Personal Finance

8 Tips for Millennials to Ditch Their Debt Fast

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Personal Finance, Real Estate Investing Basics
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When you’re under the weight of heavy debt, it literally changes the way you think.

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You think defensively, feeling pressed in on all sides. Your first focus is simply survival: How do I make all my payments this month?

Once you’ve figured out how to simply survive with that debt, your vision expands to a second goal. How can I start tackling my debt, so I can one day get out from under it?

It's a worthy goal—but a defensive one. But after you conquer your high-interest unsecured debts, a funny thing happens. You start thinking differently about money, about your goals. You start thinking offensively and creating a vision of building wealth rather than simply escaping debt.

In a very real sense, your mindset expands and you see the world differently.

First though, you need to defeat your debt. It is absolutely, 100 percent possible to save tens of thousands of dollars even on a median salary. Whether you’re a millennial or a little further along the path through life, follow these eight tips to get out of debt as quickly as possible and start thinking differently about money.

How to Get Out of Debt Quickly

1. Stop the Bleeding

The first step to financial healing is to stop the bleeding. You need to stop adding to your debt. Today. Now.

In most cases, this ongoing bleeding comes from credit cards. Take all of your cards and hide them away in a drawer somewhere. If you have to physically cut them up, do so.

The same logic applies digitally. Go to every online store where you blow money and delete your saved credit card information. No exceptions.

The average American’s credit card debt is an ugly $5,673 according to CreditCards.com. You’re done being an average sop, playing into credit card companies’ marketing. Before long, you’ll be at a $0 balance.

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2. Transfer Your Balance to a 0% APR Card

Many credit cards offer 0 percent APR for an introductory period for balance transfers. And in some cases, that introductory period is as long as 18 to 24 months—more than enough time for you to pay your balance in full.

Stop paying 20 percent-plus in interest on your credit card balance, so your entire monthly payment goes to principal, not interest.

Related: 7 Lies About Debt (& How to Get Out of It for Good)

3. Automate All Debt Payments

If you have to rely on discipline to pay your debts, you’ll fail. Discipline is a fickle friend, and often it leaves you stranded when you need it most.

Instead, set up automated payments on your credit cards, on your student loans, on any other high-interest unsecured debts. And not just monthly recurring payments, either. Schedule your payments to go out on the same day you get paid—every single payday.

That way, the first bills paid out of every paycheck are your debt payments.

But don’t just pay all debts evenly. Instead, pick one to eliminate first.

4. Use the Debt Snowball or Debt Avalanche Method

The concept behind both the debt snowball and debt avalanche methods is similar: Choose one debt to focus on at a time. Once you’ve eliminated the first one, take the money you were paying toward it and put it toward the next debt on your list. With each debt you knock out, you’ll have more money to funnel into paying off the next debt, until they’re all gone.

The difference between the two methods is how you prioritize the debts. In the debt snowball method, you start with the smallest debt first, then the next smallest, and keep tackling them in order of size.

In the debt avalanche method, you prioritize your debts in order of interest rate. You start by paying off the debt with the highest interest rate first, then the next highest interest rate, and so on until they’re all paid in full.

Which is the better approach? It depends. Mathematically, the debt avalanche method saves you the most money. But psychologically, most people need the momentum provided by scoring early wins. For a simple breakdown of both the math and the psychology behind the two methods, see Ashley Hendrickson’s examples at Blogging Away Debt.

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5. Cut All But Your Favorite Subscription Service

Quick: how many subscription services do you pay for?

You don’t know off the top of your head. And even if you think you do, you almost certainly forgot a few that you pay annually.

Pick one that you simply can’t live without. It could be Netflix or Amazon Prime or your cable TV subscription or Pandora or something else entirely. But you only get to keep one. Every single one of the rest need to go.

What, you thought there wouldn’t be any sacrifices on the road to becoming debt-free? Get real.

6. House Hack

If you really want to get out of debt fast—and supercharge your savings rate to build wealth fast—get rid of your housing payment.

Housing is the number one expense for most people, so it offers the greatest opportunity to save money. The classic house hacking model involves buying a multifamily, moving into one unit, and renting out the others; see this duplex house hacking case study as an example.

But that’s not the only way. My co-founder Deni Supplee has house hacked suburban single family homes using a variety of ways in her career, from roommates to garage storage space to foreign exchange students. Most recently, she’s house hacking a mixed-use building and lives for free.

But here’s the key: Every single penny of the money you’re saving on housing must go to paying off your debts. And when all your debts are gone (which won’t take long with no housing payment), keep saving the money and investing it to build real wealth fast.

Related: Dave Ramsey’s “7 Baby Steps” Are Flawed: Get Rid of Debt Quicker Like THIS

7. Get Rid of Your Car

Want to create wealth even faster? Choose a home to house hack in a location where you don’t need a car—somewhere you can get around by walking, biking, carpooling or by taking public transportation, ride-sharing services like Uber and Lyft, or car-sharing services like Zipcar.

My wife and I spent four years sharing a car. A few months ago, we moved to a new home where she can walk to work and I can bike to a co-working space, where I telecommute.

We have no housing payment and no car payment. As a result, we’re able to save over 50 percent of our income. Despite neither of us making a massive income, we’re building our wealth quickly.

Most Americans dismiss out of hand the idea of living without a car. They immediately write it off as impossible, never pausing to ask the question, “How could I make it possible?”

And as all innovators know, the first step to any breakthrough is simply starting with the assumption that the breakthrough is possible and brainstorming ways to make it a reality.

8. Get Even More Creative with Savings

There are infinite ways to save money. Some are obvious and common, such as packing your own lunch for work rather than paying a premium for someone else to make your food for you.

Other savings tactics are more unusual. For example, another way to save money on food is batching your food and then doing a Tupperware meal exchange with like-minded friends. For example, you make an enormous batch of lasagna. Four of your friends each make their own enormous meal batch. Instead of you eating lasagna for five nights in a row, you swap most of your lasagna batch with your friends, who each give you a meal portion of their enormous batch. You each get five different meals, but you only had to make one meal apiece.

Or you can get even more extreme with your savings. Stay for free when you travel. Get cheap medical care from medical school clinics. Buy everything but consumables used. Cancel your gym membership and work out for free at home. The list goes on.

Final Thoughts

Debt keeps you thinking small and defensive. You need to get out of it as quickly as possible, with the exception of cheap secured debts like mortgages.

Without the yoke of debt around your neck, you’re free to start mapping out your own personal perfect life. Want to be financially free by 40, with your investment income able to cover your living expenses? No sweat. Or want to start your own business? It’s a lot easier with no debt.

Or perhaps you want to be able to work from anywhere? As a landlord, online entrepreneur, and occasional freelance writer, I spend 10 months out of the year living overseas.

But I never would have had the vision to create that life back when I was straddled with massive credit card debt.

Get out of debt. You’ll be amazed at how differently you start seeing the world.

What are you currently doing to tackle your debt? What are you planning to do differently to escape from your debt even faster?

Share your thoughts below!

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their ...
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    Wenda Kennedy JD from Nikiski, Alaska
    Replied 9 months ago
    I totally agree. Debt is the chock collar that many people willingly put around their necks and wear with pride. Uh???? I'm older compared to many of you, BUT I'm just about debt-free, including my real estate investments. And I'm starting another new business this coming month with real money to add additional cash flow. Did I mention that cash is king? I learned my money sense from my parents. They were up to their @#$##@s in debt all of their lives. I didn't want that habit passed on to me. It's a hard way to live.
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Congratulations on shedding your debt Wenda! So glad to hear it!
    Pat Tobin Investor from Salt Lake City
    Replied 9 months ago
    LIfestyle creep is a killer. If you get a raise, don't blow it on things you don't need! You can be frugal and still have fun.
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    So true Pat! All about the high savings rate and avoiding lifestyle inflation.
    Soddee R. Knight Investor from Oklahoma City, OK
    Replied 9 months ago
    I like to use the 0% credit cards to pay for all types of debts (student loans to extra principal on our many mortgages). 0% money is very powerful, just make sure you pay the balance before the 0% intro period expires, as you said. House hacking is also very powerful. Thanks for the article!
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Thanks Soddee, and glad to hear you've had success with the 0% card transfer!
    David Pfeffer
    Replied 9 months ago
    I agree 100% with everything in this article. Also, it's never to early to start credit gardening. If I ever have kids I will start this process for them as soon as they can walk.
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    So true David, never too early!
    Caleb Irvin from Great Falls, MT
    Replied 9 months ago
    Great article, I have employed many of these tips and it's amazing how fast things turn around. Also, I wanted to add the flip side to this and that is to start earning more money, best defense is a good offense! Cheers
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Thanks Caleb, and earning more money certainly helps!
    Jacob Compher Real Estate Broker from Asheville, NC
    Replied 9 months ago
    Just moved into a new place this year to cut my housing expense in half! Credit card debt is gone, but now I need to lose the student loans. Not sure if it's avalanche or snowball, but they're the next priority. Thanks for the advice Brian!
    G. Brian Davis from Baltimore, MD
    Replied 9 months ago
    Glad to hear it Jacob, congratulations! Best of luck with the student debt, sounds like you're moving quickly on it.