How to Pay Off Debts Fast

Paying off debt fast involves self-sacrifice, careful calculation of your budget and your financial obligations, and a cash flow that allows you to meet other life obligations.

Organize Your Debts

Highest Interest First

According to ABC News consumer correspondent Elisabeth Leamy, take stock of what you owe and prioritize your debt based on what carries the highest interest rate. For example, if you have a $2,000 loan at 14.5 percent interest and a $2,000 credit card balance at 18.9 percent, Leamy suggests it makes more financial sense to pay off the credit card first.

Snowball Effect

Financial expert Dave Ramsey recommends a slightly different approach using the "snowball effect." This involves paying off debts from the smallest to the largest. His rationale is that seeing debt start to disappear gives you a boost of confidence and will encourage you to stick to your debt reduction plan.


Consider whether any of your debts have extenuating circumstances that move it to the head of the pay-off line. For example, if you have a credit card debt with an interest rate that's about to go up, or a line of credit you’ve exceeded so you’re being charged penalties, these debts should take priority.

Pick Your Targets

Put all your available debt-payoff cash toward the first bill you've selected. You'll still be making minimum payments on other debt as part of your budget "necessities," but your top target should get the most attention. After that debt is paid in full, move to the next target on your list. Your payoff pace will pick up as you go through the list. After you pay off Debt A, you'll put your debt reduction financial resources toward Debt B, along with the amount you were already paying toward that bill. As you continue applying earmarked payments from eliminated debts to existing ones, your overall debt load will rapidly start to shrink.

Tighten Your Budget

Go through your household budget line by line and look for ways to slash expenses to the bare minimum. Eliminate all but absolutely essential expenditures. For example, postpone vacations, cancel memberships and subscriptions, eliminate dining out and entertainment, and don't buy anything you don't need. When you're working with a lean budget and after you have a clear picture of what you owe, compare your debt to your income. For example, if you've slashed your budget to $2,500 per month and you earn $4,000 per month, $1,500 should be allocated to debt reduction.


  • Set aside money for an emergency fund, but otherwise keep funneling cash overage toward your debt pay-down.
  • If you aren’t sure where your money is going, start tracking your spending to get a better idea of your financial habits.

Sell Stuff

Look around your home for items of value you don't use, want or need, and sell them. This might include antiques, household items, collections, equipment or machinery. If you have enough stuff, employ an auction company or estate sale provider to conduct a sale. Otherwise hold a garage sale, haul your stuff to a swap meet or use an online auction site. Put everything you earn into your debt fund.


Set aside every penny of unexpected “windfall” money to pay down debt. Holiday gifts, tax refunds, work bonuses -- all should go into your debt kitty.