how to get out of debt

4 Surefire Ways to Crush Your Debt Quickly

Before you can begin the joy of credit card rewards, you need to learn how to get out of debt so you can use these cards to their max without other debt getting in the way. Whether it’s credit card debt, student loan debt, or any other type of debt, there are several legit ways to get out of debt quickly and with as little pain as possible.

Keep those eyes movin’ to see how to get out of debt as quickly and as painlessly as possible.

How to Get Out of Debt With a Debt Consolidation Loan

I know, going into debt to pay off debt seems counterintuitive, but it does work. Here’s how to get out of debt with debt.

Let’s say you have $10,000 in credit card debt, and they all have an average interest rate of 20%. You can take out a debt consolidation loan to pay off that debt and potentially get an interest rate as low as 8% from our partners at Payoff.

What’s more, with a debt consolidation loan, you also have a fixed end date for your debt troubles. Unlike credit cards, a loan from Payoff has a scheduled payoff date you can circle on the calendar and shoot for. Credit cards, on the other hand, can sometimes feel like an endless abyss hoovering cash like some greedy vacuum cleaner.

Use the Avalanche Debt-Payoff Method

If you don’t have enough debt to make it worthwhile to get a debt consolidation loan, or your credit just isn’t good enough yet, you have to go a bit old-school and just pay it off yourself. There are a few schools of thought on debt payoff, and my analytical side loves the avalanche debt-payoff method.

The avalanche method is straightforward. Find the debt with the highest interest rate and balance, and roll every penny you have laying around into paying that debt off while making the minimum payments on your other debts. Once that debt is paid off, combine the money you were using to pay that debt with the minimum payment on the debt with the next-highest interest rate until that one is paid off. Then you just repeat this process until all that money-sucking debt is gone for good.

Why do I prefer this one? It’s simple: You pay the least in interest. The next method will give you a less intense alternative to this.

Use the Snowball Debt-Payoff Method

Made famous by Dave Ramsey, the snowball method is a bit more of a relaxed approach to paying off debt that also rewards you with quick victories. How this one works is you find the card with the lowest balance and roll all your extra money into paying that off as quickly as possible while making minimum payments on the rest of your debts.

Once you pay off that debt, you move onto the next lowest balance and combine what you were paying on the now-paid-off debt with that one’s minimum balance. Once you pay off this debt, you can roll that payment on top of the next lowest balance, and so on, until you pay off all your debts.

This one is great for beginners to paying off debt, as the small victories can give them the motivation they need to continue. That said, saving all your highest balances – and possibly the highest interest rates – for later means you may end up paying a ton in interest over time.

The Balance-Transfer Dance

This is a far more active debt-payoff game that requires careful planning and established credit.

To pay off your debt this way, you have to sign up for a new credit card with a 0% interest promotion, then transfer as much of your high-interest debt to it as possible. Then take an avalanche approach to paying off the remaining interest-bearing accounts. Once you pay off those debts, you can start working on that 0% card or cards until they are paid off.

You must watch closely, though, as the 0% cards have an expiration date on the promotion, and you’ll need to roll the balance onto a new 0% card before that promo expires.

There are a few things to consider when playing the balance-transfer game, though. First, most cards charge a 3 to 5% transfer fee. Yes, this is better than paying interest, but you must consider it. Second, you must have established credit to do this, as no credit card issuer is going to throw a 0% interest card at someone with a low credit score. Fortunately for those of you in this situation, there is the snowball or avalanche method.