The fastest, easiest way to pay off debt quickly is to funnel as much money as possible toward paying it off. If you're already earning as much as possible and can't get a second job to increase your income, your only other option is to reduce costs and use any extra money coming in to pay off debts.
Step 1
Take stock of your total debt. Tally up all your debts in a spreadsheet. Add a column noting interest rate, penalties you might accrue and penalty fees that might be coming. Write down all debts, even if they're just a few dollars. Organize the debts so the one with the highest interest rate is at the top.
Step 2
Make a list of all your monthly expenses. Include not only the basics, such as mortgage or rent, utilities and credit card payments, but also more variable expenses such as food, transportation and gym memberships. Anything that you spend money for on a regular basis, including magazine subscriptions, morning coffees and medication, should go on the list as well.
Step 3
Find ways to reduce those monthly expenses. Either switch to basic cable or cut off service completely. If you have both a cell phone and a land line, see if you can get rid of one. Cell phone companies will often agree to switch you to a cheaper program if you regularly have leftover minutes at the end of the month. Cancel your gym membership if you don't use it, don't renew magazine subscriptions, and make your own coffee at home instead of buying on the go.
Step 4
Sell everything you don't need or use. If you have exercise equipment or an old bicycle gathering dust in the garage, sell them through Craigslist (see Resources). Small electronics, DVDs and even used clothing can be sold through garage sales or on consignment through second-hand shops. If you have items that are valuable, consider selling them through eBay.
Step 5
Pay the minimum due to all debts and put any extra money you can come up with toward paying off the debt with the highest interest rate. If you have more than one debt with the same high interest, divide your money in equal parts toward those. Once those debts are paid off, direct your money toward the next one on the list.
Step 6
Pay all your bills on time so you don't accrue additional debt. Stop using credit cards and instead set up a budget so you know how much real money you have available every month. If there are bills you simply can't afford to pay right now, call companies and ask for a reduction on your interest rate or a payment plan that fits within your current budget.
Member Comments
debtzing April 12
All good advice - nothing new, but it still works :-)
I'd point out that it will be faster and easier than not having a plan, but it's still not fast and easy. You'll need to work at it, and it will take some time (depending on how far in the hole you are of course).
debtzing April 12
All good advice - nothing earth shattering or new, but it works as well as it always has!
I wouldn't say it's necessarily fast and easy though. It still takes work, willpower and time to get the debt paid off. This just makes it faster and easier than not having a plan ;-)
debtzing April 12
Sorry about the double comment - the first one wasn't showing so I reentered it. Feel free to delete one :-)