How To Pay Off $10,000 Of Debt In One Year (2024)

How To Pay Off $10,000 Of Debt In One Year (1)

It’s that time of year when we look back on what we have and haven’t accomplished and decide what to tackle in the second half of the year. Even though we're in extraordinary times, most people will still have getting out of debt and building wealth as top goals.

If eliminating some of your debt while simultaneously improving other parts of your financial life are among your goals, this post is for you. It’s time to take back control and kick your debt to the curb.

It can sound like paying off large amounts of debt in a short period of time is impossible - but it's not! You can even pay off $10,000 in debt in just one year. Whether you have student loan debt or credit card debt, there are options.

Here’s how you can pay off $10,000 in debt in one year.

Table of Contents

Step 1: Work Backwards

The first step in any good debt pay-off plan is knowing how much money you need to come up with in order to meet your goal. Saying that you’re going to pay off $10,000 in debt in one year isn’t good enough. You need to breakdown that number so that you can hit smaller milestones.

The simplest way to make this calculation is to divide $10,000 by 12. This would mean you need to pay $833 per month to have contributed your goal amount to your debt pay-off plan. This number, though, doesn’t factor in the interest on your debt.

If you want to see the impact of interest and how much you can save by accelerating your debt pay off plan you can use a debt calculator like the one provided by BankRate.

In the example below we’re assuming a $10,000 credit card balance at a 16% interest rate. In order to pay the balance off in one year payments of $907 per would be needed which would save over $4,000 in interest – a huge savings!

How To Pay Off $10,000 Of Debt In One Year (2)

You can use this calculator to tally up all of your current debts and see what you could save with an accelerated debt pay-off plan.

I can tell you that after a decade of helping people get out of debt, simply getting organized and understanding your debt is the number 1 reason why people don't make forward progress.

Step 2: Decide On Your Strategy

If you only have one loan or credit card you don’t need to worry about coming up with a strategy. (Other than how much your monthly payments will be, of course.) You can simply choose to automate your payments and consider yourself done.

However, if you’re working with multiple loans and debts you’ll have to determine in what order you’d like to pay those off. There are two popular strategies for doing this: the debt snowball and the debt avalanche.

Debt Snowball Method – With this method you’ll list your debts from smallest balance to largest balance and work on paying off the smallest balance while making minimum payments on everything else. Once the smallest balance is paid off you move on to the next smallest while still meeting all other minimum payments.

This is the method popularized by Dave Ramsey, and the goal is to get some early wins by eliminating small debts - which in turn boost your attitude towards paying off the remaining debts. Plus, putting that extra money towards the next debt helps eliminate it faster.

Debt Avalanche – With this method you list all of your debts from highest interest rate to lowest interest rate. You then focus on putting all of your extra money toward your highest interest rate while making minimum payments on the rest.

This method is mathematically the lowest cost approach to paying off your debt, but it could also mean a longer stretch before you see wins.

There’s a lot of debate over which method you should use and there is NO right answer. The debt snowball method is a great option if you like quick wins and want to eliminate smaller bills. The debt avalanche method is great if you’re focused on saving the most money in interest.

Once you pick your strategy you should also consider how often you’ll make extra payments and whether or not to automate your plan.

Step 3: Free Up Money in Your Budget

At a glance, paying off $10,000 in a year can seem like a huge number. However, once broken down coming up with the extra money isn’t as hard as it seems.

If you’re serious about getting rid of your debt one of the first places you should look is your current spending. There are always ways to stretch more out of a budget with minimal effort.

Here are some things to consider:

Monitor Your Spending – It’s impossible to know where to cut back if you don’t know where you’re spending. You can sign up with a service like Empower for free. Empower will automatically monitor and categorize your spending after you link your bank accounts.

You can also check out our list of the best budgeting apps here.

How To Pay Off $10,000 Of Debt In One Year (3)

Participate in Uber Frugal Month – Cutting back on spending has just as much to do with mindset as it does with actual needs. Early retirees Mr. and Mrs. Frugalwoods have had immense financial success through practicing frugality and without feeling deprived. In January they are hosting an Uber Frugal challenge for a month. This challenge can help you lower your costs and discover alternative ways of utilizing your money.

You can sign up for the challenge here.

Easily Save an Extra $500 per Month – It’s very likely that you are needlessly spending money without realizing it! This post breaks down fifteen simple ways you can squeeze an extra $500 out of your budget each month. If all of these ideas are applicable to your situation you’ll free up $7,000 over the course of the year.

Budget for Your Personality – One of the biggest mistakes new budgeters make is trying to adopt a system that doesn’t fit their personality and that they won’t stick with. The trick to making a budget work is finding a way to make it a regular part of your life.

This post will breakdown different ways you can create a budget that works for you.

Step 4: Earn More If You Need To

While it’s always a good idea to trim away the fluff in your budget it’s also important to look for ways to earn more if needed.

Depending on how much extra money you need you may be able to get by with putting in a couple hours per week overtime or you could start a side hustle to earn more.

Earning more money is a perfectly viable option for the majority of the U.S. population. You can look at some of the hundreds of different ideas already listed on this blog.

This was one of the most important strategies for myself when it came to paying off my student loan debt. I was able to earn an extra $2,000 per month by selling stuff on eBay and starting this blog.

Step 5: Track Your Progress

Paying off $10k in a one year is not an easy feat. It will take hard work and you’ll probably have to recommit to your goal a few times. One of the best ways to keep yourself motivated is to continually track your progress and celebrate the small wins.

When things get hard don’t give up. In a year from now you’ll be thanking yourself for sticking with the plan!

Finally, make sure you do reward yourself at small milestones. It's a lot of work to pay off debt, so congratulate yourself every now and then!

Check Out These Related Articles:

15 Ways To Save An Extra $500 Per Month

15 Ways To Save An Extra $500 Per Month

7 Things To Do After You Pay Off Your Debt

7 Things To Do After You Pay Off Your Debt

How 16 Real People Paid Off Their Student Loan Debt

How 16 Real People Paid Off Their Student Loan Debt

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How To Pay Off $10,000 Of Debt In One Year (2024)

FAQs

How To Pay Off $10,000 Of Debt In One Year? ›

The simplest way to make this calculation is to divide $10,000 by 12. This would mean you need to pay $833 per month to have contributed your goal amount to your debt pay-off plan. This number, though, doesn't factor in the interest on your debt.

How long does it take to pay off the $10000 debt by only making the minimum payment? ›

1% of the balance plus interest: It would take 29.5 years or 354 months to pay off $10,000 in credit card debt making only minimum payments. You would pay a total of $19,332.21 in interest over that period.

How to pay off $9,000 in debt fast? ›

To pay off $9,000 in credit card debt within 36 months, you will need to pay $326 per month, assuming an APR of 18%. You would incur $2,735 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.

Is $10k in credit card debt bad? ›

Having any credit card debt can be stressful, but $10,000 in credit card debt is a different level of stress. The average credit card interest rate is over 20%, so interest charges alone will take up a large chunk of your payments. On $10,000 in balances, you could end up paying over $2,000 per year in interest.

How to pay $30,000 debt in one year? ›

The 6-step method that helped this 34-year-old pay off $30,000 of credit card debt in 1 year
  1. Step 1: Survey the land. ...
  2. Step 2: Limit and leverage. ...
  3. Step 3: Automate your minimum payments. ...
  4. Step 4: Yes, you must pay extra and often. ...
  5. Step 5: Evaluate the plan often. ...
  6. Step 6: Ramp-up when you 're ready.

How to pay off 10k in debt in 12 months? ›

The simplest way to make this calculation is to divide $10,000 by 12. This would mean you need to pay $833 per month to have contributed your goal amount to your debt pay-off plan. This number, though, doesn't factor in the interest on your debt.

How can I pay off 10k in debt fast? ›

7 ways to pay off $10,000 in credit card debt
  1. Opt for debt relief. One powerful approach to managing and reducing your credit card debt is with the help of debt relief companies. ...
  2. Use the snowball or avalanche method. ...
  3. Find ways to increase your income. ...
  4. Cut unnecessary expenses. ...
  5. Seek credit counseling. ...
  6. Use financial windfalls.
Feb 15, 2024

How to pay off debt when you live paycheck to paycheck? ›

Tips for Getting Out of Debt When You're Living Paycheck to Paycheck
  1. Tip #1: Don't wait. ...
  2. Tip #2: Pay close attention to your budget. ...
  3. Tip #3: Increase your income. ...
  4. Tip #4: Start an emergency fund – even if it's just pennies. ...
  5. Tip #5: Be patient.

How to pay off debt when you are broke? ›

How to get out of debt when you have no money
  1. Step 1: Stop taking on new debt. ...
  2. Step 2: Determine how much you owe. ...
  3. Step 3: Create a budget. ...
  4. Step 4: Pay off the smallest debts first. ...
  5. Step 5: Start tackling larger debts. ...
  6. Step 6: Look for ways to earn extra money. ...
  7. Step 7: Boost your credit scores.
Dec 5, 2023

How do you pay off aggressively debt? ›

Make debt payments beyond the minimum.

Making more than your required minimum payment can help you pay off debts more quickly and save money in interest charges. Earmark unanticipated funds, such as your tax return or a bonus, for debt payments.

Does the government have a debt relief program? ›

Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief. In fact, if you receive a solicitation that touts a government program to get you out of debt, you may want to think twice about working with that company.

Is debt forgiveness legit? ›

But the harsh truth lies somewhere short of "totally erased" and "no consequences." To be clear, debt forgiveness does exist, and it's possible to settle your debt for less than what you owe. But to get it totally erased is rare, and it usually requires an extreme measure, such as bankruptcy.

Is there a debt forgiveness program? ›

The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans after 120 payments working full time for federal, state, Tribal, or local government; the military; or a qualifying non-profit. Learn more about PSLF and apply.

How to pay off $18,000 fast? ›

  1. Make a List of All Your Credit Card Debts. You can't get where you're going if you don't know where you are. ...
  2. Make a Budget. ...
  3. Create a Strategy to Pay off the Debt. ...
  4. Pay More Than Your Minimum Payment. ...
  5. Set Achievable Goals. ...
  6. Consider Debt Consolidation. ...
  7. Seek Credit Counseling.
Sep 14, 2023

How to pay 15000 in debt fast? ›

Here are four ways you can pay off $15,000 in credit card debt quickly.
  1. Take advantage of debt relief programs.
  2. Use a home equity loan to cut the cost of interest.
  3. Use a 401k loan.
  4. Take advantage of balance transfer credit cards with promotional interest rates.
Nov 1, 2023

How to pay off $6,000 in debt fast? ›

Pay off your debt and save on interest by paying more than the minimum every month. The key is to make extra payments consistently so you can pay off your loan more quickly. Some lenders allow you to make an extra payment each month specifying that each extra payment goes toward the principal.

How fast can I pay off 10k in credit card debt? ›

To pay off $10,000 in credit card debt within 36 months, you will need to pay $362 per month, assuming an APR of 18%. You would incur $3,039 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.

What is the minimum payment on a $10,000 credit card balance? ›

If you only make minimum payments, a $10,000 credit card balance will cost you $16,056.59 in interest and take 346 months to pay off. Minimum payments on a $10,000 balance would start at $267 and decrease as you paid down what you owe.

How long to pay off debt with minimum payment? ›

For example, say you have a credit card account that charges 18% interest, and you have $10,000 in credit card debt. If the minimum payments are equal to interest plus 1% of the balance, it would take 342 months to pay off the debt by making minimum payments alone.

What happens when you only make minimum payments on your credit debt? ›

Because when you carry a balance on your credit cards, your credit card issuer will charge interest on your debt—and when you only make the minimum payment on your credit cards, those interest charges can quickly add up.

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