Tips For Paying Off Debt

Debt is easy to accumulate and genuinely hard to escape. The good news is that it does not have to control your life. Getting out of debt and building financial freedom is possible, and the path forward starts with understanding your options.

Create a Budget

You cannot start paying off your debt until you know exactly where your money is going. A budget does not have to be anything fancy, you simply need to know how much money is coming in and going out each month. An Excel spreadsheet works fine. So does Mint or another budgeting app. The CFPB’s budgeting tool is a free resource that walks you through tracking income and expenses step by step.

Find a Strategy That Works for You

There are different strategies for paying off debt. Some people prefer to start with the smallest balance first because eliminating a smaller debt gives them the confidence to tackle a larger one. Paying debts from smallest to largest is often referred to as the debt snowball method, a term popularized by personal finance educator Dave Ramsey. Research published by the Harvard Business Review found that borrowers who focused on paying off individual accounts in full showed greater motivation and were more likely to eliminate their overall debt load.

While focused on your smallest debt, make sure you at least make the minimum payment on the others. The debt avalanche method takes the opposite approach: you pay off the balance with the highest interest rate first. This method tends to get you out of debt more quickly because high interest rates make it hard to lower your balance. Lenders such as SoFi and Chase offer online calculators to help you model which payoff method saves you the most money over time. Your FICO Score can also improve as your overall debt-to-income ratio, commonly referred to as your DTI, decreases.

The debt avalanche method is mathematically superior in most cases, but the best debt payoff strategy is the one you will actually follow through on. Behavioral consistency matters far more than theoretical optimization, according to the CFPB.

Opt for a Balance Transfer

A balance transfer lets you move debt from one credit card to another, often with a much lower interest rate. Many issuers, including Chase and Citi, offer introductory 0% APR periods ranging from 12 to 21 months on balance transfer cards, according to NerdWallet’s balance transfer card analysis. That interest-free window can help you save money and pay down your balance faster.

This option is generally only available to borrowers with good credit. Getting approved requires a minimum credit score, and most issuers look for a FICO Score of at least 670 to qualify for the best balance transfer offers, per Experian. There is also a balance transfer fee of 3% to 5% of the transferred amount, so it is worth calculating whether the interest savings outweigh that upfront cost before applying.

Debt Consolidation

Managing multiple debts means juggling multiple due dates and payments, which creates real room for error. Taking out a single loan to pay off several accounts at once can simplify your finances and, in many cases, reduce what you pay in interest. Lenders like SoFi, LightStream, and Marcus by Goldman Sachs offer personal loans specifically designed for debt consolidation, often with fixed APRs starting below 12% for well-qualified borrowers. The FDIC recommends carefully comparing loan terms and fees before consolidating to ensure the new loan genuinely reduces your total cost of borrowing.

Debt Payoff Method Comparison

*Estimated figures based on a $15,000 total debt balance at a starting APR of 22%. Actual savings will vary based on individual circumstances.

Stop Using Your Credit Cards

Getting out of debt requires stopping the cycle of adding to it. Take your credit cards out of your wallet so the temptation to use them is removed. For online shopping, delete your saved payment information from retailer websites. Every new charge you put on a card offsets the progress you are making on existing balances.

Having good credit often means a steady stream of credit card offers showing up in your mailbox. You can opt out of pre-screened credit card offers at OptOutPrescreen.com, which is the official Consumer Credit Reporting Industry website authorized under the Fair Credit Reporting Act (FCRA) and overseen in part by the CFPB.

Find Ways to Earn Extra Money

Directing extra income toward debt each month is one of the most effective ways to shorten your repayment timeline. Asking your employer about overtime is a straightforward first step. A part-time job is another option for those with available hours.

The gig economy makes it possible to earn on your own schedule through platforms like DoorDash, Lyft, Uber, and Instacart. Selling handmade or vintage goods on Etsy is another avenue. According to a Bankrate survey, roughly 36% of U.S. adults reported having a side hustle, with median monthly earnings of approximately $810. Applied consistently to high-interest debt, that kind of extra income can meaningfully cut years off a repayment timeline.

The key is treating that extra income as a dedicated debt payment before it gets absorbed into everyday spending. Even an extra $200 to $400 per month directed at your highest-interest balance can shave years off your repayment timeline, according to the National Foundation for Credit Counseling (NFCC).

Talk to a Credit Counselor

There is nothing wrong with turning to a professional when debt feels unmanageable. Credit counseling can help get your finances back on track in several concrete ways. Nonprofit agencies affiliated with the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA) are widely regarded as trustworthy starting points.

A counselor can help you build and manage a budget, explain what is on your credit report, and walk you through your FICO Score or VantageScore. Many also provide free educational materials. The CFPB offers a free debt collection resource center that explains your rights as a borrower under the Fair Debt Collection Practices Act (FDCPA).

Lower Your Monthly Bills

Cutting monthly expenses frees up cash that can go directly toward debt. Streaming subscriptions and cable are obvious places to start. A higher electric bill is worth examining too, getting an energy audit can reveal where money is being wasted. The U.S. Department of Energy estimates that homeowners who act on energy audit recommendations can reduce their energy bills by 5% to 30% annually, freeing up meaningful cash for debt repayment.

Consider Getting Debt Relief

For those overwhelmed by debt with no clear path forward, debt relief is worth considering. Debt relief companies charge a fee for their services, but they can negotiate with creditors on your behalf to settle accounts for less than the full amount owed. Many people are able to resolve their balances for significantly less than what they originally borrowed. The Federal Trade Commission (FTC) provides guidance on how debt settlement works and what warning signs to watch for when evaluating debt relief companies.

Debt relief does come with real downsides. Most debt relief companies instruct clients to stop making payments so negotiations can begin, which causes your FICO Score to drop and may trigger late fees. The CFPB warns that debt settlement can have long-lasting negative impacts on your credit report, sometimes remaining on your Experian, Equifax, or TransUnion credit file for up to seven years.

Do Not Re-Start Bad Habits

Paying off debt takes real effort. Sliding back into the same spending patterns afterward negates that work. Avoiding the habits that created the debt in the first place is the final, and ongoing, part of the process. A fee-only Certified Financial Planner (CFP) can help you build a long-term financial plan that keeps debt from taking over again. You can find one through the CFP Board’s advisor search tool.

Frequently Asked Questions

What is the fastest way to pay off debt?

The fastest method is the debt avalanche, directing extra payments to the balance with the highest APR first while making minimum payments on everything else. Pairing it with a 0% introductory balance transfer card or a lower-rate debt consolidation loan can accelerate your timeline further.

What is the difference between the debt snowball and debt avalanche methods?

The debt snowball pays off your smallest balance first, delivering quick motivational wins that help some borrowers stay the course. The debt avalanche targets your highest-interest debt first, minimizing the total interest paid over time. Research from the Harvard Business Review suggests the snowball method can improve follow-through for certain borrowers, while the avalanche method typically saves more money overall.

Does debt consolidation hurt your credit score?

Applying for a consolidation loan triggers a hard inquiry, which may cause a small, temporary dip in your FICO Score. Over time, consolidation generally helps by lowering your credit utilization ratio and making on-time payments easier to manage. Both Experian and the CFPB note that the long-term credit impact of responsible consolidation is usually positive.

How does a balance transfer card work for paying off debt?

A balance transfer card lets you move existing credit card debt onto a new card, often with a 0% introductory APR for 12 to 21 months. During that window, every payment goes directly toward your principal rather than interest. Most cards charge a balance transfer fee of 3% to 5% of the transferred amount, so calculate whether the interest savings outweigh that upfront cost before applying.

How much can a credit counselor help with debt?

A nonprofit credit counselor affiliated with the NFCC or FCAA can help you build a budget, review your credit report, and enroll in a Debt Management Plan (DMP) that may reduce your APRs to as low as 6% to 9%. DMPs typically take 36 to 60 months to complete but can save thousands of dollars compared to making only minimum payments.

What credit score do you need for a balance transfer card?

Most issuers require a FICO Score of at least 670 to qualify for a balance transfer card with a 0% introductory APR. Borrowers with scores above 740 generally access the longest promotional periods and the lowest transfer fees. You can check your score for free through Experian, Chase Credit Journey, or the CFPB’s credit resources page.

Is debt settlement the same as debt consolidation?

No. Debt consolidation combines multiple debts into one new loan or account at a lower interest rate, and you repay the full amount owed. Debt settlement involves negotiating with creditors to accept less than the full balance. While settlement can reduce the total amount paid, the FTC and CFPB both caution that it can severely damage your credit score and may result in tax consequences on forgiven amounts.

How does stopping credit card use help pay off debt faster?

Every new charge added to a card offsets the progress you are making on existing balances. Removing cards from your wallet, deleting saved payment information from online retailers, and opting out of prescreened credit offers at OptOutPrescreen.com all help reduce the temptation to add new debt while you focus on eliminating what you already owe.

Can side hustles really make a meaningful difference in debt repayment?

Yes. According to Bankrate, side hustle earners bring in a median of about $810 per month. Applying that full amount to a $15,000 credit card balance at a 22% APR could cut the repayment timeline from over seven years (minimum payments only) down to roughly two years, saving thousands of dollars in interest.

When should I consider talking to a financial advisor about debt?

Speaking with a Certified Financial Planner (CFP) makes sense if you have paid off debt but keep falling back into the same patterns, or if your debt involves complex assets, tax considerations, or retirement accounts. The CFP Board’s advisor search tool can help you find a fee-only fiduciary who is legally required to act in your best financial interest.