How do you get out of debt quickly?


Quick Answer

The first key to getting out of debt quickly is to quit funding purchases with debt. Additional steps include establishing a budget, setting up a debt repayment plan and earning extra cash.

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Full Answer

  1. Stop using debt

    Using debt to make large or non-essential purchases is a habit. Before a person can get the ball rolling on getting out of debt, that person must quit adding to the debt through purchases. Building a rainy-day fund of $1,000 or more may help someone stick to this commitment in an emergency.

  2. Set a budget

    Paying off debt requires that an individual's income or revenue exceeds his expenses. Setting or reviewing a budget gives a realistic view of the current financial situation. For example if your income exceeds monthly expenses by $300, you have that amount to put toward debt.

  3. Set up a debt repayment plan

    There are two common strategies to paying off debt. One is to pay off the smallest balances first, which creates a snowball effect. The other is to pay the highest interest rate accounts first, which minimizes the amount of interest payments.

  4. Earn extra cash

    An individual's ability to pay debt quickly is impacted by his income. One way to expedite repayment is to find ways to earn extra cash and put it toward debt payments.

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