How to pay off debt quickly

We don’t often talk openly about money as Brits, which only adds to the stress for millions of people who have consumer debt and who are struggling to work out how to tackle the mounting pressure on their finances. Breaking down the taboo around debt and opening the conversation about how to take control is a huge step in the right direction, so here are some tips to keep you on track.

Choose a strategy

There are lots of articles all over the internet which debate the best approach to paying off debt when you have multiple loans and credit cards. There are two main methods: the debt snowball, and the debt avalanche. The aim of both approaches is ultimately the same, however, the order of tackling the debt varies. Here’s a quick breakdown:

The debt snowball

Is where you pay off the smallest balance first, working your way towards the largest balance, regardless of the interest rates that apply to the debt. The reason this approach is popular is that you can see progress quickly as you reduce the number of debts that you have quickly, especially where there may be small amounts on various cards.

The debt avalanche

Takes into account the interest rates on the debt you have and you pay off the highest interest rate debt first, whatever the balance. This can take a little longer to get you started and it might feel slow to begin with, but the speed of repayment can pick up towards the end of your journey as you reallocate more money to paying off capital, rather than interest. 

The best approach? The one which works best for you. Although it can save you slightly more money in the long run to use the avalanche method, the main priority is staying on track and motivating yourself to work towards your goal.

Stay motivated

One of the hardest things about a financial goal which can feel far off in the future is the motivation to keep going when things get tough, or when you have other priorities and distractions. For some people, the knowledge that they are closer to the finish line with their goal can be enough, but others (myself included) need visual signs to keep the momentum when there are big challenges ahead. Try creating a debt repayment chart to show your progress and remind yourself how far you’ve come.

Make small changes with big impact

Paying off debt doesn’t mean that you have to sacrifice everything else in your life, yet there are some areas where you can save money without trying too hard and accelerate your debt repayment. Check out this blog post for simple ways to save more today.