Today we are going to discuss how you can transition from overwhelmed to debt free- your speedy action plan. If you’ve ever asked yourself, “How fast can I get out of debt?” — you’re not alone. The truth is, your speed depends on where you start. And the good news? You can change your starting point so you get out faster and pay far less in interest.
Let’s walk through it step-by-step.
Step 1 – Know Your Starting Point
Before you can make a plan, you need to know exactly where you’re starting from.
Here’s an example. Let’s say you have $40,000 in debt:
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At 24% interest, you’re paying about $9,600 a year in interest.
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At 16% interest, you’re paying about $6,400 a year.
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At 8% interest, you’re paying about $3,200 a year.
That’s a difference of over $500 per month going to the bank instead of toward your balance.
Step 2 – Reposition Your Debt
Your first goal isn’t just “pay it off.” It’s to reposition your debt so more of your payment hits the balance.
Some examples:
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From a high-interest credit card to a home equity loan
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From a national bank card to a credit union card with a lower rate
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From a personal loan at 16% to one at 8% or less
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From any balance to a 0% transfer card (with a small transfer fee)
Even moving from 24% down to 16% could save you $3,200 a year. Drop to 8% and you could save $6,400 a year. That’s money you can put toward your balance instead of the bank’s profits.
Step 3 – See the Power of a Lower Rate
Let’s go back to our $40,000 example. If you just make the minimum payment (interest + 1% of principal) at 24%, it could take about 25 years and cost you almost three times your balance in total payments.
Now watch what happens when we change the starting point:
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At 16% – You could be debt-free in about 1–2 years less and save around $30,000 over the life of the loan.
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At 8% – You could be out in 5 years, paying just under $49,000 total instead of $120,000.
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At 4% (0% card with transfer fee) – You could save over $8,000 in the first year alone.
Step 4 – Keep Your Mortgage Where It Is
If you own a home, avoid refinancing your entire mortgage just to pay off debt.
Instead:
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Use a home equity loan or HELOC for only the debt amount.
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Keep your original mortgage rate (especially if it’s 3–4%).
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Focus on replacing bad debt with good, cheaper debt.
Step 5 – Build Your Payoff Plan
Once you’ve repositioned:
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List all debts with their new interest rates.
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Target the highest rate first, paying minimums on the rest.
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Put all savings from lower interest into extra principal payments.
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Repeat every time you find a lower rate or better offer.
Why This Works
Changing your starting point first gives you:
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More momentum – You’ll see balances drop faster.
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More savings – Less to the bank, more in your pocket.
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More hope – You’ll know there’s a finish line you can reach sooner.
Even if you don’t pay it all off in five years, you could cut your timeline in half and keep thousands more in your life.
Ready to Start?
The first step is a personal inventory of your debt. Find your interest rates, balances, and monthly payments. Then, look for ways to reposition into cheaper debt.
At Smart With Debt, we’ve built calculators to show you exactly how fast you could get debt-free with the right starting point.
Stop overpaying the banks. Start keeping more of your money.
Watch our most recent video today to find out more about: From overwhelmed to debt free – your speedy action plan
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