How to Pay off $25K in Debt Using Tried-and-True Methods

A sensible plan of action can help you get out of debt faster than you thought.

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Updated May 13, 2024
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No matter the amount, there’s nothing quite like the weight that debt bears.

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 $30K's 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.

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In this article

Money in, money out

The first step 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, however much you owe the credit card companies, etc.

You work hard for the money you bring in, there’s no doubt about that. So it’s important to know exactly where every penny of it is going. 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 finances, this 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.

Luckily, there are plenty of free tools out there to help you track expenses, whether it be a printable planner, a spreadsheet template, or an online budget planner like Mint.

My wife and I used what’s called a zero-based budget, which gives every dollar a function so your expenses match your income at the end of each month, equalling zero.

Following this type of budget means if you earn $3,000 a month, you’ll want every expense to add up to $3,000. This includes savings (starting with an emergency fund), investments, charity, and debt repayment. 

If, when you get to the end of the month, you have any money left over because you spent less than budgeted, you throw all of that at your debt as well.

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Minimize your spending

If you’re determined to pay off your debt, you’ll need to make some cuts to spend less than you’re bringing in. Even if the debt doesn’t stem from overspending, being disciplined enough to cut back on expenses aggressively is one key to overcoming it.

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.

Whatever it is, ask yourself if you really need it in your life right now. 

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 (formally Ebates) 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 of the best credit cards also basically give you a discount by paying you cash back on your purchases.

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5 options to pay off debt

Juggling $25,000 of debt can be stressful to manage, whether it's student loan debt or an expensive car loan. But you may be able to chip away at the debt faster by combining your loans or using one of these classic debt repayment strategies.

1. Consider 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. First, 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. 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 instead of focusing on the interest rate. For a more cost-effective debt payoff strategy, consider the debt avalanche method.

2. Tackle high-interest debt first with the debt avalanche approach

The debt avalanche method is similar in ways to the debt snowball method, 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. While making the minimum payments on all other debts and working toward paying off high-interest debt first, you’ll target the debts likely costing you the most money in interest payments.
  2. Make a list of every debt you owe. Order them from highest interest rate to the lowest interest rate.
  3. 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.
  4. When the highest 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 lowest debt early, the debt avalanche method can save you money and time, making it a more cost-effective debt repayment strategy.

3. Start a side hustle to throw more money at your debt

I know, work away from work. But it’s not forever.

If you have the time and can manage a second job, you’ll be able to throw extra money at your debt. Plus, some ways to make money can actually be fun. Combine this with any debt repayment strategy and you’ll be a force to be reckoned with.

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!

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. 

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4. Do a balance transfer

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

The key to balance transfer credit cards is they typically offer a 0% introductory APR for several months. This allows you to catch your breath and transfer over balances from accounts with higher interest rates, which can result in pretty significant savings. Keep in mind that there is typically a balance transfer fee. 

Check out our list of the best balance transfer cards for more information.

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 is struggling, you may only qualify for an introductory period of six months.

5. Take out a personal loan

Borrowing more money may seem counterintuitive, but depending on your circumstances, taking advantage of one of the best personal loans could be a good option for paying down your debt.

While balance transfer credit cards provide a promotional period of charging little to no interest, if you don’t pay off the balance within that time, the remainder will be subject to the card’s ongoing APR, which could be higher than other cards.

Personal loans such as debt consolidation loans offer more flexibility in that regard and typically have a lower interest rate than credit cards.

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. But again, having good credit could help you qualify for a low interest rate.

Bottom line

While paying off $25,000 in debt might seem daunting, it can definitely be done. Take action sooner rather than later, and consider asking for help if you're not sure where to start. Credit counselors at non-profit credit counseling agencies could be helpful, for example. 

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Author Details

Matt Miczulski

Matt Miczulski is a personal finance writer specializing in financial news, budget travel, banking, and debt. His interest in personal finance took off after eliminating $30,000 in debt in just over a year, and his goal is to help others learn how to get ahead with better money management strategies. A lover of history, Matt hopes to use his passion for storytelling to shine a new light on how people think about money. His work has also been featured on MoneyDoneRight and