Couple leaning over computer researching how to pay off debt faster.

Paying off debt can feel like a daunting challenge, but with a systematic process in place and the right tools at your disposal, you could be free from debt sooner than you expect—even with a low income.

If your income has suffered recently, or your money just isn’t stretching the way it used to now that interest rates are rising, you can still shorten the time it takes to pay off your debt.

Want to know the best ways to pay off debt fast? Check out the tips below.

Assess your financial situation

First, get a full picture of what you owe. Gather all your financial statements (credit cards, car loan, etc.) and make a list with the following items:

  • How much you owe on loans, large bills (i.e., medical), and credit cards
  • The amount of interest you’re paying
  • Your annual percentage rate
  • Your minimum monthly payments

Once you know the scope of your debt, you can set some reachable goals. For example, you could work toward shrinking your debt and saving more for retirement within a few years.

Find more money in your budget

Sometimes drastic reductions are in order, at least for a time. The goal is to cut back on any optional expenses—like restaurants, streaming subscriptions, impulse buys, and possibly car ownership.

First, create a detailed budget and commit to tracking everything you spend, so you can see exactly how much you need to pay basic expenses. Living within your means is essential, and it’s much easier to do when you know exactly where your money is going.

“The key is finding a method you can stick with,” says Matt Lattman, vice president of Discover Personal Loans. “Because seeing continued progress and just making sure that you’re reviewing your situation on a regular basis is the best assurance we have towards making sure that you’re on the path towards financial health.”

Next, think about automating your finances. For example, automatically scheduled bill payments and direct deposits from your employer into a savings account are great ways to stay on top of your financial goals. Not seeing that money in your checking account will make it easy to avoid spending it on other things, and there might even be a savings account that will pay you more in interest than you’re getting now.

Of course, generating more income, and increasing your debt payments could help, too. If a side job isn’t in the cards, you might be able to earn extra money by selling items you no longer need, either online or at a garage sale. If you have things you’re willing to part with, and you’re open to discount pricing, you could come into some cash without too much effort.

Keep paying down your debt

Any funds you can squeeze out of your budget should be put toward your debt. If you have credit card debt, pay at least the minimum payment on all your balances. And anytime you can pay more than the minimum, do it. You’ll reduce the total amount you pay in interest.

The goal, of course, is to avoid carrying any revolving credit card debt. When you can pay off your credit card balance in full every month before the due date, you’ll avoid interest charges and penalties.

In the meantime, make sure to avoid missing payments, which could harm your credit and cause you to incur more debt.

Hold yourself accountable

You’ll pay down debt much faster if you remember to hold yourself accountable for your debt payments. It can help to set concrete deadlines and payment amounts, or you might find yourself forgetting about them when they’re inconvenient.

“As you think about different debt management strategies, the first and most important thing to do is sit down and make a plan,” says Lattman.

A personal loan can be a useful tool in this respect, because it has a fixed term with set monthly payments. You’ll know exactly when you’ll pay off the loan if you make all your payments on time. And, depending on your loan repayment term and how much you pay above the minimum payment on your loan and any other debt, a personal loan could help reduce your debt burden sooner.

Negotiate with creditors

If you’re going through a difficult time, service providers (cell phone providers, utilities, etc.) might be willing to offer accommodations, such as lowering your payments or extending your payment terms. So, don’t be afraid to ask.

If you are able to work out an alternative plan, ask to receive all the details in writing to ensure you understand what you are agreeing to. And make sure you don’t miss any payments.

Consider different strategies and tools for paying off debt:

  • A personal loan for debt consolidation could allow you to consolidate your debt and pay off creditors directly. Then you can repay the loan with a fixed monthly payment and interest rate.
  • Debt settlement is when a third-party company steps in and negotiates a settlement with your credit card companies. Just be sure to research the debt relief company, understand what your rights are as a customer, and learn about the potential impact to your credit score.
  • A home equity loan may come with a lower rate than you’re paying on a high-interest credit card balance, but it requires putting your home up as collateral to secure the loan. Because a home equity loan or cash-out refinancing can be used for larger amounts, they could be good options if you’re also undertaking a large project such as a home addition.
  • A 401(k) loan. Some employers will allow you to borrow money from your 401(k) retirement plan. Be sure to weigh the pros and cons of a personal loan versus a 401(k) loan. There may be drawbacks like missing out on gains or losing an employer match.
  • Talk to a credit counselor, who can assess your financial situation, help you explore debt consolidation while unemployed, or suggest ways to pay off debt fast with a low income. The first discussion should be free, so you have nothing to lose from an initial meeting.
  • Celebrate your achievements. Paying down debt is hard, and every forward step counts. Reward yourself when you hit a milestone, maybe with some at-home pampering or a streaming movie binge.

Don’t do it alone

It can be difficult to talk openly about issues related to money, but it can help to tap a close friend or family member to be your accountability partner in your debt payoff plan. They can help you follow through more consistently and might also be a source of moral support.

So, make your debt relief a community effort. And don’t forget to celebrate as you reach your goals—a walk or coffee with your accountability partner could be just the encouragement you need to move on to your next financial goal.

Paying off debt isn’t easy. But if you stick with it, you may find you can make a lot of progress in a short amount of time.

With our debt consolidation calculator, you can see the potential savings of consolidating higher interest debt with a loan from Discover.Estimate Savings