As of the third quarter of 2024, the average household in America had a debt of $104,215 and collectively owed $17.94 trillion, according to Experian and the Federal Reserve. Total debt is at an all-time high and people are trying to figure out how to rid themselves of the crippling feeling of debt in the fastest possible way.
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Chances are very little planning went into building up your current amount of debt, but paying it off should be a cold, calculated plan of action that will restore not only your financial situation but your dignity.
That’s the view of financial expert, best-selling author and one of GOBankingRates’ 100 Most Influential Money Experts, Rachel Cruze, who, like her father Dave Ramsey, strongly believes that eliminating your debt as quickly as possible comes through sticking to a solid game plan and making sacrifices.
Here are Rachel Cruze’s three ways to pay off your debt fast in 2025.
Build an Emergency Fund of $1,000
Call it a pre-step in your journey of paying off your debt. Having some money ready to cash-flow any emergency is the first step to tackling your debt. Cruze suggests $1,000, but the rule of thumb is having enough to pay off at least three to six months’ worth of expenses, per Vanguard.
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Start the Snowball Method of Debt Repayment
Like many financial experts, Cruze follows the snowball strategy — rather than the avalanche method — for paying off debt, which implies repaying the smallest of your loans as soon as possible, regardless of interest rate. Once that obligation is paid off, you transfer the funds you used to make the payment to the next-smallest debt outstanding.
“Debt is more of a behavior issue, it’s not a moth issue,” Cruze said. Changing your behavior and eliminating increasingly substantial debts one by one provides quick wins and establishes a positive plan of attack.
Find Available Margins To Pay Off Debt
To pay off your debt in the fastest possible way, you’re going to have to find extra money in your budget beyond your everyday expenses that can be put towards paying down your debt faster.
There are plenty of strategies you can use to pay off your debt faster. Cruze identifies six margins that you should consider.
- Cut Unnecessary Expenses: Lower your lifestyle and cut out anything you don’t need from your life like unused subscriptions, going out to eat, etc.
- Boost Your Income: Increase what you earn by working overtime, starting a side hustle in your field of expertise, or monetizing your hobbies and skills.
- Sell Unwanted Items: People are looking for bargains wherever they can find them, so there is a huge market out there for stuff you don’t want or need anymore. Learn to list and start generating profit on online marketplaces like eBay, Etsy, Facebook Marketplace, Poshmark, and local classifieds.
- Delay Investing: While you are paying off debt, payments that are getting transferred directly from your paycheck into an investment fund or retirement savings account might be better spent paying off debt. These contributions can be a big game changer.
- Adjust Your Paycheck Withholdings: It’s a good idea to check your tax withholding amounts annually to ensure that you aren’t paying too much or too little in federal income tax. Taxpayers often adjust their tax withholdings when they get a second job, get married, have a child or become unemployed, but you can also fine-tune your taxes to pay the debt off too.
- Sign Up for the Money Finder Challenge: Cruze’s sixth margin is a Ramsey Solutions self-promotion for its 14-day Money Finder series of tips on how to uncover more money every month. Challenges may help you strengthen your motivation and focus on accomplishing tough tasks like getting rid of your debt. Money “made” from losing subscriptions or socking away a little bit more money from your budget every month can make a big difference, if you use it wisely.
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This article originally appeared on GOBankingRates.com: The 3 Fastest Ways To Pay Off Debt in 2025, According To Rachel Cruze
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