If you are looking for ways to get rid of debt as fast as possible you are in good company. According to an article from Bank Rate, where they looked over the results of a 2019 study from Experian called the Consumer Debt Study they found that the average American holds nearly $100k in consumer debt.
Actually, its $90,460 to be exact. With numbers like that it’s no surprise that people are looking to answer the question, “how to pay off debt quickly?”
Today, I am going to share with you some strategies and tips on how to pay off debt quickly.
If you have been following my blog, you may know that my husband and I got very serious about this topic in the Spring of 2020. During the beginning of the coronavirus pandemic in the United States we didn’t know what was going to transpire as far as the economy and our jobs.
It was a scary time, and it remains that way for many. But it was that moment in the Spring of 2020 that we made a plan to tackle debt. We sat at our kitchen table and made a list of all of debts down to the exact penny. Next we hung it on our refrigerator, right next to pictures of family members and a calendar. We wanted to have this debt in a common place so we would give ourselves a daily reminder of our debt goals.
Since the Spring of 2020 I am happy to report that we have been able to payoff our car, and three of our student loans so far.
In just eight short months we have paid off over $28,000 in debts!
If this is your first time visiting my blog you may have missed the first few posts on our debt free journey. Just so I don’t repeat myself and bore all of you, I will quickly summarize how we got to this point and then share our strategies on what worked for us to implement a plan on how to pay off debt quickly.
August 2020 – Car Loan- $12,785.85
In August of 2020, just four months after making our get out of debt plan we were able to accomplish paying off our car loan in the amount of $12,785.85.
October 2020 – My Navinet Student Loan – $6,301.51
Next we achieved paying off one of my student loans called Navinet (formerly Sallie Mae). We paid this off at the very end of October in the amount of $6301.51. This made our total debts paid off in six months to be $19,087.36!
November 2020 – My Husband’s Navinet Student Loan #1 – $4,724.19
In November of 2020 we were able to accomplish paying off my one of my husband’s Navinet student loans in the amount of $4,724.19. He has a total of three private student loans with Navinet.
This was the first private loan we paid off for him and it felt great to make that payment and say goodbye. In the past, especially right out of college when we did not have well paying jobs, just making these payments was so difficult, and Navinet was always very difficult to work with.
December 2020 – Another One Of My Husband’s Navinet Student Loan’s #2 – $4,748.48
We ended the year with paying off another one of my husband’s Navinet private loans which was also very satisfying.
How Did We Come Up With The Extra Money?
At this point you are probably wondering how in the world did we come up with the extra money to pay off these debts right? Well I will explain exactly what we did to achieve making these payments on our loans.
If you have read any articles about how to pay off debt quickly I guarantee that you have come across the debt snowball method. We use this method to pay off our debt.
The concept of the debt snowball makes perfect sense. Once you pay off one debt, you simply take that extra money to roll into your next debt. It builds on itself and you are able to make larger payments and payoff debt faster.
During The Pandemic We Spend Less
Since March my husband and I have been fortunate to still have our jobs and we both work full-time from home. While I always walked to work, my husband would drive. But now we only use the car once a week to buy groceries. Driving less has saved us a lot of money on gas each month.
Another area we spend less on is dry cleaning. No need to get a suit dry cleaned when you can just work in your sweatpants all day. Along with no dry cleaning we also don’t spend much on food outside of our regular grocery store trips.
I personally am guilty of spending almost $400 a month on breakfast, lunch and multiple coffees when I was in the office. Honestly I am embarrassed about how much money I used to spend while at work. But since I am home I don’t buy ANY takeout food.
Our Federal Student Loan Payments Are On Pause
I mentioned this in my first post about debt pay off, but both my husband and I have massive amounts of federally held student loans. During the pandemic the government has paused all payments on federally held loans. We would normally pay around $1,200 a month in federal student loans. But since the pause we have been able to save that money and put it towards other debts.
No Vacation Expenses
Because of the pandemic we have not traveled and taken vacation at all. We live in Oregon and while we could rent a house on the pacific coast and take a week off, we just feel like its not worth the money and the risk right now. Instead, like many people, we have been staying home and just using our free time to take long walks with our dog, binge watch old shows and movies and have indoor fun that costs nothing.
If we were not living in a pandemic I’m sure I would have justified to myself the need to take a nice vacation. I love to travel but travel does come with a cost. I have been forced not to travel right now, so that has saved me thousands of dollars.
We Got More Strict With Our Budget
Over the years we have had some lifestyle creep in regards to buying groceries. I remember about nine years ago when we would only spend $65 per week on groceries. We were frugal because we had to be.
But as we got better jobs and our salaries increased our trips to the grocery store got more expensive. Instead of $65 per week we would spend almost $300 or more.
It’s terrible to say that we wouldn’t look at the prices of items. We just bought what we felt like buying. But when I look back now, that was a terrible way to shop.
We have cut our grocery spending in half.
Instead of spending $1,5000 a month, we now spend $800. I think we can cut this back even more. I am working to be better at meal prep so we don’t run out of food and then need to make a second trip to the store during the week.
For example this week, I am already out of coffee and it’s Tuesday! Sometimes I buy less than I think I will need. But luckily, we only spent around $170 at the store this week, so there is room in the budget to get more coffee.
Tip To Spending Less At The Grocery Store
If you haven’t been using online grocery ordering services you may want to give it a try. I like this because as you shop you can see exactly how much you are spending and you can be more strict with your budget.
A lot of grocery stores won’t even charge you for this service if you spend a minimum amount. With Walmart, for example, you get free delivery if you spend a minimum of $35. Its a great way to have a contactless shopping experience as well as keep an eye on everything you purchase.
The Key Factors To Pay Off Debt Quickly
I believe the two essential rules to pay off debt quickly include budgeting and income. Everyone thinks they know where their money is going, but until you make an actual budget and look at it head on you could be in for some big surprises.
A budget, as boring as it sounds, is truly one of the foundations to making a debt pay off plan. Start out by listing all of your bills every month. Next, ensure that your income will cover all of your bills. If you don’t have enough income coming in that is obviously the biggest problem. You will need to get some more money coming in.
I know this can be so difficult to earn extra money. I recommend looking into these side hustles, freelance writing, work from home side gigs and some additional ways to make an extra $1,000 per month.
Once You Have A Budget, Start The Debt Snowball
With a proper budget in place you are ready to start tackling debt. The key with a budget is that every dollar is accounted for. Every bill, and all money you are going to SAVE for that first debt payoff.
I recommend printing this out and keeping it visible. If you are looking at your budget, and debts every day you will want to see it gone. It will keep you motivated.
You Will Feel So Great Once Debt Is Paid Off
I can’t tell you how good it feels to have some of our debts paid off. If you read my first debt payoff post when we paid off our car, I had noted all of our debts, and boy do we have a lot. Nearly $800K of debt combined between my husband and I.
The good news about our debt is that $400K is in our home loan, and I although that is a lot of money, we do plan to sell this within the next year and go back to renting to lower our expenses.
The remaining $400K in debt is about $300K in federal student loans as well as nearly $85K in private loans, (but $28K that we have now paid off).
Although the $300K in Federal student loans is a huge burden as well, my husband and I both work for government affiliated employers, and we are both enrolled in the PSLF (Public Student Loan Forgiveness Program).
While there have been a lot of problems with people actually getting their debts forgiven with this program, we are hopeful ours will in about five more years.
Top Takeaway Tip
Remember, anything extra you can save and set aside to pay off debt is a step in the right direction. It will build on itself and I guarantee the more you save the more motivated you will be to grow that savings to put towards your debt pay off.
None of what I have said is new or shocking. These methods are just basic saving, cutting expenses, lowering costs of living and tackling debt one bill at a time. It can be done, it just takes focus and determination.