10 Tips to Aggressively Pay Down Your Debt

Debt can wreak havoc, not only on your finances but also on your ability to borrow. Having a great deal of debt can create stress and can be hard to get under control. The good news is that there are ways you can aggressively pay down your debt, helping you get in a better financial position more quickly and alleviating the stress that debt can bring.

1. Always Pay More Than the Minimum

Not only will making the bare minimum payments cost you a significant amount in terms of interest, but it will also typically take ten years or longer to repay the debt, even without additional charges. Look at your budget and find areas you can cut that can allow you to pay at least double the minimum each month.

2. Consider the Avalanche Repayment Structure to Reduce Debt

Start with your highest interest rate card or loan and pay as much as you can each month while paying the monthly minimums on the rest. Once that first debt is paid, take the amount that you were paying on it each month, and begin paying that in addition to the minimum payment on the next highest-interest debt. Continue this method until each debt is paid.

3. Use the Snowball Method

A snowball repayment plan is similar to an avalanche repayment, except instead of targeting your highest interest rate debt first, you will start with the debt with the lowest balance. This may be the best method if you have multiple cards with low balances, as it will free up funds more quickly.

4. Look at Balance Transfer Offers

You may receive credit card offers with a zero percent balance transfer interest rate if you repay the debt in a certain period. Consider these offers a possible way to manage high-interest credit card debt. Without interest accruing, you can pay down the balance much more quickly.

5. Apply for a Home Equity Loan

If you have accrued a large amount of equity in your home, you can secure a home equity loan to pay off your debt. If you have lots of equity and a fairly good credit score, you can get a much better interest rate than most credit card interest rates. In addition, in many tax situations, you can deduct the interest from your loan on your personal tax return.

6. Look at a Debt Consolidation Loan

Debt consolidation loans are personal loans used to pay off high-interest-rate credit cards. You typically need good credit and a strong income for this option to result in significant savings. The other benefit of a consolidation loan is that it will be for a set term. This means that, if it is a three-year loan, you know at the end of three years you will be debt-free.

7. Trim Your Budget to the Bare Minimum

Part of aggressively paying debt down involves finding more money to put toward your debt. This means taking a hard look at your income and budget and finding areas where spending can be cut so you can put more money toward paying down debt.

8. Raise Additional Income

If you’ve trimmed your budget and realize you need more money coming in to put toward debt repayment, consider taking on a side gig to bring in extra money used solely to put toward debt.

9. Consider Loans From Friends and Family

If you have family and friends who have the means to loan you money, you might want to consider borrowing money to pay down your debt. Odds are that your family and friends will give you a more favorable interest rate, but always make sure to honor your repayment so the relationship stays strong.

10. Try to Renegotiate With Your Creditors

When you are way in over your head with debt, it may be time to talk to your creditors to see if they are open to renegotiating the terms of your debt. Sometimes, creditors will offer settlement amounts to save you fees and interest, but this can have a negative effect on your credit, so it should be done with caution.

When following the tips above to aggressively pay down your debt, it is also critical to take time to identify what caused the debt in the first place. You will need to develop a strategy to ensure once you have paid down your debt, you prevent yourself from getting into the same situation. This can include cutting back on spending or setting up emergency funds. Remember, one of the most essential strategies for paying off debt is to put systems in place to ensure it won’t happen again.