If you feel like you’re currently struggling with your debt then the obvious solution is to try to pay it off. No matter how much debt you have there are always options when it comes to paying off debts fast. From cutting back on your essentials to applying for loans for paying off debts there are many different approaches you can take. Follow these steps if you want to learn how to pay off debts quickly.
Step 1 – How much debt do you have?
When it comes to paying debts off you first need to establish exactly how much debt you have to deal with. Make a list of all the debt that you currently have. It can be useful to note the monthly repayments and also the interest that you’re paying on each debt. If you have debts with low interest – such as a 0% credit card – make a note of when any special deals on that low interest are likely to come to an end and what the rate will be at the end of the offer period.
Step 2 – Start with the debts with the highest interest rates
Paying off debts quickly means finding the most efficient way to reduce what you owe. So, it makes sense to start with the debts that currently have the highest interest rates. The faster you reduce these debts, the less interest you’ll pay over the long run and so the easier it will be to get debt free.
Step 3 – Look into a loan to pay off debt
If you want to get help paying off debts there are a lot of different options to choose from. A consolidation loan can be a great choice if you currently have multiple debts with a range of different interest rates. The idea behind getting a loan to pay of debt is to find new finance with a lower interest rate and use it to clear debts with a higher interest rate. Find a consolidation loan so that you’ll be left with a single debt with a lower interest rate that should be much simpler to clear.
Using a loan to pay off debt can also help to minimise issues that may arise from multiple debts, such as missing payments because you have so many to meet. It may also be possible to reduce the size of your monthly payments using a loan to pay off debt by borrowing a new loan over a longer period of time. If you want to find out more about debt consolidation, take a look at our article on the best way to consolidate debt.
Step 4 – Start budgeting
Often the answer to the question of how to pay off your debts comes from taking control of your finances. Most people struggle to do this without some sort of budgeting to help them. Budgeting is a simple process of working out what you have coming in every month and comparing this against your outgoings. If you want to create more room in your budget for paying off debt then increasing what you earn or reducing what you spend may be the most effective way to do it.
Step 5 – Cut back on non-essentials
If you’re looking into how to pay off debts – and you want to do this quickly, often the easiest way is to cut down what you spend every month. It’s amazing how quickly cutting back can make a difference to the money that you have available for paying debts off. There are lots of options when it comes to cutting back on non-essentials. For example you could:
- Shop around for better deals on regular costs, such as energy and broadband
- Give up your gym membership and start road running instead – or use a free outdoor gym in your local park
- Have a meat free day each week to reduce your food spend
- Go through your monthly outgoings and cut out luxuries, such as restaurant meals or going out
- Start taking coffees and lunch to work with you, as opposed to buying these every day in cafes and supermarkets
- Sell your car and get a bike instead or take public transport to work
- Start car pooling with others going in the same direction as you every day
- Instead of buying brand, new look into buying second hand online or shopping in vintage stores
- Audit your monthly subscriptions – are you still paying for services that you don’t even use without realising it?
Step 6 – Make a plan and stick to it
Paying off your debts can be a time consuming process but once you have a positive plan in place make sure you stick to it. It may not be instant but, with the right plan, you could be debt free sooner than you think.
Step 7 – Ask for help paying off debts
If you’re still struggling to make any inroads with paying off debts quickly then it might be worth reaching out and asking for help. There are a number of organisations that can provide this, such as Citizens Advice and the National Debtline. You may also find family and close friends can offer advice or financial support.
If you want to pay off debts quickly these 7 steps are a great place to start.