4 Steps to Pay Off Large Debt Fast

At the age of 24,Jaime MastersShe graduated from college and landed a six-figure job. She got married, had two dogs, owned two homes, a new car, and was expecting a baby.

It was a pretty good life, if not for the debt that came with it. Masters owed $19,300 on her car, $26,180 in student loans, and $24,560 on her mortgage. She owed $70,000 in total, and she hated her job but was the breadwinner for her family.

Masters started trying to get out of debt when she was pregnant. And 16 months after she started her debt-paying plan, she did it. She is now a speaker, author, and host of programs on business and entrepreneurship. She shared withCNBCabout the 4 steps used to get out of debt.

Selective methods

Like many people faced with a mountain of debt, Masters didn't know where to start. So she researched and chose Dave Ramsey's 'Snowball Method'.

First, she sold her two-month-old Honda Civic and the family's older Jeep to buy a 2000 Jeep Cherokee. The extra money went toward paying down debt, bringing her total debt down to $55,440.

Masters then applies the remaining steps in the 'Snowball' method. Specifically, this method recommends paying off the smallest loans first while continuing to make minimum payments on the larger loans.

Once you have paid off one loan, continue using the monthly payment to pay off the next loan, until everything is paid off.This method also notes an option to focus on paying off the loans with the highest interest rates first and then gradually pay off the loans with the lower interest rates.

Review spending

Masters didn’t keep track of how much money she was spending until she decided to pay off her debt. She and her husband cut cable, reduced their cell phone plan, stopped eating out, and budgeted their household expenses.

“It wasn’t easy at first because I was used to spending lavishly. It felt like a complete lifestyle change. But then it got easier,” she said.

To make this step easier, first check your credit cards and bank accounts to see where your spending is going. Note what you can afford and what you need, such as rent, food, and utilities.

Then, identify expenses you can cut. Can you reduce your phone bill? Can you live in a cheaper house? And can you cook at home instead of eating out?These are small changes but will give you extra money to pay down debt.

Earn extra income

Along with cutting costs and creating a budget, couplesMastersThey also focused on making as much extra money as possible before their baby arrived. “We worked harder and did a lot of yard sales to increase our income,” Masters says.

Masters decided to work onsite. This meant more travel, but she earned an extra $40 a day. Meanwhile, her husband earned extra money by doing web design work. They also had yard sales in the summer. They listed unused items onCraigslist and sell clothes on eBay.

In fact, ways to increase the income of couples are not too difficult to learn. In addition to earning extra income through expertise, the sharing economy also allows many people to earn money without requiring special abilities. For example, you can work as a part-time delivery person or a driver for a technology car company.

Set up a savings fund

Just before her son was born, Masters had one student loan remaining to pay off. But she was hesitant to pay it off because she was saving for the upcoming birth. So she called directlyDave Ramsey.

“I called Dave Ramsey and asked him for advice. He advised me not to pay off the last loan and to keep the money until the medical bills were paid,” she said.

When his son was born, Masters had $23,000 in the bank.She used the money to stay home with her child for a few months. Then she went back to work and paid off her student loans within a month and a half.By the time her son was four months old, Masters had paid off all her debts and had also quit her job and started her own business.

According to Masters, the hardest part of paying off debt is keepingResponsibility. “The responsibility is huge. My husband and I share responsibility and support each other when times get tough. We also talk to people about our debt repayment plan, which helps keep us on track,” she says.