JUMP TO :
JUMP TO :
8 Proven Ways to Get Out of Debt Faster
Around 30% of households in India are now in debt. The pressure to repay this debt every month can be overwhelming, whether it is credit card debt, personal loans or business obligations. But whatever the type of debt, you can learn to break free from the debt cycle.
This blog will teach you how to get out of debt, regain control of your money and build a stable future where you’re no longer controlled by debt.
1. Create a Debt Repayment Plan
First, you need a debt repayment plan. Without this, it is difficult to make any progress. There are two popular methods that help you plan to eliminate debt.
Debt Avalanche Method
This method focuses on paying off high-interest debt first. This approach saves you from paying too much money in interest over time. If you have multiple debts, list them in order of highest to lowest interest rate. Start paying off the debts from the top of the list.
Debt Snowball Method
This method works by targeting your smallest debt balance first, regardless of interest rate. You set aside most of your money to close your smallest debt first. This helps you reduce the number of debts you have by closing off debts faster. If you are overwhelmed by the number of debts you have, this approach may be suitable for you.
2. Choose Debt Consolidation
Debt consolidation combines multiple debts into a single payment at lower interest rates. This simplifies your finances and can reduce the total interest you pay.
Balance Transfer Options
Balance transfer credit cards offer promotional periods with 0% APR, typically lasting 12-21 months. Transfer high-interest credit card debt to take advantage of this interest-free window, allowing more of your payment to go toward reducing the principal balance.
Be aware of balance transfer fees, usually 3-5% of the transferred amount and ensure you can pay off the balance before the promotional period ends.
Debt Consolidation Loan
A debt consolidation loan from a bank or credit union replaces multiple debts with one personal loan at a fixed interest rate. This works particularly well if you can secure a rate lower than your current average interest rate.
The fixed payment schedule provides predictability, making budgeting easier. You’ll know when your debt will be paid off if you stick to the plan. It only works if you address the spending habits that created debt in the first place and commit to not accumulating new balances.
3. Stop Taking High-Interest Debt
Breaking the debt cycle requires stopping the accumulation of new debts. High-interest debt grows faster than you can pay it down, trapping you in a long repayment cycle.
Payday loans, title loans and other high-cost borrowing options should be avoided at all costs. These unsecured loans have very high interest rates, making repayment really difficult.
Before taking any loan, compare the annual percentage rate (APR) and total repayment amount. If the interest rate exceeds 10-15%, explore alternatives like borrowing from family, negotiating with creditors or seeking assistance from nonprofit credit counseling services.
4. Pay Off Expensive Debt
Credit cards, personal loans and consumer financing usually have the highest interest rates. Know exactly how much interest you pay on each. Put all extra money toward the highest-interest debt.
Even small additional payments can reduce total interest and payoff time. After clearing one debt, roll that payment into the next highest-interest balance. Ask lenders for lower interest rates if you have a good payment history. A reduced interest rate can save a meaningful amount each year.
Indian credit cards average 30-40% yearly. A ₹2 lakh balance at 36% costs over ₹6,000 monthly in interest before you touch the principal. Stop using cards while you pay them down. Some people remove cards from their wallets.
Pay more than the minimum (5% of balance). Minimums barely cover interest. Double the minimum and cut repayment time in half. Clearing cards lifts your CIBIL score by lowering credit use. Keep use below 30%, better yet below 10%.
5. Avoid Credit Card Debt
Credit card debt carries some of the highest interest rates, ranging from 18% to 29% APR. At these rates, a balance can double in just a few years if you only make minimum payments. Use credit cards strategically by paying the full balance every month.
If you’re currently struggling with credit card spending, consider switching to cash or debit cards until you’ve developed better spending habits.
6. Track Your Money
You can’t clear debt without knowing where your money goes. Tracking shows you where to cut and what to put toward debt.
Track every expense for one month. Use ET Money, Money View, Walnut or Excel. Most people spend more than they think on food delivery, OTT subscriptions or impulse buys. Seeing this lets you change it.
Split costs into fixed (rent, insurance, EMIs) and variable (groceries, entertainment, transport). You can cut variable costs. Try this split: 50% for needs, 30% for wants, 20% for savings and debt. Shift more to the 20% if you’re in debt.
Cancel unused subscriptions, negotiate lower mobile or broadband plans, cut electricity use. These changes free money without much sacrifice. Then cut bigger costs.
Cook instead of ordering food. Take public transport. Skip vacations. Find free entertainment. Every rupee saved goes to debt. Check your tracking weekly at first, then monthly. Adjust as needed, but live within your means.
7. Earn More
Cutting spending has limits. Earning more has no limit.
Freelance Work
Use skills you have. Writers, designers, developers, marketers and assistants find work on Upwork, Fiverr, Freelancer and Naukri. Start with a few hours weekly. Even ₹20,000-40,000 monthly helps when you put it all toward debt.
Part-time Work
Match work to your time and skills:
● Drive for Ola or Uber evenings or weekends
● Deliver food through Swiggy or Zomato
● Teach online (Unacademy, Vedantu)
● Sell on Meesho, Amazon or Flipkart
● Make content on YouTube or Instagram
● Rent out a spare room
Grow Your Main Income
Ask for a raise if you deserve it, especially during appraisals or after taking on more work. Look for overtime or bonuses. Some companies pay for referrals or good performance. Learn skills that boost your pay. Certifications in CA, CFA, digital marketing or data science can lead to promotions or better jobs. Put all extra income straight into debt. Don’t spend raises or side income.
8. Get Help When Stuck
Sometimes debt overwhelms you. Help gives you structure and expertise.
Credit Counselors
RBI-registered Credit Counselling Centers review your finances, build a budget and may talk to creditors for you. They can set up payment plans. Some banks and NBFCs will restructure loans or cut rates. Find RBI-recognized counselors or ask your bank about restructuring. Avoid companies charging big upfront fees.
Financial Advisors
SEBI-registered advisors or certified planners help you balance debt with other goals like retirement, education or emergency funds. They build plans based on your full picture—PPF, EPF, mutual funds, investments. They help you decide whether to pay off debt or invest. Pick fee-only advisors who work for you, not commissions.
When You Need Help
Get help if you can’t make EMI payments, recovery agents keep calling, you’re thinking about settlement or you feel overwhelmed. Getting help isn’t failure. It’s smart. It saves money, cuts stress and shows you the way forward.
Frequently Asked Questions (FAQs)
Pay the highest-interest debt first. Make minimums on the rest. Earn more through side work. Cut all waste spending. This clears the debt years faster than minimum payments alone.
Stop new charges. Pay double or triple the minimum (5% of balance). Transfer to a 0% card if you can. Or pay the highest-rate cards first. Pay on time to avoid late fees and higher interest.
Pay the smallest balances first for quick wins. Cut down on spending. Earn extra through gig work or selling unused items on OLX or Quikr. Talk to RBI-recognized advisors who can match plans to your income.
Set auto-debit for EMIs. Follow the 50/30/20 budget rule. Put extra money into debt automatically. Pick a method you'll stick with.
If your CIBIL is 750+, transfer to a 0% card and clear it during the offer. Otherwise, pay the highest-rate cards first. Stop further use of cards. Consider a personal loan to combine multiple high balances. Always pay more than the minimum.
Recommended posts
Related Content
Millionaire Mind Intensive is about unlocking your financial freedom and strengthening your relationship with money.
Quick Links
Contact Info
Success Gyan India LLP
S5, Thiru Vi Ka Industrial Estate,
Guindy, Chennai – 600032