In April 2015, I published this piece on how I managed to pay off debt fast (I paid off over $8,000 in just 90 days!) . It’s easily one of the biggest goals I’ve ever accomplished, and it's been the most popular post on my site (OF ALL TIME.) I was also super happy to have my debt payoff story featured on big name websites like Business Insider, The Penny Hoarder, The Well Kept Wallet (and others.)
Recognition is super cool. Internet trolls are not.
A lot of people commented that what I'd done was impossible, that I must've been “stripping on the side” in order to pull down that kind of cash to pay off all that debt.
Others criticized my story for not being very realistic for those who live paycheck to paycheck, (I was making $60k a year at my then-job) or those who have families and other commitments that prevent them from being able to side hustle for extra income. And while I don't want to validate internet trolls, I do believe this critique has a nugget of honesty; what worked for me wouldn’t work for someone else, especially not on such an accelerated timeline.
Which is why I put together this post on how to pay off debt fast if you don't have time to hustle. It's mainly for those with stellar credit who'd like to save money on interest. Have you heard about debt consolidation yet?
How to Pay Off Debt Fast: Debt Consolidation Demystified
Debt consolidation is a word you hear a lot when talking about student loans or home consolidation; something that gets repeated incessantly during daytime television commercials. They make debt consolidation out to be an option only for those in the direst of circumstances (those with creditors calling every day, etc.).
While this is certainly one scenario, there are also many individuals out there who have decent credit but are carrying balances, those who (for whatever reason) aren’t making great progress on paying back the debt. The good news is that there are now a handful of cool, new companies out there who seek to help individuals and families get a handle on their balances. One such company is Upstart.
Upstart: A New Way to Pay Off Debt Fast (Whether It's Credit Cards, Student Loans, or Home Improvement)
Instead of offering “consolidation”- which implies negotiating with creditors, Upstart offers one loan that you take out with them and then use to pay off your other higher interest balances.
I had a money coaching client who used Upstart to consolidate her credit card debt into one payment when her credit score wasn't high enough to qualify her for programs via Payoff or SoFi.
Using outside means to reduce debt isn’t just for folks on the brink of bankruptcy. It’s for those who want to pay less in interest and get ahead with their finances instead of constantly playing catch up, and there isn’t any shame in it either.
How Upstart works is that you're taking out a fixed rate installment loan from them, and you get to set the terms. Typically you pay it back between 2-5 years.
What all that terminology above means is that you can take out a certain amount (say $5,000) and pay it back in monthly installments over a certain period of time (which you get to choose.) Obviously, the shorter the term the lower the interest rate and the less you’ll pay in interest.
This means instead of six or seven monthly payments to your creditors, you’ll have just one payment.
And trust me, if you’ve got good credit, you’ll be offered a much lower interest rate than the 15-24% you're currently getting on your cards or other higher interest student loans.
If it sounds scary to take on a loan to pay off another loan, don’t worry this is actually a smart move (if you use a reputable company like Upstart.)
• Getting a lower interest rate loan allows you to save money on interest.
• You’re consolidating your many credit card payments (with different due dates) into one, single monthly payment that you can easily automate from your checking account.
• No credit card balances means a lower debt-to-utilization ratio, which makes your credit score will go way, way up.
But You’ll Need to Change Your Lifestyle Too
It isn’t enough to qualify for a debt consolidation, pay off the credit card companies and go about your day. Even though you’ve paid off debt quickly, you’ll still need to make lifestyle changes to ensure you don’t get into credit card debt again. Here are some of my favorite ways to ensure you’re making smart financial moves after you get rid of the card debt for good.
Related: 37 Ways to Save Money
Cut, Cut, Cut
Barring any unforeseen circumstance, if you’re in credit card debt – it’s likely because you’ve been living beyond your means or purchased something that wasn’t super affordable to you yet (case in point – me and my house.) I’m not saying to cut everything, but once you’ve taken care of the high-interest debt, it may be time to look at other areas in your life where you could be saving and living more modestly. Here are the five easiest things to cut from your budget.
Find New Sources of Income
This is my favorite. Clearly, I’m a lady all about the side hustle. Making extra cash is a great way to meet financial goals, and better accommodate the “fun stuff” we love in our budgets. Also, if you look at it in a certain way – if you spend more time working to generate extra income, it’s less time you are out spending money. You can build the side hustle of your dreams, or take a one-time cash infusion by selling your stuff or completing online surveys. Here are some of the other survey sites I like to recommend to readers.
Stash Away The Extra
Even if you pay off your credit card debt, you may have other debts to tackle. I recommend saving or putting toward debt any and all tax returns, insurance settlements, raises at your job or purchase rebates. It’s “found” money, which means you weren’t expecting it and can use it to make some serious progress on your financial goals.
Debt is a tool, but it can also set you back so don’t be afraid to evaluate ALL The options for successfully and quickly paying off debt. If interested, Click here to learn more about consolidating your debt.