DIY your way out of debt with 5 tried-and-true debt payoff methods

By Rebecca Lake

Reviewed by James Heflin

Feb 12, 2024

Read time: 7 min

A young couple sitting a kitchen table looking at a budget and figuring out ways to pay off debt

Key takeaways:

  • Choosing a DIY debt payoff method ultimately depends on your budget and your goals for getting out of debt. 

  • A debt expert can help you decide which debt payoff option might work best for you.

You've decided it's time to drop your debt like it’s hot. Excellent. Slaying debt is a big deal, and you’re stepping up to the plate. This isn’t just about getting your finances in order. It’s about setting yourself up for a future where you call the financial shots. Hats off to you.

The best debt strategy for you may depend on where you’re starting from. Let’s roll up our sleeves and dive into DIY debt payoff options that require little more than positive energy and commitment. You've got this.

DIY debt payoff methods

There are several debt payoff strategies that are proven to work. What you need is the one that's most doable for you. To give you some inspiration, here's a rundown of tried-and-true ways to pay off credit card debt (or other debts) the DIY way. 

The snowball method

The snowball method of paying off debt works like this:

  • You list your debts from the lowest balance to the highest.

  • You pay as much as you can to the first (smallest) debt on the list, while continuing minimum payments on all your other debts.

  • When you pay off the first debt, you roll that payment over to the next debt, adding it to the minimum. 

  • You rinse and repeat, rolling payments over until you're left with zero debt. 

Let’s face it—paying off debt is no fun a lot of the time. You’re all but guaranteed to have to make some sacrifices. Scoring a win by paying off one or two smaller balances can motivate you to stick with your plan. 

The downside? The snowball method for paying off debt doesn't consider interest rates. That means you could end up paying more in total interest compared to using the avalanche method.  

The avalanche method

The debt avalanche works just like the debt snowball with one big difference. Instead of paying off debts from smallest balance to biggest, you pay them off from highest annual percentage rate to lowest. 

Why is that good? One simple reason: it might save you in interest charges. 

Here’s the thing, though. In theory, it seems like paying off the most expensive debt first is a good move. But in practice, using the avalanche method doesn’t make a huge difference in the overall cost of the debt for most people, or the amount of time it takes to pay it off. People tend to get rid of their debt in the same amount of time or one month earlier compared to using the snowball method. In other words, the dollar amount saved is equal to or less than that last month’s payment.

Debt stacking (or the debt blizzard method)

Debt stacking is a hybrid of the debt snowball method and the debt avalanche. Sometimes it’s called a debt blizzard.

With this DIY debt payoff strategy, you:

  • Decide how much you can pay monthly toward all of your debts combined.

  • Choose one debt to focus on first and pay as much as you can toward it, while paying the minimums on everything else.

  • Once you pay off your focus debt, add the payment to the next priority debt.

You might target your highest-interest debt first, or your highest-balance one. Bonus points if these are the same debt, and you can knock it out quickly. 

It's sort of like a DIY debt management plan (DMP). With a debt management plan, you pay a set monthly amount to a credit counselor. The credit counselor then splits up the payments among your creditors. 

Debt stacking lets you do more or less the same thing. It does require that you be tuned in with your budget and how much you can afford to pay. But it gives you some flexibility, since you can change which debt to prioritize at any time. 

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Consolidation loan

Debt consolidation involves borrowing a lump sum to pay off other debts. 

You could use a personal loan to consolidate debt. For most personal loans, you don’t have to own anything valuable that you can offer the lender as a guarantee. Or it might make sense to use a home equity loan to consolidate debt if you own a home. A home equity loan lets you borrow against your home equity (the difference between what you owe on the mortgage and what your home is worth). Home equity loans typically have lower interest rates compared to personal loans because your home guarantees the loan (if you don’t repay the loan, you could lose your home). 

DIY debt consolidation might be a good option if you want to streamline monthly payments and possibly lower your interest rate. You could use a debt consolidation loan to pay off:

The key to getting the most benefit from DIY debt consolidation is to find the right loan. If you're considering personal loans, for instance, review the interest rates and fees. The secret to getting the best rates on a personal loan is having a good to excellent credit score. If your credit standing isn't where you'd like it to be, you might work to improve it before you apply for a consolidation loan. 

Also, think about the loan term. For example, if you're interested in paying off $50,000 of debt in two years, you'd need to know if the monthly payments fit your budget. If not, you might need to adjust your goal and choose a longer loan term.

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Debt negotiation

DIY debt negotiation means working out an agreement with your creditors to pay off balances for less than what you owe. 

Here's how it works.

  • Creditors are usually more inclined to negotiate if you can show that you have a financial hardship that'll make it difficult or impossible for you to fully repay your debt. Gather information that will help you show your hardship.

  • Your negotiations might be more successful if you have a lump sum to offer your creditors. If you don’t have money to offer, you might want to work on saving some before you start making calls.

  • Contact your creditors, one at a time, and make an offer. Start low, in case they accept your offer. 

  • Once a creditor agrees to a negotiated amount, get the agreement in writing before you send any money. The agreement should clearly state that the creditor is accepting your offer as full and final resolution of the debt.

  • Send the agreed-upon amount to your creditor and be sure to keep documentation showing that you did so.

  • The remaining debt balance is forgiven. Again, keep documentation showing that there is no balance due. You’re now one step closer to debt freedom. 

Resolving debts in this manner could be a good option if you're already behind on debt payments. Creditors are often more willing to offer partial debt forgiveness if it’s clear that you can’t keep up. For them, getting something is better than getting nothing, and going to court is expensive. 

If you’re not comfortable handling negotiations or you want help for some other reason, you could work with a professional debt resolution company. Expert negotiators will work on your behalf to come to agreements with your creditors. 

Talk to a debt expert about your situation. At the very least, talking to someone about your debt can help you feel more confident in deciding which option to pursue. 

What's next

  • Use an online debt payoff calculator to estimate how quickly you'd pay off debt using the snowball or avalanche method, and how much you’d pay in interest. 

  • Create a “budget to pay off debt” spreadsheet to track your progress and maximize your monthly payments. An app could help. The Achieve GOOD app is specially tailored to help people get out of debt.  

  • If you're on a tight budget, consider talking to a debt expert for options on how to pay off debt with little money, which might include credit counseling, a debt management plan, or debt resolution. Those aren’t DIY strategies, but they could be more appropriate for people with serious debt problems.

Rebecca Lake - Author

Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.

James Heflin - Author

James is a financial editor for Achieve. He has been an editor for The Ascent (The Motley Fool) and was the arts editor at The Valley Advocate newspaper in Western Massachusetts for many years. He holds an MFA from the University of Massachusetts Amherst and an MA from Hollins University. His book Krakatoa Picnic came out in 2017.

Frequently asked questions

There's no right or wrong answer for how to create a debt payoff plan, because it ultimately depends on what kind of debts you have, how much you can budget for debt repayment each month, and your desired time frame for paying off debt. Using a free budgeting app to analyze how much you can realistically afford to pay each month is a great place to start. 

If you have overwhelming debt and you can’t afford a DIY payoff strategy, it may be time to bring in the experts. A debt expert can explain your options, including debt resolution or bankruptcy.

Debt resolution can help you get rid of debt for less than what you owe. Your credit standing might temporarily suffer, and there are fees to pay if you go with the pros. What you should expect in return is caring and helpful debt professionals who will help you get through your financial rough patch, and an education about debt that stays with you for life. 

Bankruptcy is a legal process for getting rid of certain debts. You might have to give up some things you own, or give up all of your disposable income for several years.

A serious debt solution could be the turning point you need, to get on a path to a better financial future.

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