Effective Strategies to Manage and Pay Off Your Debt Faster

When you’re shouldering high-interest debt in the form of credit cards and loans, paying it off ASAP can help you improve your finances and build stability. But that can be challenging, especially if you’re juggling multiple balances, working with a tight budget, or simply don’t know where to start.

For expert advice on how to prioritize your debts, navigate repayment, and get debt-free sooner, we asked four financial planners for their best strategies for getting out of debt.

1. Track Your Spending

Starting a budget is a key move when it comes to paying off debt faster. A budget is a plan for how you’ll direct funds toward spending, saving, and—importantly—paying off debt. But Artica Financial Services’ lead financial planner, Kassi Fetters, cautions that you should avoid a budgeting blunder that can derail your efforts to pay off debt: not following up by tracking your spending.

“Many families forget an important step to a successful budget—feedback,” Fetters says. For your budget to be successful, you need to track your actual spending against your expected spending.

For example, you might write a budget and plan to spend $250 dining out in a month. But to see if you stuck within your limits, you’ll need to keep track of your actual spending.

“Use a spending tracker where you can categorize your spending each time you make a transaction,” Fetters suggests. She recommends researching budgeting apps and selecting one that works well for your household.

2. Set Debt Priorities

There are two main methods you can apply when deciding which debts to prioritize paying off first: the debt snowball strategy and the debt avalanche strategy.

The debt snowball method has you pay off your debts in order of size, starting with your smallest balance. Make only minimum payments on your other debts, then funnel whatever extra you can afford to the debt with the smallest balance. When that balance is paid off, move on to the next smallest, and so on. The debt avalanche method has you focus on paying off balances according to the interest rates on each account, from highest to lowest.

“Both debt repayment methods have advantages,” Joseph Carpenito, a financial advisor at Materetsky Financial Group RIA, says. “The avalanche method may save you more money in the long run, but the debt snowball method can be really motivating and give you a sense of accomplishment as you pay off smaller debts first.” He suggests you stick with whichever method motivates you.

3. Balance Saving and Debt Repayment

The key to finding long-term financial stability is to balance paying off debt with another important money move: saving.

“It’s important to prioritize debt repayment, but it’s equally important to have some savings set aside for emergencies and future expenses,” Gabriel Lalonde, a certified financial planner with MDL Financial Group, says.

He suggests you aim to set aside at least three to six months’ worth of essential expenses for emergencies. The reasons are twofold. “It can help you avoid taking on more debt in case of an unexpected expense or emergency,” he says. “Plus, having some savings [can] help you feel more financially secure and reduce your stress levels.”

Nick Loeffelman, associate advisor at Citrine Capital, adds that in addition to setting some money aside for savings—even while paying off debt—you should also check to see if your employer offers a 401(k) match. “If so, take advantage of this by contributing up to the matching limit,” he says. Doing otherwise is essentially throwing away free money toward your retirement.

Beyond that, Loeffelman recommends focusing on paying off your highest-interest debts for the best returns on your effort. “Confront anything with an interest rate greater than 6% before anything else,” he says. Those debts are accruing interest at a potentially higher rate than your investments will earn, he says.

4. Live Like a College Student

Fetters says her experience paying off debt provided her with this unique strategy: Live like a college student.

“When my husband and I got married over 10 years ago, we added up all our debt, not including our house,” she explains. “It was $49,000 of credit cards, loans, and cars.” They were able to pay it all off within a year by getting super strict with spending and downgrading their cars.

“No eating out, no travel and a lot of free outdoor activities,” she says. Her advice to those who want to pay off debt quickly: Your debt will disappear at the same rate you’re willing to temporarily sacrifice your lifestyle. “Be prepared to make temporary radical changes to your budget,” Fetters says. “Anyone can live like a college kid again for a couple years.”

5. Consider Consolidation

If you have good credit, you may be able to qualify for a debt consolidation loan. Consolidating your debt is when you fold multiple balances into one new loan. Ideally, the new loan should have a lower rate than the average rate of your current debts.

Carpenito says that consolidation is an option worth considering if you’re juggling multiple balances. “It can help you simplify your finances, and reduce your overall interest rates,” he says.

But he cautions that you should consider all your options before you rush into consolidation. “Remember that debt consolidation is just one tool in your financial toolbox, and it may not be the best solution for everyone.”

6. Talk to Your Creditors

If you’re deeply in debt, you may need extra help getting back on track. Carpenito says you should talk to your creditors to see if they’re willing to offer you a hardship plan. “Communicate with your creditors and be honest about your financial situation,” he says. “Many creditors are willing to work with you to find a repayment plan.”

A credit card hardship program may come with deferred payments, temporary reductions in interest, and reduced fees. While not all lenders offer hardship plans, it’s always a good idea to check in with your lender or credit card issuer if you’re struggling to afford payments.

The Bottom Line

Getting out of debt isn’t easy, but there are places you can turn for help. Consider reaching out to a nonprofit credit counselor for free or low-cost help setting up a budget or getting on a debt management plan to eliminate your debt. For a more long-term approach to structuring your finances, consider reaching out to a financial planner. They can help you make a comprehensive plan for managing your debt, saving, and investing for a financially secure future.

In addition, start monitoring your credit for free through Experian. When you sign up for free credit monitoring, you’ll be alerted to changes in your credit report and score. It allows you to stay in the loop on how your repayment efforts are helping your credit over time. In addition, you’ll see personalized insights on how lenders are likely to view your creditworthiness and changes you can make to increase your score faster, such as paying down a revolving balance or avoiding new credit.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is ready to help you navigate your financial journey and achieve your goals.