At a Glance

Paying off any amount of debt is a stressful and time-consuming task. However, attempting to pay off $100,000 is a huge undertaking and requires a comprehensive strategy. With the help of Mike Winer, the Product Manager at Localcoin ATM, Daniel Herrin, an attorney at Herrin Law, and Jillian Knight, owner of Her Financial Therapy, we’ve put together a guide to strategically paying off $100,000 in debt.

In this article, you’ll learn:



The average credit card debt per American family in 2023.

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Tips to pay off $100,000 of debt in a short amount of time

Step 1: Assess your debt

The first step in paying off large amounts of debt is to figure out exactly how much you owe and to which lenders. You need to fully understand your debts to actually do something about them. You should compile a comprehensive list of each of your debts. Include credit cards, loans, and other outstanding balances that you want to pay off. Next to each debt amount, write down interest rates and minimum payments due, along with the due date. Doing this step is crucial to being able to devise a debt repayment plan.

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Step 2: Create a budget

Once you have a clear understanding of your debts, you will need to develop a realistic budget to track your income and expenses. Your budget should be by pay period rather than a monthly budget. Note areas where you might be able to cut back, like dining or shopping, so you can allocate more of your income toward debt repayment. You can pay off your debt faster with every dollar you reallocate. This also helps ensure you aren’t accumulating more debt each month as you try to pay your balances down.

You should keep coming back to your budget regularly. You might spend the first few months adjusting your budget until it better aligns with your circumstances.

Step 3: Explore debt consolidation options

There are a number of credit cards that offer 0% introductory APR on balance transfers for up to 21 months, saving you significant amounts of money if you have balances on high interest credit cards. You can also consider debt consolidation loans that might have a lower interest rate. Not only can this save you money, but it makes it easier to manage. Making one monthly payment is much more simple than making five or six monthly payments. Be sure to research all your options before deciding on the one that has the best interest rates and terms.

My husband and I have paid off over $250,000 in debt with the majority being paid off over the last four years,” says Knight. “We started out with $364,000 (all non-mortgage debt) when we got married in 2016 but weren't able to make much progress on the total balance until we increased our income in 2019.

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Step 4: Prioritize repayment

The bulk of your work comes in this step. You should determine your preferred debt repayment strategy. Many people are fans of the snowball method, which is where you pay off your smallest balance first while making the minimum payments on all other balances. Once your smallest debt is paid off, move on to the next smallest debt, and so on. This is great for morale, as you will feel very accomplished when you see that $0 balance.

The other strategy is the avalanche method, where you prioritize paying off debts with the highest interest rate first while making the minimum payments on the rest. Then, move on to the debt with the next highest interest rate, and so on. This is a great way to save money on interest, but it might take a while before you see a big dent in your overall debt, which can be discouraging.

You can also choose to switch methods once you have made progress. Maybe you start with the debt snowball method, and once you no longer need the psychological advantage, you switch to the debt avalanche method, which provides more financial benefits.

Apart from your preferred repayment method, you can attempt to negotiate the debt with the lender. Creditors can help set up payment plans or even lower the amount owed if you are in default.

Step 5: Increase income and reduce expenses

Once you have your repayment plan in place, figure out ways you can increase your income and reduce your expenses. Any extra money in your budget can go toward additional debt payments. You might take on a side job, start freelancing, or go through your home and sell valuable but unused items. Take a close look at unnecessary subscriptions that you can cancel, negotiate your bills to lower your monthly payments, or find cheaper alternatives for essential services.

Paying off such a large debt will require discipline. Make sure you stick to your plan and avoid falling into old spending habits at all costs. If you’re still struggling after implementing these methods, consider seeking professional help. A credit counselor or financial advisor can help you come up with a plan that satisfies your goals and makes them attainable.

Benefits of paying off your debt in a shorter amount of time

There are several benefits to paying off your debt in a short amount of time. Here are some key advantages:

1. Saves on interest: By paying off your debt quickly, you can reduce the amount of interest that accrues over time. The longer you take to pay off your debt, the more interest you’ll end up paying. By paying it off quickly, you can potentially save a significant amount of money.

2. Improves credit score: Your credit score is influenced by your debt-to-income ratio and your payment history. Paying off your debt quickly can lower your debt-to-income ratio, which can positively impact your credit score. It also demonstrates responsible financial behavior, leading to a better payment history.

3. Financial freedom: That freedom that we talked about before could be very real for you. Once you’ve paid off your debts, you can allocate your income towards savings, investments, or other financial goals. You’ll have more control over your money and fewer financial obligations weighing you down.

Bottom line

If you get discouraged, remember that you are doing this to free yourself from the stress and burden that your debt causes. It will take time, but you can make it happen. Every small victory will bring you one step closer to financial freedom.