Rachel Cruze: 7 Steps To Pay Off Debt Fast Once You Have Emergency Savings
Paying down debt is one of the top 2026 financial goals for many Americans.
In a recent YouTube video, Rachel Cruze, financial expert and author, laid out a plan to pay off debt quickly this year. Here are the steps she suggested to follow, but only after accumulating a $1,000 emergency fund.
1. Eliminate Nonessential Expenses
Cruze recommended choosing a simpler lifestyle that reduces spending and leaves more cash for debt payoff. This step requires getting strict with budgeting and scrutinizing expenses to reduce or cut. For example, it might involve cancelling certain streaming services, downgrading phone or cable plans and cutting back on using food delivery apps.
"See if you can shrink it down by $50 to $100 and throw extra at your debt," said Cruze.
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2. Increase Your Income
Besides cutting spending, focus on bringing in extra cash to speed up paying off debts. You could try working extra hours at your current job, finding a weekend part-time job or pursuing a profitable side hustle.
While Cruze acknowledged that working more hours can seem unappealing, the temporary sacrifice can eventually lead to financial freedom. Plus, finding work doing something you're passionate about, such as making art or caring for pets, can make this step less painful. Just make sure that extra income goes toward debts, and not splurges.
3. Sell Household Stuff
You likely can declutter your house and sell valuable stuff to work toward getting out of debt. Cruze highlighted popular household items such as electronics, clothes and furniture.
Many options exist to get cash for these goods, including using online marketplaces like eBay or Poshmark, or selling locally through Craigslist or garage sales. Just be mindful to avoid scams and find safe ways to get paid and hand over goods.
4. Temporarily Stop Investing
While putting aside funds for retirement is wise, it's important to consider the costs of debt compared to potential investment returns. Cruze recommended temporarily discontinuing investing until the debt is gone.
"That could be hundreds of dollars back in your paycheck every single month that can help to pay off your debt," said Cruze.
Once you're debt-free, your extra money can go toward filling up your emergency fund and resuming investing. Cruze advised investing 15% of earnings at that point.
5. Adjust Your Tax Withholding
According to Cruze, "If you got a big tax refund, that means you are sending your money that could be in your paycheck to Washington."
You can adjust your W-4 form so that your employer takes less money from your pay for taxes. This includes accounting for other income sources, your spouse's job, dependents and expected tax deductions and credits.
The IRS tax withholding estimator can help with figuring out the right withholding amount. Once the bigger checks come in, start putting the extra money toward debt payments.
6. Use the Money Finder Tool
Cruze recommended the free Ramsey Solutions Money Finder tool, which quickly identifies spare cash in your budget. It involves reviewing food costs, lifestyle expenses and insurance needs to find areas to save.
This tool also goes along well with Dave Ramsey's EveryDollar app, which uses the popular zero-based budgeting system, and helps with reaching financial goals like debt payoff.
7. Implement the Snowball Method
Cruze advised using the snowball method when paying down debts. This means targeting your balances from the smallest to largest sizes to see progress early on. For example, you'd pay off the $150 credit card before moving on to the $500 personal loan, $1,000 credit card and so on.
This payoff strategy can be less intimidating than the avalanche method, which might leave you demotivated while trying to pay down a huge high-interest debt first.
According to Cruze, you should close the accounts you've paid off. That way, you can reduce the risk of ending up burdened with debt again.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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