"When I was young I thought money was the most important thing in life. Now that I'm old--I know it is." - Oscar Wilde

Fast or Slow: The Best Way to Pay Down Debt

By , July 5th, 2010 | 7 Comments »

When it comes time to pay down debt, there are two schools of thought. The first argues that you should pay it all down as quickly as possible. This may mean taking on extra jobs and sacrificing all of your fun and frivolous spending for as long as it takes to get the job done. The other school argues that you should pay it off as you are able without putting yourself under the stress of multiple jobs or giving up all of your fun activities. Which is right?

The financially smart answer is to pay it as fast as possible. Paying fast saves you thousands of dollars in interest charges and gets you on the road to a secure financial future much quicker. When you pay debt quickly, you find yourself able to save more for retirement and other goals much sooner. Since your savings need time to compound and grow, the sooner you start packing it in, the sooner you can reach your goals. You also have the psychological advantage of getting the debt off your back. It’s not hanging over your head and you’re able to fully enjoy your freedom.

The downside to paying it fast is that you do have to give up a lot of fun for a while. Barring a huge increase in income, you’ll have to give up all extra spending to have the cash to throw at your debt. You might also have to take on an extra job or send a partner back to work which beings more stress. It can be worth it, but paying fast comes with sacrifices. You may also have to temporarily suspend your savings. Once you have enough to cover some emergencies, all of your extra cash will go to debt repayment, which means you’ll lose out on some prime compounding years.

Paying slowly, on the other hand, may mean fewer sacrifices. If you just take a fraction of your extra cash and throw it at the debt, you can keep some back to have fun with. You may also be able to keep funneling some toward savings. This method can feel like less of an imposition than paying quickly.

You will pay more in interest with this method, however. Much more. You’ll also have to live with the debt much longer which, for some people, can be more stressful than paying it off quickly. You won’t be able to fully maximize your savings or enjoy your freedom as soon, either. Paying slowly may also mean that you are likely to incur more debt as you go along because you don’t feel the urgency of avoiding debt. You may start thinking things like, “Well, I’m still paying off the debt so a little more won’t hurt. We’ll take that vacation and charge it.”

The biggest drawback to paying slowly is that it sets you up for justifying not paying at all. You start saying things like, “Well, it’s not like I can pay it off anytime soon anyway, so I’ll just make the minimum payment,” or, “It’s not that big of a deal. I don’t really care if I ever get it paid off,” or, “I’m not seeing any progress, so I give up.” Your thinking may shift to the point where you figure that if you’re only throwing small extra amounts of money at the debt that it’s not really worth it so why bother.

This is why paying faster is not only the financially smart choice, but the psychologically smart choice, as well. Yes, it may mean more short term stress but when it’s over, it’s over. The urgency of meeting your goal is likely to keep you going long enough to get the job done. If you feel that urgency and you’re seeing regular progress, you’re not as likely to incur more debt or decide it doesn’t matter. Paying slowly leads to more justifications and excuses which leads to never getting the debt paid off. You have to decide for yourself how to approach your debt repayment but paying quickly, while requiring sacrifices, is usually the more foolproof method.

Get Your FREE Book Now

Enter your name and email address to get your FREE copy of "Guide to Shopping at Costco."

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit
What did you think about this article?
1 Star2 Stars3 Stars4 Stars5 Stars (2 votes, average: 4.00 out of 5)


  • Jessica says:

    I think the answer is balance. I know I would be discouraged if I got rid of all fun and social activities-and it would effect my relationships. But, I have definitely changed my habits and made sacrifices-no clothes shopping for a year (that’s part of why I’m in debt, so I have plenty of clothes). I budget for eating and drinking out instead of just going crazy. I’m not going on a huge vacation this year, but I am going on a small trip to see a friend in Portland this summer. If I got rid of all fun, I would have quit a while ago-I think it comes down to being realistic.

  • Rick says:

    I also think balance is the answer.
    I am paying off debt slowly because I think it’s much more important to have a 6 month emergency fund in place before being debt free.
    I usually take the 1st $1000 and put it in my emergency fund.
    Anything over that amount goes toward debt repayment.
    In my case I have the luxury of very low deductible interest.

  • I think it depends on the debt. I think that high-interest debt and debt that comes from “wants” should be paid of quickly and sacrifices should be made to do so. If it means a 2nd job or selling something of value, so be it.

    I think that debt such as mortgages and student loans, though, should be paid off slowly. I think the easiest way to express why is to use the old saying:
    “How do you eat an elephant? one bit at a time.”

    I think people who try too hard to pay down HUGE low interest debt pose a greater risk to themselves and their families by burning out, having health problems, or just pushing too hard. They also stress their financial accounts, taking every discretionary cent and applying it to the huge balance. This prevents them from taking vacations, buying gifts, or otherwise enjoying life a little bit.

    For debt that was incurred on a whim, pay it off quick. Debt that was planned to be long term, let it run the term and see through your plan to pay it.

  • Isabelle says:

    By paying the ‘whim’ – and usually high interest – debt quickly, the mind set should develope that wants to see debt gone. The payments you had been making can be rolled over to pay off the mortgage debt.

    To have no or a very small mortgage gives enormous freedom. It means one can change from an unpleasant job to a lower paid but enjoyable job. It means money can be saved and used to go travelling or do whatever the dream is.

    There is a thread on a British site ‘Martin Lewis’ where people set the target to pay their mortgage quickly. It is amazing to read the posts from the past three years and see how people have managed to pay more than they would ever have dreamed possible. It hasn’t taken decades, and now they have far more freedom and security.

    I read about the austerity measures individual states in America are having to take, and here we are facing the same cut backs. To be secure in knowing the roof over one’s head is one’s own is priceless!

  • Joy says:

    Balance, yes. I have a little daughter who, if I were to do nothing but pay off debt, would never have piano lessons, we’d never have had some of the really wonderful experiences we’ve had. She’s going to be young and with me for such a short time.

  • ana micaela says:

    i also think so…you eed balance. interests are normal because the company needs to have a profit ot of it. in te first place, if one doesn’t want to have due debts, then these shoul hve been paid in due dates. i on credit, well, it was ones choice to go it in the first place. nobody decided for you to go into debt. so it’s a normal situation to have interests but it’ is not good not to live for awhile just to get it all paid up right away. pay in regular amounts…then if you have extra money, pay extra…i think that’s it.

  • Gail says:

    When we were paying down credit cards (all gone now except for charges that get paid in full every month :)!!!) We stopped charging and started paying the minimum rounded up to the closest $5 or $10 (if you can even afford to do that). The next month when the bill came due the minimum payment was a tad less, but we paid the same minimum as the month before and each month after–this actually starts the so called snowball effect. As long as you are not charging more onto the bill, the bill does get smaller and smaller and since you keep paying a set amount, you can budget it better. Check out those boxes on credit card bills now that show what even a smaller extra payment each month will do to the balance and how much you will save. When you see that adding $10 a month to your minimum payment can save you a $1000 or more dollars in interest and pay off the bill months sooner, you might be more willing to dig deeper and save those luxury items for later.

    The trick to paying credit cards down is to leave yourself enough cash to not have to charge items, paying a set amount each month with a little extra added in, and be sure you are never ever late with the payment. After a few months you will really see the difference start to accumulate.

    Of course, to not have to charge anymore you will really have to examine your budget and whether you like your fun stuff or not, if you can’t afford it and can’t pay cash for it then don’t get it. Now that the credit cards are paid off, it is such a relief to be able to budget in those things that we need and buy them as we have the money and know that they aren’t going to be a chain around our neck for the next decade.

    I’m always amazed about people;s attitudes when buried under a mountain of debt, that they deserve their fun and little luxuries. Time to start relearning ways to have cheap fun since you really can’t afford those luxuries anyhow.


Leave a Reply


Sign up for the "Saving Advisor" newsletter (Weekly)
Google Plus

Subscribe by email:

Related Articles

Previous Years Articles

Today, last year...

Copyright © 2018 SavingAdvice.com. All Rights Reserved.