Debt – a four-letter word dreaded by so many. Currently, the average household credit card debt (of those that carry a credit card) is over $15,000, according to CreditCards.com. This doesn’t account for car loans, student loans, personal loans or business loans, which we all know can massively contribute to our overall debt.
Note: This post may contain affiliate links. If you click on them, we may be compensated.
After graduating college, I started racking up credit card debt just like everyone else that I knew. I purchased a new Mac computer, went on a few vacations and relied on it for restaurants and happy hours when I was low on money. Fast-forward five years, and I was sitting at more than $4,000 in credit card debt. My soon-to-be husband, who had around $3,500 in credit card debt, and I decided to start getting serious about paying it off.
4 Ways to Pay Off Your Debt Faster
If you have multiple credit cards, Dave Ramsey (financial expert and author of The Total Money Makeover) advises paying off the one with the smallest balance first, and then applying that payment to the next one and so on and so forth. He refers to this as the ‘debt snowball plan.’ My husband and I each only had one credit card (with very high balances), so we weren’t necessarily going to use the snowball plan, but instead wanted to pay off our credit cards in the shortest amount of time possible.
1. Use bonuses or raises to pay off debt
During this time, I was working at a job where we got a quarterly commission. My first commission was around $1,200 after taxes and it went straight to my credit card. While it was tempting to want to put $800 towards my debt and spend the rest, I knew that would prolong me from reaching my goal sooner. If you’re in debt and receive any type of bonus, commissions check or raise, put the entire amount towards your debt.
2. Earn extra income
Perhaps you work at a job that where bonuses don’t exist and you don’t expect to see a raise any time soon. Instead of waiting for that to happen, focus on bringing in extra income in another way. My husband works for himself and decided he was going to work on Saturdays until his credit card was paid off. Other ideas include picking up a part-time job, babysitting or petsitting on weekends, renting your space on Airbnb, freelance writing on the side or doing manual labor from jobs you find on Craigslist (such as mowing someone’s lawn, helping someone move or cleaning someone’s home), or even taking online surveys through companies like Harris Poll Online or Earning Station.
3. Cut way back on expenses
If you have credit card debt, you need to get yourself on a strict budget. My husband and I completely stopped going out to eat, our weekly Bingo adventures came to a halt and we no longer indulged in desserts and alcohol a few times a week. If you’re serious about paying off your debt, you have to eliminate all unnecessary spending. This may sound harsh, but it’s the only way you will truly be able to pay off your debt faster. There are many ways to cut back, including:
- Getting rid of cable
- Cooking all meals and snacks from scratch
- Finding cheaper auto insurance
- Driving less
- Getting rid of expensive hobbies (gym membership, golf club membership, etc)
- Clipping coupons
- Lowering your thermostat in the winter
- Raising your thermostat in the summer
- Asking your cell phone provider to lower your bill
- Drinking no alcohol
- Carpooling to work
Cutting back on your expenses doesn’t mean you can’t have fun, it just means you’ll have to get creative with free things to do in your area. Even though all our credit card debt is paid off now, we still enjoy free things to do in our community – including going on walks, taking our kids to the park and library, cooking together, attending free festivals, playing card games, watching movies and more. You can still live a rich, fulfilling life without spending a fortune.
4. Sell unused items
When we moved from Arizona to North Carolina, we sold some of our items on Craigslist. At first glance, I didn’t think we had that many items to sell, but after going through a bunch of our stuff, we came across a plethora of unused items we didn’t want to take with us. Seriously, spend some time over the next week sorting through your kitchen, closets and garage. I can guarantee you will come across some stuff you no longer want that other people would love. We sold a couch, tools, ladders, an old table, patio furniture and more, profiting over $1,000. If you have many smaller items, have a garage sale or list your items on eBay.
Paying off your debt fast requires a lifestyle change. If you continue to make the minimum payments, it’s going to take years – possibly decades – to pay off the balance. It’s worth it to make a few sacrifices in the short-term in order to get out of debt for the long-term. Plus, perhaps you’ll find other ways to pay off your debt faster. You may find an income-producing hobby in your free time that you can continue to do once your debts are paid, such as building a blog or starting a business.
About the author: Sarah Brooks is a wife and mom of two little girls. She’s passionate about personal finance, saving money and developing passive income streams. She writes over at The Frugal Millionaire Blog and for various other personal finance sites. In her spare time, she enjoys being outdoors, baking and spending time with her family.
CMF’s favorite FREE money management tools!
Some of the best online tools out there for money management are at Personal Capital, and the awesome news is that they are all FREE! Cash flow tracker, 401(k) fee analyzer, investment checkup, net worth monitoring, and many more! I’m a net worth junkie, so the net worth monitor is my favorite. Check out my Personal Capital review here, or click here to check out all the awesome tools for yourself!