Here are the 4 Fastest Ways to Pay Down Your Debts
Here are the 4 Main Ways to Pay Down Your Debt Fast
Paying down debt is probably one of the biggest financial feats for any tax-paying citizen. There are so many reasons why people find themselves in debt (some more reasonable than others), but there is no doubt that debt will be a part of any individual’s life at some point in time.
Whether it's a school loan, a mortgage, or burdensome credit card debt - nobody likes to admit to having any. If you do have debt, the biggest thing on your mind is either paying it down fast or maybe you're avoiding the situation altogether. Either way, it's something you want to get rid of and you want to get rid of it as fast as possible.
One thing to keep in mind though is don’t be hard on yourself for having a debt to pay off. It’s one of those necessary evils that we all have to go through. There will also be times when we need to take on debt to fuel a larger purpose that will repay us back in the future, i.e. starting a business or buying a home. Try to look at the good side of why you obtained that debt, to begin with, and why you're focusing now on paying it off.
Lucky for you, I've come up with 4 simple ways to start paying down your debts as fast as possible.
Set SMART Goals
One can't stress it enough - setting S.M.A.R.T goals are essential to strategizing a way to pay off your debts. You want to make sure your goals are effective and that you're not just spewing out random visions and desires. Your goals have to be realistic. It’s super easy for us to just plug into our heads what it is we want to pay down in 'x' amount of time, but we don't actually sit down, strategize and write out how we're going to do it.
A SMART goal is a popularized goal-setting method created by George Doran, Arthur Miller, and James Cunningham in their 1981 article “There's a S.M.A.R.T. way to write management goals and objectives”. It's been widely used within the education system and it really breaks down goal setting in a more strategic and achievable way.
The S stands for specific, M stands for measurable, the A stands for achievable, R stands for relevant and the T stands for time-bound. Every goal that you create should incorporate this strategy and the five main categories. By the time you're done writing out your SMART goal, it really should be well thought out and concrete in its objective. It also doesn't have to be an extremely long paragraph but should just be a couple of sentences of about how much your debt is, how much you have to pay down, how you're going to pay it down and when you're going to get there.
A lot of times you make these goals that you're really excited about, but maybe you know some of the steps are really far off. Take, for example, you say you want to run a 5k marathon. You cannot say that you're just going to jump up tomorrow and run a 5k. There's a lot of preparation and training beforehand required to achieve this particular goal. So, maybe your SMART goal isn't even going to encompass the 5k, but instead, you are going to break it down into smaller steps that make the end goal more achievable. You could instead say, get up every morning for the next five days and run 1/2 a km. And then the second week I'm going to get up and run 1K, and then the following week I'm going to get up and run 3k. You habitually stack smaller goals to inevitably prepare you to reach your end goal, in a more sustainable and less time-pressure way.
Pay Down More Than the Monthly Minimum
Another strategy to incorporate if you want to pay down your debt fast is to ensure you are paying down more than your minimum monthly payments. For example, your credit card has a minimum monthly payment of $50. You'll want to put down twice or thrice as much - or as much as you can possible. You could take your time and pay your loans off but you have to remember that interest is working against you. So the longer it takes you to pay off this debt, the more you're actually paying back the creditor in the long run.
If you get a little bonus from work maybe instead of treating yourself and buying a bunch of clothes, you can use that to pay off your debt. Maybe you're able to take a little bit of the extra money you’re putting into your savings and/or put it towards your debt which is always going to be saving you in the end.
Pick Up A Side Hustle
The more challenging but rewarding way to pay down your debts faster is to pick up a side hustle. I say challenging because depending on the side hustle it may take some preparation to get the ball rolling and see income, but it doesn't have to be a side business. A side hustle can just look like picking up a part-time job or even working overtime and picking up extra shifts at work.
This is exactly what I did back in 2018 when I was working towards paying off my credit cards and car loan. I was working my normal 9-5 administrative job and on the weekends I was working as a waitress at a small family-owned restaurant.
So, yeah - I literally had no days off for a bit and maybe my mental health suffered too, but in the end, I knew how important paying off this debt was to me and how much better off I would be mental if I made this short term sacrifice to reap the rewards of being debt-free. That was more important to me than the idea of maybe not getting my 9 hours of sleep and being able to see my friends often.
Move Back In With the Rents (or downsize)
Last but not least, this is an unpopular opinion and the last resort. This is speaking more to people who maybe just left University and want to work on paying down their student loans. You don't have to worry about many large expenses like rent or utilities and for the most part, most parents will let you live at home without a cost. At times you may want to pitch in with groceries or utilities, but for the most part, if you have parents that are laid-back and see that you are working towards a financial goal they will want to help you progress and not hold you back.
This option may sound annoying and depending on the situation you have with your parents, it may not be an option at all. If you are not on good terms with your parents or don't like your home situation, then choosing to rent shouldn't be frowned upon. Eventually, you will want your own space and freedom, and will have to pay that price - but you can try to milk out the situation for your own financial benefit as much as you can.
There are alternative options (if you do decide to rent) to keep costs low, such as rooming with a friend or going halves on an affordable apartment with your significant other.