How to Pay Off 50,000 in Debt in Three Years

Millions of Americans find themselves in massive debt each year. If you're in this situation, you can pay off your debts—even the large ones—as long as you're willing to develop a plan to eliminate your debt and stick to it. Being on a shorter timeline to eradicate debt makes your task more challenging, but not impossible. Even if your debt reaches $50,000, you can still pay it off within three years.


Step 1

Do the math. Before you can create your action plan for paying off your debt, you need to know how it breaks down. To pay off $50,000 in three years, you'll need to pay off $16,667 per year, not including accruing interest. That equates to $1,389 per month.

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Step 2

Review your budget and expenses. Unless you have an extra $1,389 going into your savings account each month, you must locate the funds to make debt payments. Identify budget items you can do without for the next three years. Looking in your checkbook register or online banking account can provide additional insight to areas you can cut out.


Step 3

Contact creditors. The higher the interest rate you pay on your balance, the longer it takes to pay off your debts. Even before you miss payments, contact your lenders and let them know your commitment to paying what you owe. Ask for a lower interest rate to help. While creditors may not like the idea, they would rather get back the full balance than risk getting nothing if you file bankruptcy.


Step 4

Work with a reputable credit counseling agency. When unsecured credit forms the bulk of your debt, a credit counselor can negotiate lower interest rates on your behalf. You might not like asking for help, but interest payments on $50,000 can snowball, making it impossible to pay off within your three-year deadline.


Step 5

Decide on a payment strategy. Just because paying off the highest interest rate balances first saves money on interest payments, it doesn't mean this is the best plan for you. If you need more than $1,300 for monthly debt payments, you may benefit more by focusing on paying off debt with the higher payments first. Once that debt is gone, you have more money to use for other debts.


Step 6

Look for additional sources of cash. $17,000 per year is fair amount of money to pay towards debt. Using the funds in your savings account can help you make a dent in that number and lower the amount of money you need each month for payments.

Step 7

Borrow from your retirement accounts. Check with your 401k plan administrator about your loan options. Once vested, many employers allow you to borrow half the value of the account without the 10 percent early withdrawal penalty.


Consider the return on savings and retirement accounts before using the money for debt payments. If the return is less than you pay in interest, using the funds is a viable option.

Find ways to increase your income. Even if you can only bring in a few hundred dollars extra by having garage sales or working at a part-time job, that still helps.


Always research debt settlement companies before using their services to avoid scams.

Things You'll Need

  • Calculator

  • Household budget

  • Checkbook register

  • Credit statements

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