How to Pay Off Debt: Effective Strategies to Get Out of Debt Fast

High-interest debt reduces monthly cash flow that could otherwise be invested, saved, or redirected toward long-term goals. It can also add financial pressure and complicate monthly budgeting, especially when rates are variable. Significant debt increases your credit utilization ratio, which plays a big role in your credit score and overall borrowing power.

For high earners in particular, debt can feel frustrating. You may have significant assets tied up in retirement accounts, equity, or investments—but limited liquidity month to month. Paying down debt strategically can restore breathing room and help you move forward with more control.

A strong debt payoff plan has four steps. Start by clarifying your finances, then take action.

1. Calculate your total debt burden

Before you develop a plan to get out of debt, understand exactly what you owe. Create a list of each debt and note:

• • The lender or creditor that holds the debt
• The current balance
• The interest rate
• Whether the interest rate is fixed or variable
• Whether the debt is secured with collateral (mortgage, auto loan) or unsecured (credit cards, student loans)
• The monthly payment due date

Organizing your debts into a list can provide clarity on their scope and help you determine the most effective repayment strategy. A key way to assess how manageable your debt is to calculate your debt-to-income (DTI) ratio. Your DTI ratio considers how much you’re paying toward debt as a percentage of your gross monthly income.

A DTI ratio below 40% is typically considered manageable, while anything above 50% indicates an inability to take on more debt and potential problems managing existing debt. Some lenders, including BHG Financial, may be willing to approve qualified borrowers with higher DTIs if their income and credit score indicate they can reasonably handle an additional loan payment.

With a complete list of your debt and your DTI ratio in mind, you can begin to think about a realistic strategy to repay what you owe.

2. Choose an effective debt repayment strategy

There are three main debt repayment strategies that may be worth considering depending on your debt burden and financial goals.

Debt consolidation

Debt consolidation loans are a tactic to shift multiple high-interest debts into one loan with a single monthly payment. For well-qualified borrowers, a debt consolidation loan offers a lower interest rate, which can save you money on interest while streamlining debt management. You might consider consolidating unsecured debt, such as credit cards, to achieve more manageable monthly payments.

The snowball method

With the debt snowball, you’ll pay off your smallest debt first, regardless of interest rate, while continuing to make minimum payments on all other debt. Once the smallest balance is paid off, you roll that payment amount into the next smallest balance.

The idea here is to create momentum, like rolling a snowball down a hill that will inevitably gain weight and increase speed as it goes. If motivation drives your behavior, this approach can keep you engaged long enough to pay off your largest debt in full.

The avalanche method

With the avalanche method, you start with the highest interest debt first, regardless of balance, while continuing to make minimum payments on all other debt. After eliminating the highest-rate debt, you roll that payment into the next highest rate. This strategy prioritizes math over momentum. By eliminating the most expensive debt first, you typically minimize total interest paid.

If your primary goal is cost efficiency and long-term savings, the avalanche method may align best.

3. Determine the best way to pay off debt for you

The best way to pay off debt is to choose a strategy you can commit to for the long term, or until your debts are paid. If you’re someone who relies on quick wins to stay motivated, the debt snowball may be the better choice. However, if you’re motivated by saving money, a debt consolidation loan or the debt avalanche might be a better fit.

4. Change your money habits to stay out of debt

After committing to repaying your debt, it’s important to adjust your spending habits to avoid accumulating more debt. There are several helpful changes in habit you can implement, including:

• Spend according to a budget: While some might see a budget as restrictive, it’s a way to set clear boundaries around your spending. The key is to be honest with yourself when creating a budget, particularly in areas where adjustments are needed. Small, realistic changes are often easier to manage and maintain compared to drastic ones, making it simpler to gradually shift your spending habits.
• Prioritize spending categories: Identify the categories that matter most to you and allocate more of your budget there, while cutting back in other areas. For instance, if dining out is a priority, you might set aside extra funds for restaurants and adjust your clothing or travel budget accordingly.
• Set a mandatory cooling-off period on purchases: To reduce impulse spending, set a mandatory wait time before making purchases over a certain amount. For example, you could wait 24 hours before deciding to buy anything over $100. This pause gives you time to consider whether the purchase is truly necessary, helping you control spending.
• Delete your credit card number from shopping apps and websites: One-click ordering is the enemy of good spending habits. Try removing your card number from your favorite shopping apps and websites, so you must enter it manually each time. It might surprise you how much this helps you avoid impulse buys.

Big, sweeping changes like consolidating debt can be impactful when you’re getting out of debt. But small, steady habit changes can also have a big impact over time. The most important thing is that you start taking steps to get out of debt, leveraging financial tools and education at every stage.

BHG Financial offers debt consolidation loans up to $250,000¹ with loan terms up to 10 years^1,2 to help you streamline high-interest debt repayment. Start today by contacting our dedicated concierge support team or checking your rate online at no cost, with no commitment and no impact on your personal credit score.³

How can you pay off credit card debt fast?

Start by listing all balances and interest rates. Then, choose a structured approach—snowball, avalanche, or consolidation—that’ll help you methodically pay down your balances. Reducing high-interest balances first or consolidating into a lower fixed-rate loan can accelerate progress and reduce total interest paid.

Can a personal loan help you get out of debt?

A personal loan for debt consolidation can simplify repayment by replacing multiple high-rate, expensive balances with one fixed monthly payment that’s easier to manage. For qualified borrowers, a lower rate and extended term may reduce monthly payments and create a clear payoff timeline. The key is to avoid new revolving debt while you repay the loan.

How do you create a plan to pay off high-interest debt?

First, create a complete inventory of your debts. Then, determine how much of your debt payments can be attributed to high revolving APRs and select a repayment strategy aligned with your budget, personality, and goals. Set a defined payoff target date and automate payments where possible. Review progress quarterly to adjust as income, expenses, or interest rates change.