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11 Ways How to Pay Off Debt

There are several ways to pay off debt, and trying to determine which makes sense can feel overwhelming. The Financial Guides at Your Money Line help employees navigate debt repayment and their other financial goals day in and day out. To know how to pay off debt, you need to understand what debt is, how much you have, and how this debt could be impacting your other financial goals. You’ve likely heard the statistic that most US households don’t carry enough cash to cover a $500 emergency. Anecdotally, I would have to agree with this statement. 

The most concerning part of having outstanding debt is that it can put you behind on all fronts. You might be contributing less to your 401k, maybe you’ve depleted your emergency savings, or perhaps you feel like you’re running on a financial treadmill. 

1. Make a list of all your debts

The first step before debt payoff starts. Before asking yourself, “how do I pay off my debt” you have to know what debt you have and the status of any of these outstanding liabilities. Make a list of every debt you have. Yes, this is every debt, so your student loans, mortgage, and other “healthy debt” still count. It’s not uncommon to not want to include these debts because they don’t feel “bad” like the others might. But we do need to have them on our list.  

For each of these outstanding debts, you’ll need the following information: 

  • Creditor name
  • Interest rate
  • Minimum monthly payment
  • How much you’ve been paying toward this debt
  • Outstanding balance

2. Establish a budget

To start paying off debts, one should track down their monthly income and expenses and understand the maximum they can pay every month. I know budgeting is the worst. But we must know where you stand now to forecast any type of debt payment goals or calendar. You will be infinitely more successful in paying down debt if you start with a budget (or spending plan). 

3. Know your debt strategy

Knowing the best strategy for repaying debt can be difficult, especially when there are so many strategies to pay off debt. Depending on your savings (long, intermediate, and short term), income potential, and personal behavior, some options might make more sense than others. There are some options we’re rarely going to recommend. Good personal finance advice can’t happen in a vacuum, so there are always exceptions, but as a rule, we don’t recommend 401(k) loans or using secured debt to pay off unsecured debts.

Scatter method

This method is the most common among employees when we begin working together to pay off outstanding debt. The scatter method is when you round up your payments on your outstanding liabilities. If you owe your credit card company $75, you might round it to $100. Is your mortgage $1420? You write the check (just kidding, no one writes checks anymore) for $1,500. 

Paying extra on your debts is a great habit to build and employ. However, this method is generally not the best from both a math and a behavioral point of view.

Math method

The name tells you everything you need to know about this method. This method is the best way to pay off debt from a dollar and cents perspective.

When adequately executed, you’ll make the minimum payment on all of your outstanding debts, except the one with the highest interest rate. Any “extra” you place toward your overall debt should go to the debt with the highest interest rate. Again, when we look at what saves the most money, the math method is the clear winner and is the best way to pay off debt.

The Momentum Method

You want to know how to pay off debt fast? Here’s the key - the Momentum Method, which is the preferred method of the Your Money Line team. The Momentum Method uses human behavior to our advantage when trying to pay off debt fast. Though you won’t save quite as much as the math method, you will have a higher probability of long-term success. As people, we want to feel the benefits of the decisions (and sacrifices) we make. The Momentum Method begins debt repayment with your smallest debt to help you feel the impact of your active decision-making. 

If you decide to use the Momentum Method (a good choice), you’ll want to line your debt up from the smallest balance to the largest balance. Remember, we’re entirely casting aside interest rates here. You’ll make the minimum payment on all of your debt except the one with the smallest balance. All of the extra you planned on will be applied to your smallest balance debt. When paid, you’ll take everything you were putting on this debt (minimum payment and the extra) and put it on the next smallest balance debt. Repeat this process until you’ve eliminated all of your outstanding debt.

Other useful debt payoff tips

You can leverage many different tips and tricks to pay off debt.

1. Never get in debt again 

I’m not trying to be insensitive or flippant about the financial realities of life. It’s hard. Inflation is high, housing prices are off the charts, and as of the writing of this article, we’re on the brink of recession. However, the key to long-term debt freedom is not to take on the debt in the first place. (Again, easier said than done, I know.) 

2. Keep track of bills and pay them in less time. 

Keeping track of your bills is relatively low-hanging fruit in this space. Keeping track of your outstanding bills and making these payments on time will help keep you out of debt in the first place.

3. Stop your credit card spending

Cashback bonus. Miles rewards. Points systems. It all sounds great, but the truth is that if you’re a credit card user, you spend more than your cash/debt self would. Trust me; there are psychological studies in this space. If you want to manage your outstanding debt best, you have to stop the bleeding from credit card usage first. 

4. Remove credit card info from online stores

We’ll credit James Clear and his book Atomic Habits for this tip. One of the premises of his book is that we can break bad habits by simply making them more inconvenient. If you remove your payment information, you’ve created a barrier to purchasing, making you less likely to complete the transaction. 

5. Sell unwanted household items and gifts 

If you’re anything like me, you have plenty of items around the house you could sell to pay off debt faster. Paying down debt quickly often requires an increase in income that looks less traditional than you might think. I know no one likes posting items on FB Marketplace (or similar platform) but remember the goal is to pay off debt quickly, and a little extra cash will make this possible. 

6. Get a second job 

If you want to kickstart your progress into becoming debt-free, a second job (or side hustle) is a great option. Every dollar you earn above your regular income can be put toward your outstanding debt. If you decide to pick up a second job, be sure to give this job a job. Know how much you need to make from this second gig and how long you’ll need to work to achieve your goals.

7. Live on a budget 

You might have just rolled your eyes, and if you did, bare with me. We talk with employees about money every day, so I know how you’re likely to feel about budgeting. The word budget often feels restrictive when the opposite should be true. A well-crafted budget (or spending plan, if that makes you feel better about it) allows you to plan in advance for how you want to spend your money. If paying off debt is a priority for you, then setting up a budget will be an integral part of success in goal achievement.

8. Get on the proven plan for your money 

The Financial Guides on the Your Money Line advice team are experts at helping craft plans that work for employees. Finding a balance between personality, circumstances, and best practices is the bread and butter of what we do here. Getting help with paying off debt is one of the most common problems plaguing the financial lives of your people. Your Money Line is here to help alleviate these stressors. Whether via phone call, email, or chat, our team is here to ensure paying off debt remains a realistic goal for a population.


Solid financial guidance and long-term success take teamwork. Your Money Line works day in and out to ensure our participants are equipped with the keys to success. If you want to demo our service or have more questions about serving your most significant asset, you know where to find us!