7-minute read.

If you really want to learn how to pay off debt, you have to go boss mode. Don’t know what that means? It means being an executive of life and that starts by making decisions that improve it, not riddle it with multiple monthly payments.

Just to be clear, debt payments don’t scream boss.

Having a fun career along with a comfortable salary is great. But it doesn’t create a boss mentality when you keep forking out minimum payments to your debt, dragging it out for 10+ years (like the government suggests on student loans).

Boss mode is truly achieved when an effective method is used to pay off debt. Ready to learn how to pay off debt? I’m covering two options here to help you pay off debt right now.

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List out all debts

The first step in how to pay off debt is to take inventory. Log on to your debt payment accounts. This could include online portals like Nelnet, Great Lakes or Navient for student loans, a bank or credit union for a car loan or personal loan, or a credit card account if you have credit card debt.

Next, locate three things inside of the account:

Total debt owed
Monthly minimum payment
Associated interest rate

Thirdly, check for multiple loans if you have student loan debt with different interest rates. Make sure these are listed out separately. Lastly, if you can’t readily find this information, call customer support. That’s what they’re there for and it’s your right to understand your debt payment obligation.

? Boss mode: facing the dragon

A lot of financial experts and influencers out there tend to gloss over the fact that this might be the first time you actually see all of the debt listed out at once. This can be extremely intimidating and as a result, might have you feeling scared, embarrassed, guilty, stressed or frustrated.

It’s worth noting that it’s okay to cuss a little bit. It’s okay to cry a little bit. When I first added up all of my debts like this, I remember thinking, “There’s no way I can pay this off. This mountain seems too freaking high to climb.” Then I realized I was doing something that nearly none of my friends were doing. I was stepping into financial responsibility as an adult for the first time. Instead of signing car leases and getting a credit card, I was taking care of my debt mess first so that I could live payment-free later.

I was very in tune with living debt free early on. I was also in tune with very good breweries, like Tallgrass Brewing Company.

When you get organized with debt, you are removing yourself from the pack. You are no longer running in the chained-to-debt gang, rather you are taking a step toward debt free millennial status.

If you’ve gotten to this point and already took inventory of your debt, I just wanted to share that I’m super proud of you for making the effort to find this information. It’s not easy, and furthermore it requires reflecting back on past mistakes in our finances. But the whole reason you’re reading this is to get the eff out of debt, and I’ve got the debt pay off methods below.

“When you get organized with debt, you are removing yourself from the pack.”

How to pay off debt according to highest interest rate

Most people like to tackle debt that have crippling interest rates first. This is typically known as the debt avalanche method. If a loan has more than 10% in associated interest, then it might be advantageous to pay off that debt using this method.

How to pay off debt with highest interest rate:

Make minimum payments on all loans EXCEPT the one with the highest interest rate.

Focus on throwing any and all extra income towards the loan with the highest interest rate first.

If you have multiple loans with the same interest rate, tackle the one that has the highest amount owed.

Debt	Total Amount Owed	Minimum Payment	Interest Rate
Chase	$10,000	$200	15%
AMEX	$5,000	$120	15%
Nelnet	$30,000	$350	6%
Total	$45,000

In this scenario, ignore the total amount owed and focus on the loan with the highest interest rate.

Once the loan is paid off, move on to the loan with the next highest interest rate and start all over with the same method. Continue to throw extra cash towards the loan while paying minimums on everything else. Ideally, extra income that was going towards the first loan will now be rolled into the second one.

How to pay off debt according to smallest loan owed

The most gratifying method on how to pay off debt is by paying off the loan that has the smallest amount owed. This is commonly referred to as the debt snowball method. Make minimum payments on all loans EXCEPT the one with the lowest total amount owed. This method completely ignores interest rates. Instead, the debt snowball method focuses on instant gratification. Let’s face it, we are motivated by quick wins. We live in a world of two-day shipping and drive-thru windows, so duh, we want to implement how to pay off debt methods quickly.

Debt	Total Amount Owed	Minimum Payment	Interest Rate
AMEX	$5,000	$120	15%
Chase	$10,000	$200	15%
Nelnet	$30,000	$350	6%
Total	$45,000

In the debt snowball method, we’re flipping the order of AMEX and Chase, so you are quickly paying off the $5k balance first.

Never heard of the debt snowball method? I explain it in 60 seconds:

This is how I personally paid off $35,000 in student loan debt in two years and five months. I surpassed my original debt pay off goal of five years because I was focused on the smallest debt owed and only that debt until it was paid off.

Fit your debt pay off plan in a budget

When you have figured out how to pay off debt, make sure the payoff plan is built into a monthly budget. Normally, I add my payment amounts directly to my budget. I adjust my budget so I can add an extra payment amount to the loan that I am paying off first. My budget was built using a Google Spreadsheet, which you can access for free, or track it using an app or pencil/paper combo. Whatever works for you, go for it and stick to it!

One look at my budget spreadsheet quickly told me where my money was going and what I needed to focus on. It’s all in the Budget Toolkit.

Let’s say you make adjustments and can add an extra $50 per month towards the first loan. Then, challenge yourself each month by finding creative ways to add even more to that extra $50 payment. This is the way I did it and it almost became a game at how I could find extra income or cut back on monthly expenses so that I could really tell my student loan debt to suck it!

The key to both of these methods is to focus on one loan at a time to master how to pay off debt. Paying extra on multiple debts at the same time will result in burn out and frustration. Selecting one method is so important in how to pay off debt effectively. I’ve met several people in the #debtfreecommunity that have chosen their method and go all in. Boss mode.

What’s your preferred method of paying off debt? Tackle the highest interest rate or smallest total amount owed?

Learn How to Pay Off Debt By Putting A Budget In Place

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Boss Mode: How to Pay Off Debt