How to Pay Off $25,000 in Debt as Fast as Possible

There’s nothing quite like the weight of debt. It can be downright exhausting.

I know the feeling. Just four years ago, my wife and I set out to figure out how to pay off debt — nearly $30,000 worth — within the 16 months leading up to our wedding.

The good news was that we weren’t alone in wanting to become debt-free — and neither are you.

Thankfully, what worked for us has worked for others trying to get out of debt as well. Here’s a roadmap of steps you can take to make it work for you, too.

Know exactly what you owe

The first step to paying off $25,000 or more in debt is knowing precisely what you owe. That means sitting down and tallying up all your debt and loan payments from all types of debt — student loans, auto loans, credit card debt, etc.

Then, once you start tracking all your spending, you can establish how much you can throw at debt each month.

That’s where budgeting comes into play.

Create a budget

A budget is perhaps the single most important tool in managing your personal finances, especially when it comes to paying off debt. It sometimes gets a bad rap, but if you want to gain control over your money, budgeting is a powerful first step. It’s not just about restricting your spending when money is tight. It’s also about knowing where all your hard-earned money is going each month.

Budgeting options

Luckily, there are plenty of free tools out there to help you track expenses:

• Spreadsheets: Search for free templates you can use to track your expenses.
• Online tools: Services like Rocket Money let you see where your money is going.
• Financial software: You can use an app or software like YNAB to get finer control over every dollar coming in and going out.
• Pencil and paper: This is old-school, but it still works – as long as you remember to track every receipt.

For example, my wife and I used what’s called a zero-based budget. Every single dollar is assigned a function, whether that’s bills, credit card payments, or groceries. It’s called zero-based because all of your income minus all of your expenses (savings and debt repayment count as “expenses”) equals zero. If we come in under budget on a category, we throw those extra dollars toward debt as well.

Slash your spending

Paying off $25,000 in debt will require some discipline when it comes to your spending. It doesn’t have to be forever, but it’s important if you want to free up more cash to put towards debt.

Go over your budget, line by line, and identify areas where you can make some cuts. Maybe you stop for coffee every morning before work. Why not make it at home? Have a gym membership you pay for but barely use? Drop it, and give working out at home a shot. Skip your subscriptions for a few months, or dial back your hobby spending.

Whatever it is, ask yourself if you can live it without it for a little while. Often, the answer is yes.

There are also ways you can save money on stuff you need to buy. For instance, I use Ibotta or Fetch after every grocery trip to receive cash back on everyday purchases. All it takes is a picture of your receipt and a few minutes of your time.

Rakuten is another good way to save when shopping online. It offers cash back when you shop like normal on many sites and then activate the cash back offer. When you’re ready, you can cash out your earnings to PayPal, and then throw that money at your debt.

Some credit cards also give you cash back on your purchases, which is kind of like a discount. Just make sure you’re not carrying a balance from month to month, because the interest will cancel out the cash back you earn.

5 ways to pay off $25,000 in debt

Paying down $25,000 of debt, whether it's student loan debt, a car loan or high-interest credit cards, can feel overwhelming at first. But you can chip away at the debt faster by using one of these classic debt repayment strategies.

Use the debt snowball approach

The debt snowball method is a repayment plan that focuses on how you can benefit from a psychological boost while paying off your debt. Advocates of this method see the quick progress of paying off your smallest debts first as a motivator to keep you on track until you’re free of debt.

Here are the steps:

1. List your debts by balance, from smallest to largest. This will give you an idea of which ones you should tackle first.
2. Throw every penny you can at the smallest debt. For all the other debts, make only the minimum payment on each one.
3. Move on to the next. When the smallest is eliminated, roll that entire payment to the next smallest debt. Continue to make only the minimum payment on all the other debts, and repeat until each debt is paid in full.

Who should use this method

If you think you’ll have a hard time staying on track and want quicker accomplishments, the snowball method might be a good payoff plan for you. Just keep in mind it may result in paying more interest over time. This is because you’ll be paying toward the smallest balance first regardless of interest rate.

Tackle high-interest debt first

The debt avalanche method is similar to the debt snowball method in that you focus on attacking one debt at a time, paying just the minimum amount due on the others. But instead of focusing on repaying the smallest debt first, you focus on the debt with the highest interest rate instead.

Here are the steps:

1. Find the debt with the highest rate. Make a list of every debt you owe. Order them from highest interest rate to the lowest interest rate.
2. Put extra funds toward the debt with the highest rate. Focus every cent you can muster on the debt with the highest interest rate. For all the other debts, continue to only make the minimum monthly payment.
3. Move on to the next. When the debt with the highest rate is wiped out, roll that entire payment to the next biggest debt as you continue to make only the minimum payment on the rest. Repeat until each debt is paid in full.

Who should use this method

If you have all the motivation you need and don’t need to rely on the “small wins” of wiping out your smallest debt early, the debt avalanche method can save you money and time, making it a more cost-effective debt repayment strategy.

Bring in additional cash

If you can manage a second job or side hustle, you can earn more money to throw at your debt. Plus, some ways to make money can actually be fun.

You can start small with survey sites like Survey Junkie (I use this one myself), then throw your earnings at your debt. This obviously won’t bring in a ton of extra funds, but every little bit helps.

With Uber Eats you can deliver food across town whenever and wherever it works for you and get paid. Just download the app and upload your documents — once you’re notified that you’re “active,” you can start earning!

Here are some other ideas:

• Get a part-time job
• Pick up extra hours at work
• Sign up to be a rideshare driver
• Sell extra items online
• Offer your services as a pet sitter, dogwalker, proofreader, photographer (whatever you enjoy)
• Look for freelance gigs

Who should use this method

You should use this method if you have the time and energy to work a side hustle or second job.

Use a balance transfer card

Balance transfer credit cards can be a powerful option because they let you temporarily halt your interest payments while you continue to attack your principal balance.

Balance transfer credit cards typically offer a 0% introductory APR for several months – typically 12 or 15, but sometimes as many as 18 or 21. This allows you to transfer balances over from accounts with higher interest rates, which can result in pretty significant savings. Keep in mind that there is typically a balance transfer fee, which is usually 3% to 5% of the amount transferred.

Check out our list of the best balance transfer cards to learn more.

Who should use this method

It depends on your financial health and your situation, and your credit report is a major factor. If you have a great credit score, you may qualify for some of the best balance transfer credit cards out there. These typically give you a 0% introductory APR of anywhere from 15 to 21 months. If, however, your credit isn’t great, you may only qualify for an introductory period of six months.

Take out a personal loan

Depending on your circumstances, taking advantage of one of the best personal loans could be a good option for paying down your debt. Personal loans such as debt consolidation loans are a way to combine your loans or debts into one, giving you one monthly payment to worry about instead of several. They usually have a lower interest rate than credit cards, too, which can help you save on interest.

Who should use this method

Personal loans can provide more flexibility than some other options because you receive a lump sum in your bank account to pay off your lenders. However, you’ll need good credit to qualify for a low interest rate.

FAQs

Bottom line

Paying off $25,000 in debt might seem daunting, but it can definitely be done. Start with a list of what you owe and the interest rate on each debt. Work out your budget for needs and wants, and figure out how to save money on what you need to buy. Then choose a debt repayment method – or more than one method – that works for you.

Take action sooner rather than later, and consider asking for help if you're not sure where to start. If you need professional advice, call a credit counselor at a non-profit credit counseling agency to help you launch your debt payoff journey. The National Foundation for Credit Counseling is one place you can look.

My wife and I paid down nearly $30,000 in debt using these strategies, and we know you can do it, too.