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.
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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
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.
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Selling stuff on Craigslist is an area wher we’re going to try harder this year. Last year we either kept expensive stuff or gave it away.
I’ve been upping my Craigslist/Ebay game too! I now have a rule that every week I have to list at least one thing for sale on either Craigslist or Ebay. We’ve been bringing in some nice extra cash this way.
That’s a really great idea!! I might have to try that, sounds like a fun challenge and a great way to make extra money!
These are all great tips! I am all about earning extra income to change/improve your financial situation. It helped me greatly in that I was able to pay off over $40K in debt with it!
That’s awesome Michelle!
Great post! I’ve always favored earning extra income on the side and cutting expenses. The two-pronged approach works like a charm every time and really helped me knock out my student loans. All of these tips will work and improve your financial life so much!
That’s fantastic! I agree, doing both can really help boost the amount you’re able to put toward debt every month.
When I was getting out of credit card debt, I was working 2 jobs to help pay it off. I also took my tax refunds and the money I received for Christmas and my birthday to knock it out.
That’s what we are doing too. We had extra income from a few different sources last month, and we sent every single penny toward our debt. We can’t wait until our student loans are gone!
If I have a large credit card bill that I’m struggling to get rid of in one payment/month, and I still need to use my credit card for other payments, I am disciplined to pay off any additional amount I add to the size of the bill immediately, plus 20% of the value of the new purchase.
It’s amazing how quickly paying an extra 20% off new card purchases means to the overall size of the debt!
Definitely! We try to make payments on our credit card every two weeks (my hubby gets paid every two weeks), in order to keep the balance reasonable. Unless we have a lot of expenses on there, that habit almost always helps us get the credit card bill paid off every month.
I struggle a lot because I only get paid monthly, so clearing my card is always a problem. It’s a great habit to be in though, clearing the card every month!
Oh yes! We did the credit card thing once we were beyond college too. We charged them up! Glad we paid them off and didn’t let that become a theme in our lives.
Same here. We gave the credit card companies probably way too much money before we wised up and realized that the cc companies were getting rich off us, and we were getting poor. Now it’s been a few years since we carried balances on the credit cards- thank goodness we are now in the habit of paying them off every single month!
I think we pretty much do all of these with the goal of saving for a down payment in mind. Mr. LH loves selling our stuff on Craigslist and ebay. The extra income goes towards our down payment as does any side income we make.
I have a rule that every week I list at least one thing for sale on either Ebay or Craigslist, and I have to say that it’s been a really good thing. Now I am much more vigilant about identifying things around the house that we do not need anymore and can sell. And likewise, we are bringing in quite a bit more spare cash every month just from doing that. Plus ever since we became parents our house has been overwhelmed with “stuff,” so it’s a good thing for us to be more cognizant of getting rid of unused items. The house is only so big you know!
These are great ideas. We’ve implemented many of these and found that they didn’t really have a negative effect on our lifestyle at all. Another great way to save is to cut your grocery bill in half by shopping at discount stores (such as ALDI).
I hear you about these things not having a negative effect on the lifestyle. We cut cable a few months ago and we’ve scarcely missed it. And that change alone is saving us more than $100 per month!
Really good ideas. Consistency is the key in everything we do and even few bucks here and then can slowly make a difference, since they build a better habit.
Exactly. Getting yourself into the habit is more than half the battle, I think! Once it’s habit it becomes automatic, which (when multiplied over many years) can be a powerful force!
I’m glad you started with ways to earn more to pay down debt. Everyone starts with trying to cut lifestyle….when adding income will often not only help you pay down debt but it’ll also help you increase your skills and future earning power.
I agree. Keeping expenses low by making cuts can be really important, but, as others have mentioned, eventually you will reach a limit and be unable to cut any more. Increasing income can increase cashflow for years if you do it right!
We utilize “Sell unused items on Craigslist” constantly. It’s also a great way to keep the clutter at bay.
I totally hear you there! We neglected this one for a couple years and it’s only been in the last six months or so that I’ve been more or less continually reassessing the need for certain items in our home. It’s already made a big difference in the amount of clutter lying around our house!
These are great suggestions! The biggest thing is to get in the mindset and the rest follows naturally, I think. Great advice!
Thanks Natalie! I agree that getting yourself into the debt payoff mindset can be half the battle. At least for us anyway, it took a long time for us to step out of the “oh it’s really low interest rate debt so we’d be better off investing” mindset. Thankfully one day we woke up and realized that with that mindset we’d be in debt until we are old and gray! Now we recognize that we want to be debt free a lot sooner than that, and we are actively taking steps to get there ASAP!
We are doing all of these things, Dee, and it really does help. The most beneficial for us, so far, as been putting extra money toward debt quickly, before it finds someplace else to go. 🙂
Boy do I hear you there! We try to do that too- otherwise life happens and it might get spent elsewhere.
We used the tax refund this year to pay some credit debt. I have picked up extra shifts last month, this month and next month. It isn’t allot but will go to my debt snow ball.
With the 6 ft of snow we have had in last three weeks,I have had too much time in the house looking at the possible selling items for sure! But in the past have had real problems with craigslist buyer, not showing…asking repetitive questions already answered in ad only to not contact back again…it is frustrating. I wish there was simpler way. I may just use my snow days to start yard sale boxes in hopes of spring 🙂
Cutting expenses, challenging them, has made a big difference in available funds at the end of the month.
I hear you on the Craigslist issue. We used to live in a suburb of a major metropolitan area, and I always had really good luck using Craigslist when we lived there- I think because buyers knew that they had to act fast if they wanted an item- and most items sold right away. But now we live in a much less populous area, and I have a harder time selling things on Craigslist. I just don’t get as many calls, and get more people flaking out on me. I often sell items on eBay unless it’s a big item that will be expensive to ship- then I use Craigslist.