9 Most Effective Ways on How to Pay off Debt in US

how to pay off debt
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Getting a loan is increasingly becoming easier, and it’s easy to find yourself buried under a pile of debt. Is there an easy way to pay off debt fast with a low income? Is it better to save or pay off debt? And there would be many other questions that may pop-up in your mind. This article will share several ways on how to pay off debt in US.

The ultimate solution for loans is to pay them. Financial experts say that overspending and accumulating debt is a behavioral issue. Improving your personal finance will require changes to how you behave with money.

Here are some of the 9 proven strategies that can help you pay off your debt:

Develop financial discipline

If you are searching for how to pay off debt, financial discipline will help. Create and stick to a budget, ensuring you do not miss the minimum payment on your debts. Defaulting on loans not only affects your credit score, but the failure can also demotivate you.

Increase your income

If you are wondering how to pay off debt fast with a low income, getting a side hustle is a solution. Earning an extra income can go a long way to helping you pay off your debt fast and save money. Make better use of your time. Increase your skills to make an extra income. Freelancing, tutoring, pet-sitting, or offering virtual assistance are quick ways to make some extra cash that can help you significantly bring down your debt.

Debt Avalanche Strategy – Pay the most expensive debt first

One smart way to pay off debt is the Debt Avalanche method. You work towards paying off the debt with the highest interest rate first.

Using a spreadsheet or just pen and paper, list all your debts. Have a column indicating the interest rate for each, in addition to other details such as the outstanding amount. After making the minimum payment on all your bills, any leftover money should go towards paying off the debt with the highest interest rate.

Debt Snowball Strategy – Pay the smallest debt first

This is another excellent strategy on how to pay off debt fast. A snowball starts small and gets bigger as it rolls down the hill. Similarly, tackle your smallest debt first, and then the next in line.

First, pay the minimum amount on all your debts. If there’s extra cash left, make an extra payment towards the smallest debt. Once the smallest debt is paid off, move on to the next smallest debt.

Debt Snowball vs Debt Avalanche – Which is better?

The choice between these two methods on how to pay off debt quickly depends on your financial situation.

In the avalanche strategy, the benefit of eradicating the highest-interest debt first is that it prevents your total debt from inflating every month due to the high interest. Use it if some of your debts have high-interest rates.

The debt snowball method is effective because the moment you’ve paid off one debt, you feel motivated to tackle the next, therefore it makes sense to start with the smallest one. If you have several debt obligations with almost equal interest rates, snowball debt management can be very effective.

Pay more than the minimum, regularly

This is an effective strategy on how to pay off credit card debt fast. Paying your credit card debt every time prevents your loans from piling up and avoids defaulting.

In addition, use any spare money to pay more than the minimum amount, and confirm with your lender that this extra payment is used to reduce the loan balance, rather than being rolled over for the next month. This is a sure strategy on how to pay off loans and be free of debt.

Refinance your loans

This basically means getting a more affordable loan. Borrowers can refinance their loans when interest rates fall. A borrower takes out a new loan at more favorable conditions and pays off the old, more expensive debt. This replaces their debt obligation with one that has more favorable terms, such as lower interest rates, longer repayment periods, and lower monthly installments.

Refinancing is one of the common strategies you can use to pay off student loan debts, as one student will often have multiple loans.

Consolidate your loans

Consolidating your loans into one can be an effective way to paying off your debt fast and saving money at the same time. Sometimes you find yourself with more than one debt, especially for students who may graduate with tens of thousands of dollars in different student loans. If you are wondering how to pay off student loan debt, you might consider consolidating them into one debt.

Instead of struggling with multiple monthly obligations, a consolidation lender pays off your debts, and you only have to pay one lender. The interest rate on the consolidated loan is usually lower than what you would’ve paid on all loans separately. This reduces your debt obligation, thereby saving you some money.

Debt Relief Recovery

Debt relief is another alternative if you want to know how to pay off debt. It involves a negotiation with your lender to accept a lower amount than the total debt you owe, rather than miss being paid at all. A debt relief company negotiates for you a lower interest rate and monthly installments, as well as a reduced overall debt.

Sometimes, you may feel completely overwhelmed, at risk of missing minimum payments or foresee having financial difficulties for a while. If you are in such a situation, here are two options better than rushing for bankruptcy. It might be time to talk to a debt relief company or consider consolidating your debts with one affordable personal loan.

LendingTree Personal loans can help you consolidate your loans into one manageable debt with more favorable terms including a lower interest rate and an extended repayment period. By just filling out one form, LendingTree will present you with 300+ lenders for you to compare interest rates and shop for a suitable personal loan offer. They give personalized recommendations, ongoing credit monitoring, and budget insights.

personal loan comparison - lending tree

Consolidation vs Refinancing vs Debt Relief – which is better?

Choosing between strategies on how to pay off loans depends on your unique financial situation.

Consolidation combines all your debts into one which likely has more favorable terms, relieving you of the pressure of keeping up with multiple lenders. However, it may come with fees such as up-front costs.

Refinancing your loan is taking a new, more favorable one and paying it off. However, monthly payments may increase, and the savings may not be worth the effort.

Debt relief involves negotiating with your lender to accept a lower amount than never getting paid at all but may affect your credit because a “settled” debt is considered a negative.

Get help

We all need help from time to time. If you feel lost, don’t shy away from talking to a financial planner. It may be just what you need to finally get the financial freedom you so much deserve.

LendingTree Personal loans offer a free consultation to discuss with you all the available options and connect you to affordable loans and debt relief programs that fit your unique needs.


Being in debt is not necessarily a bad thing and does not have to make you feel bad about yourself. With financial discipline and a strategic plan, you’ll be out of debt in no time.

These strategies are equally effective, but you should understand the trade-offs. If you are totally lost on how to pay off debt, how to pay off student loan debt, and how to pay off debt with little income, you can seek the help of a debt relief company.

Frequently Asked Questions

What’s the easy way to pay off credit card debt fast?

We all want to know how to pay off debt fast and get on with our lives. If you are struggling with credit card debt, there are a few things you can do to get out of the mess. First, cut down or pause your credit card spending, at least until you’ve paid off the most expensive debts. Avoid keeping your credit card in your pocket and delete it from online stores.

From early 2021 to 2022, credit card balances in America rose by $71 billion. When you consider that Americans pay $120 billion in credit card interest every year, paying off your credit card debt faster will do you good. This reduces the chances of using it unnecessarily. Take advantage of windfall income to bring down your debt and avoid defaulting.

Is it better to save or pay off debt?

Experts advise balancing the two, instead skipping either. The interest you earn on savings will hardly ever surpass the interest you pay on debt. As you budget for your income, prioritize paying off debt but also channel a little of your money toward your savings. Warren Buffet, a successful American billionaire, and business magnate insist on following the 90/10 rule. Save at least 10% of every income, more if you can.

Is it good to pay off debt all at once?

If your debts have low-interest rates, and you are still quite young, it may be better to invest your money rather than pay off debts all at once. Albert Einstein said that “compounding interest is the 8th wonder of the world. You still have time to let compound interest do its magic and multiply your money!

Is there a “one size fits all” strategy on how to pay off loans?

Everyone’s financial situation is different, and while there’s no “one size fits all” strategy on how to pay off debt quickly, there’s one that comes close. Always pay the minimum amount every time without failure. Missing out on the minimum payment results in a late payment fee which inflates your debt, and affects your credit score every time you default. This simple strategy will help you to pay off loans and keep a good credit score.