Living Debt Free: Top Ways To Pay Off Debt Faster
Reviewed by: Mark Zagurski CLU®, ChFC®, CMFC® and CRPC®
Estimated Read Time: ~10 minutes
Summary: Small steps in debt reduction help build momentum. With the right strategies and goals, living debt-free becomes more attainable. Discover tips to help you avoid debt and achieve financial freedom.
In this article:
- What does it mean to live ‘debt-free’?
- How can I pay off debt faster?
- Step-by-step plan to start paying off debt
- Practical examples: Real-life debt payoff scenarios
- Resources to help manage debt
- Debt-free progress checklist
- Taking control of your debt
- Frequently asked questions
Debt can feel overwhelming when you’re managing multiple payments each month. In July 2025, the average credit card debt for Americans was $6,492¹. If you’re carrying balances on credit cards, student loans or a mortgage, don’t worry, plenty of other people are in the same boat.
The challenge gets tougher when you consider that average credit card interest rates are hovering around 24.04%². When rates are that high, making only minimum payments keeps you trapped in debt longer. Mark Zagurski, host of the Make it Personal Podcast, puts it into perspective and adds, “Debt often steals attention from what matters most. A clear plan helps people redirect their energy toward family, goals, and peace of mind.”
There are ways to break the cycle and help regain your financial footing. Start by understanding the common money traps that keep people stuck. Then learn how to regain your financial freedom with a plan that fits your budget. If you have a mortgage, consider ways to pay it off early and save on interest. In this article, you can discover seven strategies to help you pay off debt faster.
What does it mean to live ‘debt-free’?
Living a debt-free life means you have little to no debts weighing you down as you finance your lifestyle. You only spend what you have available, and if there’s not enough in your bank account, you simply don’t make the purchase.
Living debt-free comes with several advantages. Without the weight of interest payments, you can manage your daily finances with less stress and focus more on meeting your needs and those of your loved ones.
Additionally, being debt-free opens up more opportunities to save for the future, helping you build a stronger, more secure financial foundation as part of your holistic financial plan.
Being debt-free also allows you to redirect your income toward building wealth and pursuing personal goals, rather than being tied down by monthly payments. Living a debt free life can also give you the flexibility to take advantage of opportunities like investing in yourself or starting a small business.
Finally, there is something liberating about having more control over where your paycheck is directed.
How can I pay off debt faster?
If you find yourself overwhelmed by a mountain of debt and are struggling to get by, there are steps you can take to help pay off your debt and put yourself on the path to a debt-free life.
Remember, consistency matters more than perfection. Small, steady progress often beats dramatic short-term efforts that aren’t sustainable.
Step-by-step plan to start paying off debt
To take charge of your financial future, follow this step-by-step plan to start paying off your debt and building a stronger foundation.
1. Create a budget
A personal budget serves as a roadmap for your monthly income and how it’s allocated, including bills and expenses. Using a budget to manage costs helps you track spending and identify areas to cut back, with various budgeting models available to suit your needs.
A popular budgeting model, both now and in retirement, is the 50/30/20 plan, which is based on where you spend your income. Under this plan, you should spend:
- 50% on needs (rent, utilities and groceries)
- 30% on wants (restaurants, entertainment, vacations, clothes and more)
- 20% on paying off debt or savings (mortgage, loans or short-to-long term savings)
Another approach is zero-based budgeting, where every dollar you earn is assigned a specific purpose. After covering bills, savings and debt payments, your account balance is reduced to zero, ensuring every cent is accounted for.
Smart budgeting tips for low-income earners
If you have limited income, focus on automating payments and savings, tracking every expense and using financial apps to monitor your spending. Prioritizing high-interest debt first can make your progress more impactful.
2. Reduce spending
Once you’ve created a budget and identified where your money is going each month, you can start looking for areas to cut back.
For example, instead of spending $100 a week on takeout, try eating healthy on a budget by prepping home-cooked meals over the weekend to enjoy throughout the workweek.
Any savings you generate this way can be redirected toward paying off your debt. Additionally, if you’re using credit cards for those expenses, cutting back helps prevent you from accumulating more debt.
Cutting living expenses is a smart way to reduce debt. Review costs such as rent, car insurance and subscriptions to find areas to downsize. Small lifestyle changes, such as taking advantage of free or low-cost activities, can help you move closer to a debt-free lifestyle.
3. Say no to credit cards
Stop using credit cards altogether unless you can comfortably pay off the monthly balance. Relying on credit cards for purchases you can’t afford means a significant portion of your monthly minimum payments goes toward covering high interest, rather than reducing the principal balance.
Avoiding credit card purchases you can’t afford is a vital step toward living debt-free. An annual financial checkup can help you stay on track, ensuring you pay off your credit card in full each month and boost your credit score.
4. Use the snowball and avalanche techniques
The “debt snowball method” is one popular method used to pay off multiple credit cards.3 With this method, you pay off the card with the lowest balance first, while making minimum payments on your other cards.
After paying off the first card, you move on to the next lowest balance and make larger payments until it’s paid off. You keep repeating this process until all your credit cards are cleared.
In the “debt avalanche method,” you prioritize paying off debts with the highest interest rates, which can save you money on interest.4
While it may take longer to see progress, both the avalanche and snowball methods are effective for paying down debt.
5. Get a side gig for extra income
If you have spare time and your health permits, consider taking on a side gig to earn extra income that can help pay down your debt. A side gig can also indirectly help you save, as it keeps you busy earning instead of spending during your free time.
Even just a few hours a week freelancing, tutoring, delivering or selling handmade goods can add up to hundreds of dollars a month toward debt repayment. Consistently applying these extra earnings toward your debt can significantly shorten your repayment timeline.
Practical examples: Real-life debt payoff scenarios
Take Sarah, for example, who had $15,000 in combined credit card and personal loan debt. She cut $150 from discretionary spending, automated an additional $200 monthly payment toward her smallest loan using the snowball method and earned an extra $100 each month through a part-time side gig.
Within 20 months, Sarah had paid off two of her three debts and was on track to eliminate the final one within the year.
Another great example is David, who consolidated $20,000 of high-interest credit card debt into a single loan at 12% interest. The lower rate allowed him to pay down the principal faster, while also allowing flexibility to create an emergency fund alongside his debt repayment.
Resources to help manage debt
You don’t have to navigate debt alone. Several organizations and tools offer free or low-cost resources to help you manage debt and track your progress toward a debt-free lifestyle.
These include:
- Budgeting apps
- Nonprofit credit counseling agencies
- Debt repayment calculators
Leveraging these tools can help you start the journey to making the path to living debt-free feel more achievable and less overwhelming. If you’re unsure where to start, consult with a Mutual of Omaha financial professional, who can help you review your options and create a plan that fits your financial goals and lifestyle.
Debt-free progress checklist
Tracking your progress is key to helping you envision your progress and stay the course to debt-free living. Consider keeping a checklist, like the one below, and reviewing it regularly:
- Create a budget and track spending monthly
- List all debts with balances and interest rates
- Choose a repayment strategy
- Automate payments for consistency
- Reduce unnecessary spending
- Review progress quarterly
- Celebrate milestones without overspending
Checking off items regularly reinforces the sense of achievement and helps maintain focus on your debt-free lifestyle.
Taking control of your debt
Being in debt can take a toll on your mental health and jeopardize both your current and future financial security. However, there are effective strategies you can use to pay down your debt and start your journey toward financial freedom.
Mutual of Omaha can support you by providing personalized guidance and offering the resources you need to take control of your finances and work toward a debt-free future.
Ready to take control of your financial future?
Frequently asked questions (FAQs)
Are there disadvantages to being debt-free?
Being debt-free can limit your ability to build credit, which may affect future financial opportunities, such as loans or mortgages. Additionally, avoiding all debt might restrict your ability to make larger purchases. The key is finding a balance between managing debt and maintaining financial flexibility.
How do I pay off debt when I live paycheck to paycheck?
If you’re living paycheck to paycheck, the first step is to consider increasing your income or cutting discretionary spending to allocate more toward debt repayment. Then, the debt avalanche method could be an effective strategy. Focus on paying off the debt with the highest interest rate first, while making minimum payments on your other obligations. Once the highest-interest debt is cleared, roll that payment into the next highest amount and so on.
How do I avoid getting into more debt?
To avoid accumulating more debt, stick to a clear budget and resist taking on new credit unless necessary. Build an emergency fund to cover unexpected expenses without relying on credit cards. During high-spending periods, like the holidays, plan ahead and use cash or a debit card to maintain control over your finances.
Reviewed by: Mark Zagurski CLU®, ChFC®, CMFC® and CRPC®
Mark is a director of strategy and communications at Mutual of Omaha. With more than 30 years of experience, he has worked extensively in advisor development, strategy, and communications, focusing on helping advisors and their clients make informed financial decisions. He is also the host of the Mutual of Omaha Advisors podcast, “Make it Personal,” which explores personal finance and strategies to help you take control of your money and future.
Sources:
- Forbes, U.S. Average Credit Card Debt In 2025 – Forbes Advisor, September 2025
- Lending Tree, Average Credit Card Interest Rate in US Today | LendingTree, November 2025
- Debt.org, What Is the Snowball Method and How Does It Work?, June 2024
- Debt.org, Debt Avalanche Method: What It Is and How to Use It – Debt.org, May 2023
Disclosures:
Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.
Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.
Not all Mutual of Omaha agents are registered representatives or financial advisors.
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