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How to Pay Off Debt

Picture it now (really picture it): Instead of spending all your money on debt payments, you’re building up your savings and paying cash for vacations. No more using your paycheck to pay for the past. You’re enjoying the present and feeling prepared for the future.

Now, that sounds like the good life! Not only is it possible, it’s inevitable if you follow the right plan.

I know because my husband Sam and I paid off $460,000 of debt (yep, you read that right). And every day, I see folks who have gone from being crushed by a mountain of debt to standing on top of it, shouting “We’re debt-free!” (literally).

I’m going to walk you through the best way to pay off debt—step by step—so you can make your debt-free dream a reality!

How to Pay Off Debt

1. Find Out How Much Debt You Have

A lot of us treat our debt like the monster in the closet, keeping the lights off and burying our head under the covers. Look, I know it might be scary to face the truth of your total debt amount, especially if you have no idea what the exact numbers are. But the first step to solving a problem is identifying the problem.

It's time to look that monster straight in the face and take back your power! Because a lot of our fear is in the unknown. But once you know your debt numbers, you can do something about it.

So, log in to all your debt accounts. I’m talking about all of them (credit cards, student loans, car loans—debt is any money you owe to anyone). Then, write down your current balances and interest rates. You can also check your credit report if you have no clue what types of debt you have.

Next, plug those numbers into our Debt Snowball Calculator below to get an idea of your current payoff timeline. And listen, don’t get discouraged—this is just the first step. I’ll show you how pay off your debt in record time, so keep reading!

2. Get on a Budget

You can’t get out of debt without making a budget. Period.

zero-based budget is the best way to make a plan for every dollar of your paycheck. And to be honest, a budget is like blood work—it reveals all. Your budget will show you where your problems lie. It’ll show you where you’re spending your money and (more importantly) where to cut back so you can throw more money at your debt.

And listen, budgeting isn’t some punishment for being bad with money. Think of it as custom organization for your money. Budgets are bougie! Because not only does a budget give you the freedom to decide how you spend your money, but it also helps you find more money! Who wouldn’t want that?

The free EveryDollar budgeting app makes it super easy to create your budget and track your spending every single month. EveryDollar played a huge role in helping us pay off debt—and it can do the same for you.

Save more. Spend better. Budget confidently.

Get EveryDollar: the free app that makes creating—and keeping—a budget simple. (Yes, please.)

Start EveryDollar for Free

3. Use the Debt Snowball Method

There are a lot of debt-payoff strategies out there, but trust and believe the best way to pay off debt is with the debt snowball method. Here's how it works:

  • Put all your debts in order from smallest to largest, ignoring the interest rates.
  • Make minimum payments on all your debts except the smallest one (trust me, you want to keep everything current so the debt collectors stay out of your business).
  • Attack your smallest debt with all the extra money you can get (this includes the money you freed up when you were budgeting, but I’ve got some more ideas in the section below.)
  • Once your smallest debt is gone, take that payment (and any extra money) and throw it onto the next-smallest debt until it’s paid off too.
  • Repeat until every single debt is gone. Whew, I’m getting hype just thinking about it!

If you’re going to get rid of your debt once and for all, you need to feel like you’re making progress—that’s why the debt snowball works. Like a snowball rolling down a hill, the amount you’re paying on your debt grows in size and gains momentum with every debt you pay off.

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Pay off debt fast and save more money with Financial Peace University.

Okay, so I know there are a lot of people out there who say you should pay off the debt with the highest interest rate first (aka the debt avalanche method). That math makes sense on the surface. But I need you to understand: Paying off debt is about more than just the math—it’s about experiencing the motivation you need to keep going.

It worked for me, and I’ve seen it work for so many others. People who use the debt snowball method have a greater likelihood of paying off all their debt because they experience small wins early and often, which keeps them going till the end!

And it usually only takes people between 18–24 months to pay off all their debt with the debt snowball. Two years? That’s a drop in the bucket! A couple years of intensity for decades of freedom? Worth it!

Tips for How to Pay Off Debt Faster

Now, in my case, it took seven and a half years for my husband and I to pay off our debt ($460,000 is . . . different). But during that time, I picked up some tips to help you speed up your own debt payoff.

Break Up With Debt

You have to draw a line in the sand and decide that you’re done with debt. Matter of fact, go ahead and decide that right now. You can’t solve a problem while continuing to create it.

I’m talking no more swiping that credit card or taking out personal loans for things you can’t pay cash for. Those habits have gotten you where you are now, and they won’t help you get out. If you want something different, you have to do something different.

Use the Envelope System

The cash envelope system (aka cash stuffing) is a great way to help you get your spending under control and stick to your debt payoff goal.

Basically, you take the amount you’ve budgeted for certain categories (like groceries or clothing) and stick it in labeled envelopes. Your goal is to only spend the cash you’ve got in each envelope for the month. This is the kind of habit that will hold you accountable and keep you on track.

Meal Plan

Food is usually our biggest budget buster. But meal planning can help you save more each month.

And listen, it doesn’t have to be this overwhelming chore that takes up your whole weekend. Just choose a couple of budget-friendly meals, try to use ingredients you already have, and decide which nights you’re cooking and which nights you’ll have leftovers. Easy peasy.

Sell Stuff

One person’s trash is another person’s treasure. Dig through your kids’ rooms and search through the black hole of your closet to find things you can part with. Then sell your stuff online to make some quick cash.

Y’all, I once sold my bath mats on Craigslist! I was shook—folks will buy anything for the right price. Or if you'd prefer to sell your stuff the old-fashioned way, host a garage sale.

Get a Part-Time Job

Find a side hustle or two to earn some extra cash on the side. Become a driver for Lyft or Uber. Deliver pizzas. Walk dogs for Rover or Wag.  

Sam and I did everything from hosting jet ski tours to working at a vinyl tint and lettering garage when we were paying off debt. Whatever you decide, do something to get more money coming in every month so you can pay off your debt quicker—and celebrate sooner!

Pause Investing

I didn’t stutter. Stop contributing to your retirement investments—and that includes your 401(k). Why? Because right now, you want to throw everything you can at your debt so you can pay it off faster.

Don’t worry, it’s only temporary. You can start investing again once you’ve paid off your debt and saved up a fully funded emergency fund. By then, you’ll have enough money freed up that you can put even more of your income toward retirement. I did this myself and, trust me, this kind of focus works!

Ditch Your Car Payment

Right now, the average monthly payment for a new car is $738.1 That’s a hot mess! Think about how much faster you could pay off debt if you traded in your expensive ride for a used car you can actually afford. Then, you could throw that car payment at your debt snowball every month—instead of out the window. And later, when you’re debt-free, you can save up to buy your dream car in cash!

When Sam and I were getting out of debt, we went from being a two-car family to a one-car family. Sure, it took a lot of extra coordination, but you’d be surprised how this really can help you kiss that debt goodbye.

Take Financial Peace University

Without the right plan, it’s hard to make progress—and even harder to keep yourself from going back into debt later.

Financial Peace University (FPU) will teach you how to pay off debt and stay out of debt. FPU has helped millions of people take control of their money and go after their goals with confidence. The principles taught in this class changed my life, my marriage and my money for the better. And they can change yours too! Find an FPU class that works for you.

I know the road to debt freedom can be tough. But I know it’s possible. If my husband and I could do it, I promise, you can too.

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Jade Warshaw

About the author

Jade Warshaw

Jade Warshaw is a personal finance coach, bestselling author of Money’s Not a Math Problem, and regular co-host on The Ramsey Show, the second-largest talk radio show in America. Jade and her husband paid off nearly half a million dollars of debt, and now she’s a six-figure debt elimination expert who uses her journey to help others get out of debt and take control of their money. She’s appeared on CNBC, Fox News and Cheddar News and been featured in Fortune and POLITICO magazines. Through her social content, recent book, syndicated columns and speaking events, Jade is on a mission to change the typical American money mindset. Learn More.

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