Articles, Borrow, Budgeting, Credit Cards, Finance, Getting Out of Debt

How To Pay Off Debt Fast – The 2 Things you Need to Do

Written By: Rick Orford
Reviewed by: Mike Reyes
Last Updated November 1, 2023

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A millennial celebrating after learning how to pay off debt fast

Are you wondering how to pay off debt fast, if you think you have no money? Indeed, in this article, I’ll cover some strategies you can do today to pay off debt, fast.

The best way for Americans to learn how to pay off debt fast, even with no money is by reducing spending, increasing income, and using the left over monthly surplus to pay the debt.

Are you in a far from an ideal financial situation? For example, do you feel like you’re always trying to catch up? If so, you’re not alone.

In the US, total household debt reached $16.9 Trillion in 2022 – including cars, credit cards, mortgages, and other forms of debt. 

It is no wonder that millions of Americans are looking to learn how to pay off debt fast. It’s not impossible to pay down debt fast. It is possible!

That doesn’t mean it has to stay that way. Perhaps it feels a bit like a financial crisis. Or, at least we’ve all been trying to catch up, right?

Becoming debt-free isn’t easy. Plus, becoming financially independent isn’t easy either. Indeed, both take work. But, once you make it a priority, I assure you it gets easier. No matter how bad your debt situation may seem, master two simple levers, and you’ll get yourself back on track. Indeed, you’ll be able to pay off your debt fast. 


Good Debt vs Bad Debt

The next step when learning how to pay off debt fast is to know the difference between good debt, bad debt. And, using that when learning how to pay off debt fast. To be sure, debt on its own isn’t the devil. When used correctly, debt can be a wealth-generating tool that pays you back for a lifetime. But, high-interest debt, i.e. from credit cards, acts in reverse. You see, it keeps you broke.

Here is an example of what someone’s debt load might look like:

 Amount OwingInterest RateMonthly Payment
Credit Card A$10,000.0019.90%$100.00
Credit Card B$4,000.0019.90%$80.00
Credit Card C$5,000.0017%$100.00
Car Loan$17,000.006%$330.00

What about the mortgage?

buying a rental property

Some might say, look, get rid of the mortgage and you’ll save a ton of interest. Yes, but the mortgage is good debt, as it’s secured, i.e. it’s tied to an asset. The interest rate is also very low, making it a cheap source of funds. Also, mortgage debt is good debt as the cheap source of funds allows you to invest your surplus. And, investing your surplus is the key to becoming financially independent! 

Further, since a mortgage is a secured loan, if worst really did come to worst, you could sell your home. Then, pay off the mortgage and hopefully keep any remaining equity.

And the credit cards?

However, you probably can’t say the same about your credit card. Does your credit card come with a 20-25% interest rate?

So what to do? Work to pay off those credit cards as fast as possible. Start with the one with the lowest balance (Credit Card B). Then, when it’s paid, have a little party. And, the monthly payment that you would have applied towards Credit Card B can now go towards Credit Card C. Rinse and repeat.

Does it mean you shouldn’t use a credit card? No. By all means, use a credit card that gives you some nice perks, i.e. credit card points, or cashback. But pay it off every single month, in full! The interest on those cards is just killer, so why not pay it off?

What about the car loan and the mortgage? Sure, if you need the car to earn money, keep it. But pay off that debt, and fast. Certainly, as fast as possible. That car payment could then be used to invest in yourself, in a rental property, a side hustle, or your retirement (stocks).

Lever 1 – Reduce Expenses

Create a Budget and Break it down into Wants & needs

The first step in learning how to pay off your debt fast is to know your monthly income. If your monthly income varies, take an average of the last six months, and adjust as needed. Click here for a downloadable budget that you can fill in.

Decreasing spending is by far the easiest way to generate a monthly surplus. The monthly surplus can then get used to paying off debt. When you reduce your monthly spending, it might feel strange. Sure, you might want to “keep up with the Jones’,” but I assure you, for at least a few months, no one will notice. Not that it even matters!


Needs are fixed expenses like:

  • Mortgage/Rent
  • Car payments
  • Food
  • Insurance (Home, life, health)
  • Credit cards
  • Lines of credit
  • Other debt payments, etc.

You might be surprised I included credit cards and lines of credit. Only the minimum payment needs consideration at this point. Also, you must stop using the credit accounts now! And keep in mind we want to pay them off, not add to the debt.

a millennial making a budget


Start by breaking down your expenses into wants and needs. Indeed, wants are things that are “nice to have”. For example, wants are things like: New clothes, spa treatments, eating (and drinking) out, etc.


  • Cut out the restaurants, and learn to cook at home.
  • Enough of the $5 lattes – make them at home! 
  • Cable / Satellite TV
  • Enough of the 2nd and 3rd car payments – and no, cars are NOT investments! Sell the cars, stick with one, maybe two if you absolutely must.
  • Stop spending on clothes, just for now.
  • Cancel the vacations/holidays, for now.

Lever 2 – Increase Income

Increasing income can be a more difficult thing to do. However, it’s essential to tackle this lever, nonetheless. Further, you might be worried that you can’t earn more money. To be sure, anyone can earn more money. You have to make it a priority.

Consider a side hustle

In the short term, think about starting a side hustle. To be sure, side hustles are a perfect way to (temporarily) increase your income. 

For example, you might consider ride sharing or working online. Indeed, some of the highest paying jobs available online include teaching English, tutoring, or virtual assisting. To be sure, you can do projects on sites like Upwork or Fiverr, or perhaps you might deliver food. 

No, side hustles don’t need to be forever. However, side hustles should be a temporary means to make an extra $1000 a month, or more to pay off debt, only. Otherwise, you’ll be overworking yourself. And, if the point of paying off debt is to become financially independent, then you’ll need to (eventually) enjoy your time! So, aim to have a side hustle just for the amount of time you need to pay off your debts.

Ask for a raise or get a new job

Another way you can increase your income is by asking for a raise. Then, if that doesn’t work, look for a new job that pays more.

What if you want to pay off debt and have no money?

If you’re a compulsive shopper, one way to (quickly) raise some money is to start selling the things you don’t use. For example, do you have a car sitting in the yard that gets rarely used? And, what about some old technology lying around? Whatever it is, chances are there’s a market for it. Even an old iPhone can fetch some good money. Organize the things you haven’t used in a few months, and put them on Craigslist or eBay. Then, use the money to pay off some debt.

Pay off debt by investing

You can invest in stocks, or buy a rental property, or start a small business. Sure, it can be a conundrum if you have no money and wonder how to pay off debt. However, with a little creativity, you’ll be surprised at what you can accomplish. To be sure, the profits from investing can be used to pay down debt.

Debt Payoff Plan

Once your budget is set up, and your debts all listed in order of interest rate, make a plan to pay them off. For example, do you first start paying your student loans, or your credit card?

For sure, your monthly surplus will go toward paying down the debt. But which debt? It depends. To be sure, there are two methods of attacking debt.

To get started, we need to determine the interest rate, and the amount owed (not the monthly payment, but the total amount owed).

In general, your mortgage will likely be your largest loan and will probably come with the lowest interest rate. By contrast, lines of credit, and credit cards will have smaller balances than a mortgage but come at a higher interest rate.

Snowball method – an excellent way to pay off debt, fast

millennials in a snow ball fight after paying down debt

The debt snowball method for reducing debt offers quick wins, but mathematically, is not the fastest. For example, with the snowball method, you organize your debts by amount owning, from highest to lowest. Generally, your mortgage will have the highest balance, while a credit card might have the lowest.

With the debt snowball method, you work to pay off the debt that has the SMALLEST balance off first. Sure, you continue to make your minimum payments to the rest of the creditors. But, the debt that has the SMALLEST balance gets paid off first. Quickly, you’ll have your first win. Then, you work to do the same to your next debt.

Avalanche method for paying off debt

The avalanche method happens to be my favorite way to reduce debt. It’s mathematically the fastest way. However, some people prefer the snowball method as it gives you quicker “wins”. But, in the end, the avalanche method is the fastest.

The debt avalanche method works like this. Remember your list of debt and the interest? With the avalanche method, you’ll aim to pay off the debt with the HIGHEST interest rate first, using your monthly surplus. 

Loans with the highest interest rate often include credit cards and lines of credit. You need to pay the one credit card or line of credit with the highest interest rate. Then, make the minimum payment on all the other debts. Make larger payments on the debt with the highest interest rate using your monthly surplus. Easy!

After you’ve eliminated the debt with the highest interest rate, pat yourself on the back because. You discovered how to get out of a debt spiral.

Rinse and repeat with the next credit account!

Putting it All together

an image of a one hundred dollar bill as part of a debt paying puzzle

To recap: you’ve gotten a handle on what you owe. You know how much is left over at the end of the month. Now, you can start to plan on how to get out of debt fast, regardless if you thought you have no money.

Remember the levers: decrease your expenses and increase your income.

Final Thoughts: How To Pay off Debt Fast

Once you have your budget set up, organized by needs and wants, it’s time to put it into practice. The key to this program is that you stick to paying your debt using your monthly surplus. Day after day, month after month. I promise, if you continue to work the levers, you’ll be able to pay off your debt fast.

The question is: Will you be using the avalanche method or the snowball method when learning how paying off debt fast? Leave a comment below, and let us know!


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