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Debt sucks. It’s easy to fall into and hard to climb out of. It can leave you feeling hopeless and unmotivated, and the more debt you have, the easier it is to fall deeper.
It’s also really common, although at the time it can feel like you’re completely alone in it. There are all sorts of reasons people fall into debt; research from debt charity StepChange shows the top three reasons being unemployment, reduced income, and illness or injury.
Just over 2 years ago, I had nearly 14k worth of debt, felt completely hopeless and thought I’d never be able to pay it back. Fast forward to now though, and through a combination of cutting back on spending and working hard to bring in extra income, two thirds of that is paid off and the rest is in progress. I feel much more confident now that I can get rid of debt for good.
Whatever your personal situation and reasons for getting into debt, the good news is that being in debt doesn’t mean you have to stay in debt.
I won’t lie and say it’s easy because it isn’t, but once you decide to commit to getting out of debt, every small step towards becoming debt free is a victory, and each victory helps build motivation to get rid of debt permanently.
7 Practical Steps To Pay Off Debt Faster
Once you’ve made the decision you want to stop being broke and get out of debt for good, you probably want to get rid of it as fast as possible. Here are some steps to help speed up your debt free journey.
1. Know your situation inside out
The first step to being able to pay off debt is to know exactly what you owe, and to whom. It can be scary to see everything laid bare, but it’s really important to have a full picture of where you’re at.
Go through everything and write down the figures so you’ve got a complete picture. Note down the interest (if any) on each debt too.
You will want to decide which method of paying off debt will work best for you.
The most two common approaches are to either:
a) Use the snowball method – this basically involves tackling each debt one at a time, starting with the smallest. Once that’s paid you add the money you were paying towards that to paying off the next biggest, hence ‘snowball’. This takes no notice of how much interest you’re paying, rather the aim is to see progress faster and stay motivated.
b) The debt avalanche method – with this you list your debts in order of which has the highest interest, then any money you have on top of the minimum payments you put towards you highest interest debt first. This method means you pay less interest overall.
Read more: Is debt snowballing right for you? [a guide]
2. Create a budget
Budgeting is key to being able to pay off debt while still managing your current bills and living expenses.
If you don’t already have a budget, set one up. You can use our free budget spreadsheet and guide if you need help getting started.
You’ll need to include all your outgoing and fixed expenses. These will include your mortgage payments or rent, utility bills such as energy and water etc, along with your debt repayments.
Add any other outgoings, such as TV and internet subscriptions, mobile phone contracts and anything else you pay regularly.
You might want to try using a spending tracker to get a good idea of your overall spending habits and expenses.
Your total income minus your total outgoings will give you a good idea of how your finances stand and how much you might need to adjust things so your budget works for you.
2. Cut your spending
Once you’ve got your budget in place, you can look through and see if there are any easy places to cut costs or save money.
Save on subscriptions
The first place to start is to look at your subscriptions and services and see if there’s anything you can do without. Gym membership you barely use? Cancel it. Monthly hairdressing appointment? Start reducing to two monthly.
Look at your TV package. Is it expensive? Could you live without some of those channels?
Personally, we cancelled our TV licence, which saves £13.50, but we didn’t want to have no TV options at all, so now we share a Netflix subscription with a friend which works out much cheaper and we can still watch pretty much everything we want to.
You can try phoning your provider and threatening to leave, in the hopes that they offer a better deal, or switch to another option such as Netflix, Amazon Video or Now TV.
Read more: Do you really need a TV licence? >>
Save on utilities
It might also be possible to get a better deal on your utilities and services, such as energy and insurance. If you’re not locked in, or coming to the end of your contract, it’s always worth shopping around for a better deal. New customer deals are often cheaper than renewal quotes, but always compare to find the best quote.
When looking at changing provider it’s worth checking cashback sites such as Quidco as providers will often offer a cash back switching bonus.
Spend less on groceries
Another place you might be able to cut down spending a little is on grocery shopping.
Start by meal planning. Plan your meals in advance and write your shopping list according to what you need for those meals.
Stick to your planned list when you go shopping and avoid impulse buys.
Bulk buy to save money by getting a cheaper price per unit, and try some batch cooking and freezing portions to make the most of those bigger, cheaper packets.
This will help by making sure you only buy what you need, reduce the cost of the things you do buy, and help to cut down on food waste, all of which will save money overall.
4. Build an emergency fund
It sounds counter intuitive to try and save whilst trying to pay off debt, but it actually makes so much sense. If you have an emergency fund available to cover you if something goes wrong, like a washing machine breakdown, or unexpected car repair, you’re much less likely to get into further debt needing to borrow more.
It also gives you peace of mind, and since being in debt has its own stresses, it’s helpful to have one less thing to worry about.
If you’re thinking how on earth am I gonna find money to save an emergency fund when I’m already broke, I get it! But it’s not impossible. It just takes small steps and plenty of patience.
5. Be more frugal
Wanting to pay off your debt faster probably means you might need to make a few adjustments to live more frugally.
It might seem like making frugal adjustments only make minimum savings, when you take a more frugal approach to everyday living the savings all add up and really can make a difference.
Jane from Shoestring Cottage has a great post on how to use frugal living to pay off debt.
Some simple frugal tips are:
- Making sure not to use lights or heating in rooms you’re not using
- Not leaving the water running while you wash up or brush teeth
- Using energy saving lightbulbs
- Choosing to walk instead of drive where possible
- Cutting down on non essentials
6. Don’t spend what you don’t have
This one might sound obvious, but it’s the thing that got most of us into debt in the first place! Try not to buy things on credit card, don’t borrow more money and try to only spend money on things are affordable and within your budget.
7. Make extra money to throw at the debt
When you’ve cut down spending as much as you can, the next thing to consider is whether you can make any extra money to throw towards paying your debt quicker.
This is the step that has made the most difference to me. I’ve worked from home doing freelance writing, virtual assistance, blogging, taking part in research studies and surveys, which have all given me extra money to throw at my debt.
Whilst it might not be practical to try and find a second job, there are plenty of ways to make extra money from home to top up your income.
You could think about:
- Trying out a work from home job in your spare time
- Renting out a spare room on Airbnb
- Having a declutter and selling things on Facebook or Ebay
- Doing paid market research interviews – Companies you can join for this are:Respondent – online remote research studiesUserTribe – remote research studies (may require webcam/microphone)
- Taking online surveys for cash.
– Whilst not the best paid, this is definitely a simple and really flexible option as you can take surveys in your own spare time, in front of the TV or even spend a few minutes in bed before going to sleep. Some of the best paid survey sites include:
Prolific – academic research studies (min £5 per hour)
PopulusLive – surveys via email (pays £1 per 5 mins)
If you are able to pay all your extra earnings towards debt, it can really help speed things up and pay off debt faster.