How to Get out of Debt Fast

Debt can leave you feeling trapped.

Even when you’re making minimum payments against your credit card debt, interest eats up the bulk of what you pay, and you see only minor gains — if you see any gains at all.

Even worse, when you have multiple debts, it can feel like you’ll never get ahead. After all, you’re already working hard enough as it is, and you’re still struggling with repayment. 

If all this sounds exactly like your personal finance situation, it’s time to ask yourself a very serious question: What more can I do to get out of debt fast?

First, you have to prioritize your debt and attack debts with the highest interest rate first. Second, you need a debt repayment solution that fits your unique financial needs.

While every person’s debt portfolio looks different, there are best practice solutions most people consider to break free from the shackles of debt and achieve their financial goals.

In this article, we’ll introduce you to the options you can explore to get out of debt, improve your credit score, and otherwise strengthen your personal financial situation. 

Americans are accustomed to financing everything

If you’re considering how to get rid of your debt, the first thing you need to know is that you’re not alone. In fact, most Americans seek financing to cover everything from big purchases, like home mortgages or car loans, to small purchases made with credit cards.

Overall, from 2020 to 2021, debt levels increased by 5.4%. By staying laser-focused on debt management and coming up with a repayment plan that helps your pay down your debt, you can save a significant amount of money over time instead of having your extra cash whittled away by high-interest debt.

Debt-free living made easy

If you’re looking to improve your financial health, raise your credit score, and get debt relief, you’ve come to the right place. Here are some tactics you can use to keep extra money in your pocket. 

Pay the minimum payment plus principal

Unfortunately, if you just cover the minimum balance on credit card payments, you’ll usually end up spending more money on interest than the actual balance.

When you pay more than the minimum monthly payment, the excess funds will be applied to your entire balance. This means you won’t get too hurt by high interest rates and you’ll be able to get out of debt faster. 

Even better: Try as hard as you can to pay your credit card bills in full each month because this type of debt is super expensive. If you’re in a deep debt hole, consider taking on a short-term, part-time job or starting a side hustle until you climb out of it.

How it works

There are two ways to ensure your payment takes a chunk out of the principal of your loan payments: 

  • You can continue to make monthly payments while increasing what you pay to ensure at least some of the funds are applied to the principal. For some debt payments, you can specify on a payment slip or online portal what amount is being applied to the principal.
  • If you can’t pay your bill in a lump sum, you can also schedule a second payment to be made before the due date in the current billing cycle. This will help you spread out your payment allocations but still achieve the same result of paying extra each month — getting you started on your debt reduction journey.

Prioritize payoffs with the debt snowball method

If you’re going to get out of debt fast, you must begin paying some of these debts off. Start by putting your list of debts in order from biggest balance to smallest. Using the snowball method, you pay off your debts with the smallest balance first. By focusing on one debt at a time, you can prioritize which debts can be eliminated quickest.

How it works:

Continue to pay at least a minimum payment on every debt to ensure credit bureaus like Experian still look at your favorably. Then, make additional payments against the debt with the smallest balance until you pay it off in full. Once that’s done, start the process over with the next smallest debt balance on your list. 

Or use the debt avalanche method instead

If you’re not keen on the snowball method, you can try the debt avalanche method, which encourages you to focus on the high-interest debt first and work your way down to debt with lower interest rates from there. It’s essentially just a mirror image of the snowball method.

When paying off your debt, there’s no right or wrong method to use. You just need to create a debt management plan and stick to it.

Ultimately, everyone has different financial preferences and is working with different lenders. So, while someone might benefit from the snowball method, another might find the avalanche method to be more effective.

Refinance debt

When you’re trying to get out of debt, keep a pulse on the financial markets and try to recognize you may be able to get better interest rates on your debt compared to your current agreements. If you can, take advantage of these lower rates by refinancing current loans using a debt consolidation loan.

If this sounds intimidating, don’t sweat it. A loan specialist can help you through the process of refinancing a mortgage, home equity loan, auto loan, personal loan, or student loan.

Similarly, you can use credit card balance transfers to lower your credit card debt. If you have a credit card with a high balance, look for opportunities to transfer that balance to a card offering 0% percent APR for a set amount of time. Usually, this will give you six to 21 months to pay off the credit card without any interest fees. That should help you repair your credit report — making issuers happy, which comes in handy if you ever need to take on new debt.

How it works:

This solution requires you to do your research — or at least enlist the help of a credit counseling service. You’ll need to know the current terms of your loans and credit card interest rates. When you recognize opportunities for better interest, work with a trusted financial institution to refinance your loan. If you’re comfortable doing it yourself, just search for 0% APR credit card opportunities. A word of caution: If you plan to transfer a credit card balance, make sure you can pay off your debt by the time the promotion period passes.

Make lump sum payments

If you’re lucky enough to get a significant cash gift or a hefty tax return, put that money towards your debt (assuming you’ve already got an emergency fund built up). One large lump sum extra payment can significantly impact your debt-payoff goals. 

How it works:

This one is easy. When you get a windfall of extra funds, apply it to your debt balance as fast as you can. 

Settle your debts

At the end of the day, creditors just want to get paid. So, if you’re having trouble making payments while working your way out of excess debt, you might want to try your hand at negotiating with creditors. In many instances, creditors will agree to settle your debts, often for less than you already owe. Keep in mind that debt settlement can adversely affect your credit score if you stop making payments during negotiations. So, choose your course of action wisely. 

How it works:

Pick up the phone and call your creditors if you’d like. If that thought makes you uncomfortable, hire a third-party settlement service to assist with this process for a fee. Just make sure you do your homework to confirm that the settlement company you select is credible. According to the Federal Trade Commission, there are risks associated with debt settlement. You just need to be on the lookout.

The road to financial freedom

Now, you have the blueprint to help you achieve financial freedom! Commit to tackling at least one of these solutions and watch your debt dwindle before you know it.

As you work your way out of debt, continue to analyze your current budget and make a spending plan. By doing so, you will continue to free up resources that can be applied to your debt.

As an added bonus, you’ll learn improved money management skills that can help you avoid future debt. By decreasing your debt, you’ll see your credit score go up — and your pulse rate go down — because living debt-free means living stress-free. 

Here’s to getting out of debt — quickly and painlessly!


10 Questions to Ask Before Making an Offer on a Home

If you’re like most people, a home is likely the biggest investment you’ll ever make. That being the case, you’ll spend a lot of time and energy finding the right place—particularly if you’re going to be a first-time homeowner.

When you’re ready to begin the home-buying process, you’ll probably already know a lot about the house you hope becomes your dream home. However, it’s a good idea to do a little more investigation and get some answers to key questions upfront. As a result, you’ll be able to make your purchase with greater peace of mind.

Reviewing public records as well as talking to the seller and the seller’s agent can fill in details that will help you make a more informed decision. Here are the 10 great questions to consider before making an offer on a home—whether it’s a buyer’s market or a seller’s market.

1. How much did the seller pay for the home?

You should always ask about the original purchase price even if it has nothing to do with the current value of the home.

If the seller bought the house five years ago and didn’t do any renovations, you might not want to come in with a high offer price unless the local market is a very competitive market.

When you know how much the homeowner spent on the house, you may be able to negotiate a better sale price in good faith.

If you’re a first-time home buyer, you might also want to ask the seller why they’re selling their current home in the first place. You might be able to get the inside scoop from their realtor, which could help you win the bidding war with a lower price.

2. What’s the real estate market Like?

As you continue the house-hunting process, spend some time researching how the housing market is doing in the neighborhood you’re considering. You may want to compare all of the homes that have recently sold with all the active, under contract, and active listings in the past year or two.

See how the home’s listing price compares with other homes on the market. Is it the most expensive or least expensive property? Does the home price fall somewhere in the middle?

If you’re able to find a dream house that has a reasonable asking price, you may end up entering into a purchase agreement that leads to strong financial returns down the line.

3. How long has it been on the market?

In the real estate world, DOM stands for days on market. Generally speaking, the longer a home is on the market, the less it sells for. The DOM clock starts as soon as a house is listed for sale. Only when a transaction is categorized as “pending” does the clock stop.

The longer a home sits on the market, the more questions you should be asking. Maybe the listing is sloppy or has inaccurate information. Or perhaps there’s something wrong with the house that keeps coming up during home inspections, which is causing the seller to experience a pattern of failing deals.

Whatever the case may be, the longer a house sits on the market, the better the chances are that you will get a more favorable sales contract if you continue pursuing the property.

4. What is the market value of the home?

The market value of a home is a key factor to consider before making an offer. After all, the last thing you want is to pay New York City prices if you’re buying a home in a rural area of Iowa.

Unfortunately, this isn’t an easy question to answer. For the best results, you can enlist the help of a real estate agent to answer this question by conducting a comparative market analysis.

Comps, or recently sold properties that are comparable to the one in question, can help you determine what to offer based on sales in the area. Agents who are familiar with the market know what houses sell for, what sort of offers people are making, and how to compete. They can also walk you through the earnest money deposit process and help you figure out how much to put down for a down payment, whether you need to make a cash offer to win a deal, and how much to counteroffer when there are multiple bids.

At the end of the day, it’s impossible to know whether you’re getting a good deal on a home sale unless you know how the local market has been performing.

5. Are there any problems with the house?

Even though they’re not legally required to do so, some sellers will share information about the home that paints it in a negative light. For example, a seller might say that the septic tank will need to be replaced within the next year.

Sellers do this so that things like an inspection contingency or an appraisal contingency don’t kill the deal. After all, they don’t want a prospective buyer to get to the inspection

It’s not in their interest that you get to the inspection stage, discover a problem, and subsequently back out of the deal. So, be attentive to the seller’s information about the home’s condition. You may find out that key fixtures have been updated lately, which is good.

6. What’s the resale value like in the neighborhood and what will it likely be in the future?

Since a house will be one of the biggest purchases you’ll ever make, your investment should hopefully become more valuable over time. Getting the perspective of your real estate agent and your mortgage loan officer will increase the chances you make a good investment.

The ideal house should be located in an area where property values are consistently rising. By buying a house in such a location, you can get better gains from the sale of your home at some point in the future.

Of course, just because a neighborhood is performing well now doesn’t mean that will always be the case. Population changes, new construction, and other events could cause your home’s value to decrease over time. If you think a house is likely to depreciate soon, pass on the deal.

One way to gauge whether a neighborhood is trending in the right direction is by attending a few open houses in the area and just talking to owners and agents. Keep your ears open; you never know what you might hear.

7. What are the closing costs?

When you’re buying a home, money is incredibly important. This is why it’s critical to find out whether you qualify for mortgage preapproval before submitting an offer letter. After all, the last thing a seller wants is to enter a deal that has a financing contingency.

As your mortgage lender will tell you, a preapproval letter is only the beginning. There are tons of costs to consider during the real estate process, including closing costs, which are one-time fees that you’ll pay when you complete the sale.

In most cases, closing costs tack on an additional 3% to 4% of the total purchase price. For example, if you purchase a $300,000 home, closing costs will amount to $9,000 to 12,000 on top of that. These costs include appraisal fees, inspection fees, lawyer fees, notary fees, and taxes related to land transfers.

Additionally, there are some one-time costs that aren’t included in closing costs. Plan for any renovations you may need for your new home, including moving expenses and utility setup costs.

8. How old are important components of the home?

A home’s appearance is less important than its age or how recently it’s been renovated. Eventually, important components of the house—such as the water tank, air conditioner, heating system, septic system, plumbing, electrical system, and appliances—will need to be repaired or replaced.

Of course, no equipment lasts forever. But before you sign on the dotted line, you need to be aware that old or poorly maintained appliances might need to be replaced, and that you may have to spend a great deal of money sooner than later if the seller hasn’t updated them in a while.

9. Are there any other offers on the table?

Unfortunately, you may be up against multiple offers when you go to buy a home. That being the case, it’s good to understand what you’re up against so you can prepare a well-timed, competitive offer for the property.

10. How soon can the seller close?

Before making an offer on a home, it’s also important to understand the seller’s timeline. How much time does the seller need to move out? Has the seller found a suitable property yet? What is the seller’s preferred closing date?

The seller’s timeline is not only important for ensuring that your offer fits within their timeline but it also helps to structure your offer in a more attractive manner. 

Suppose you’re currently renting and must leave your apartment in 45 days but the seller wants the deal to close in 90 days. In this scenario, entering into an agreement may not be the best idea.

Get informed to make the right offer

A real estate transaction is one of the most important investments you’ll ever make in your life.

That being the case, you need to ask important questions to determine whether the house is right for you and what the best price might be.

To do that, identify a trustworthy agent you can work with to find your dream home and make an offer that meets your needs and budget.

Here’s to landing an awesome property you’ll love for years to come!