sacrifices worth it in the long term.

3. Try a No-Spend Month

Try a no-spend month if you want to free up money relatively quickly. For thirty days, don’t spend any money you don’t have to.

Pay your mortgage or rent, buy food, and pay your living expenses, but eliminate all discretionary spending. No restaurant meals,

A no-spend month is one of the more creative ways to pay off debt faster. All the money you don’t use for unnecessary spending can go toward your debts. If you can extend it out for a longer period of time, you could pay off your debt much faster.

4. Increase Your Income

Figuring out how to pay off debt aggressively involves finding extra cash for your monthly debt payments. You will eventually reach a point where you can’t trim any more from your monthly budget.

Increasing your monthly income might be your fastest way to pay off credit card debt, student loans, or other creditors. You could ask for a raise, pick up extra shifts, get a second job, freelance on the side, or try something like driving for DoorDash in your spare time.

Earning extra income gives you an influx of cash to use on your debt payoff journey.

5. Try the Debt Avalanche Method

The debt avalanche method is a debt repayment strategy that helps you pay less interest. It works like this:

Every month, make the minimum monthly payments on all your debts
Circle back to the debt with the highest interest rate and put extra money toward it until you pay it off
Continue the process with the next highest interest rate until you achieve debt freedom

By paying off your high-interest credit cards and loans first, you could save a lot of money in interest.

6. Use the Debt Snowball Method

The debt snowball method, popularized by personal finance expert Dave Ramsey, works similarly to the debt avalanche. With the debt snowball, you make the minimum payments but put extra money toward the debt with the lowest balance.

Getting rid of high-interest debt first makes more sense financially. It’s difficult to stay motivated when progress is slow, however. That is especially true if you have high interest rates on high credit card balances.

You will get small wins sooner with the debt snowball, which can provide the motivation to stick to your plan. Paying off your lowest balance first and your largest debts later will cost you money in interest. The encouragement from zeroing out accounts faster may be worth it to you.

7. Put Any Windfalls Toward Debt

If you suddenly come into some money, consider applying it all to your debt balance. You can’t base your debt payoff strategy on an unexpected windfall, but using a bonus, tax refund, or third paycheck during a three paycheck month helps. You’ll have much more financial freedom if you can pay off all your debts at once with a windfall.

8. Try Negotiating With Creditors

A lower interest rate would help you get out of debt faster. Why not ask?

You can talk to your creditor and ask about lowering your interest rate. With credit card companies, you can explain that you’re looking into other cards, thinking about transferring your balance to a lower-interest card, or considering closing your account. If that doesn’t work, you can try calling back and speaking with another person at a different time.

9. Get a Balance Transfer Credit Card

If you have a good credit score, you might want to look into getting a balance transfer card that comes with a 0% interest rate for a set period. During this introductory period, which could be up to 21 months, you pay no interest on your transferred balance.

If you transfer the balances from all your credit card accounts to one card, you can simplify your life by not having multiple credit card payments. You’ll also save money, provided you pay off the entire balance before the intro period expires.

You have to be disciplined and responsible if your debt repayment plan involves transferring your balances and paying off your high-interest credit card debt before interest kicks in.

10. Take Out a Debt Consolidation Loan

Taking out a debt consolidation loan with a lower interest rate than your credit cards is another option. You combine multiple balances into one loan with one fixed monthly payment. You can save on interest and possibly pay off your debts faster.

If you are overwhelmed with medical debt, auto loans, credit card debt, and other types of debt, consolidation can work well. If overspending and not having a financial plan got you deep in debt, consolidating your debt might not be a good idea.

Address the underlying issue or habit first. Otherwise, a consolidation loan could put you back where you started or make you worse off.

11. Consider a Home Equity Loan

Home equity loans generally have low interest rates. They could be suitable for homeowners who could save money by refinancing high-interest debts at a lower rate. If you have significant equity available in your home, it’s worth considering.

Using home equity is not the best choice for everyone, though. Your home serves as collateral. You could lose your home and ruin your financial future if you fall behind.

Think about other aggressive debt repayment strategies or debt consolidation options if you don’t want to risk foreclosure.

12. Borrow From Friends or Family

If you have family or friends with the means, borrowing from them could be the answer if they are willing. You’ll almost certainly get a better interest rate, but money and relationships don’t always mix well. Getting a loan from someone close to you could mean the end of the relationship if things don’t go as planned.

If you do get a loan from a friend or family member, put it in writing. Make sure both sides are in complete agreement on the terms.

Can You Pay Off Debt Too Fast?

The answer in most cases is no. Paying off debt as fast as you can saves you money in interest and keeps your credit in good standing. However, you might be paying off debt too fast if your debt payoff strategy does not leave room for things like basic expenses or building an emergency fund.

There are other factors to consider. It depends on the type of debt you have, interest rates, your financial goals, investment returns, and your age.

Is It Better To Pay Off Debt Fast or Save Money?

Prioritize paying off debt while making small contributions to your savings. You want to get out of debt fast, but making emergency savings a priority is important in case unexpected expenses arise. Once you are out of debt, you can save money aggressively with the money you used to put toward debt.