Get Out of Debt

How do you get out of debt that you’ve accumulated over a period of time?

You see, there comes a time in all of our lives when we may find ourselves burdened by debt. Maybe you’ve taken on too much credit card debt. Maybe you’re struggling to repay car loans or a student loan. Or maybe you’ve simply made some bad investment decisions. Whatever the reason may be, it’s never an easy situation to be in.

Disclosure: This post might contain affiliate links. This means that if you later on decide to purchase something through these links, I might get rewarded through credits or money. At no extra cost to you. Rest assured that I would never link to a product I haven’t tested myself.

Debt is a huge burden for many families. It can make you feel locked down and unable to move forward financially. You want to get out of debt, but the thought of actually doing it is overwhelming. Debt can be a source of stress, but it doesn’t have to be. It all starts with taking the right actions and understanding that you are in control of your future.

Achieving financial freedom isn’t about slaving away and never having fun – in fact, it’s quite the opposite. So, what can you do to get out of debt? Below are some simple steps you should take to get out of debt and start building wealth today.

PS: This whole blogpost with all of its tips, is available as an ad free report HERE.

6 Steps To Get Your Debts Organized


When you decide to start getting control of your debt, the first part of this process is to assemble your debts so that you know the real-world picture. You may think that you know what you owe, but most people who aren’t actively keeping track, underestimate how far in debt they are.

1. Make a List

Start with your memory and make a list of your creditors. Organize them by type of debt: secured, unsecured, educational, and basic living. Every kind of debt needs to be handled in a slightly different way.

2. Check Your Bank Account

Double-check what has come out of your bank account for payments. That can jog your memory about creditors that you may have forgotten about. Plus, if you check your credit report and something is new, it may not be reported. If you pay rent, that too is not going to be reported.

3. Remove the Cards from Your Wallet

Now take all the cards out of your wallet and make sure you have listed these cards. You want to move these cards to a safe place once you note them. You’re not going to keep credit cards in your wallet while you’re working on paying down the debt.

4. Check Your Credit Report

Now check your credit report to see if anything is on that report that you didn’t list as your debts. You should look at all three reports at least yearly, and you can do so for free by contacting them directly. You can also use but be aware that if you do that, you’ll be bombarded by credit card offers and temptation.

5. Call Your Creditors or Look Online

Once you’ve got a good list going and you’re sure it’s all of the debt you have, take the time to double-check each individual account to get a real balance. Of course, the daily living expenses should have nothing to do with credit unless you have a mortgage. By each creditor, list the annual percentage rate (APR) as well as the minimum payment currently required and the full balance you owe.

6. Add Up the Total Amount You Owe

Now you’ll want to add up the total that you owe in each category. Pay close attention to the amount you owe on your unsecured debt. This is the debt that you want to pay off first. For now, only pay the minimum amount you must pay for everything while you work on a pay-off method.

While you’re in this process, put your cards away and stop using any type of unsecured consumer credit. This process may take you a couple of weeks. In the meantime, you’re going to stick to your minimal required living expenses and minimum payments.

Note: If the minimum payment required on your card is not paying the entire interest amount owed, pay and list at least that while you’re in this process. That way, the amount doesn’t continue to go up.

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How To Set Your Budget While You’re In Debt


In the previous section you worked on figuring how much you really owe, and how much you need for your basic daily living expenses. Now, let’s set a budget that works so that you can get those unsecured debts paid off as fast as possible.

1. Analyze Your Monthly Living Expenses

Add up how much you need for food, clothing, taxes, transportation, medical care including medication, housing including utilities, and so forth. These are the must-have items to keep your job and live every day in a healthy way.

2. Understand the Difference between Needs and Wants

Remember when you’re listing your monthly living expenses that it’s imperative to understand the difference between needs and wants. It’s not that you cannot have any of your wants, but it does depend on how much debt you need to pay off.

You don’t have to do this forever, just until you pay down the debt and build your emergency fund. You can do anything short term.

3. Identify Your “Disposable” Income Amount

Once you add up all your living expenses, which will include your automobile (if it’s necessary for work), food, housing, clothing, taxes, insurance, medical care, minimum debt payments, and medicine as listed above. Subtract that amount from your income. What you have left over is your disposable income.

If you’re unsure about how much is appropriate to spend on things like food in your situation, you can use online help to find out. For example, a short Google search reveals that most people spend 6 to 11 percent of their income on food, including groceries and eating out.

4. Choose a Payoff Timeline

After you have your disposable number, which is all your essential expenses subtracted from your income, it’s time to choose a payoff timeline. You can choose to use the entire disposable income amount to start paying down the debt, or you can do the math to figure out how long it will take you to pay off your debt using that amount.

When you do that math, you may discover you can add a little more back to your daily budget for a couple extras, or you may decide you’d rather pay things off faster. You may even realize that you’re in more trouble than you thought.

5. Choose Your Paydown Type

There are a couple popular methods for paying down your debt. Each of them asks that you pay minimum payments to all but the one you’re working toward paying off first. You pile all your disposable income to that one debt and pay minimums everywhere else.

Once you have paid that one debt, you take that entire amount and put it on the next bill. You can choose to pay the smallest bill first, which is the snowball method, or you can start with your highest interest rate first, which is the stacking method.

The stacking method (also called the debt avalanche strategy) saves the most interest, but the snowball method helps people stick to it because it shows results faster since you end up with fewer debts more quickly even if the balance is higher.

6. Automate the Process

As you are making your plan, if you realize you don’t have enough money to pay down your debt in the timeline you’ve hoped or you don’t have extra money once the minimum payments are paid to start paying down your debt, you may need to find a way to earn more money or get professional help.

If you can add something to your debt over and above the minimum payments, choose your method and stick to it during the timeline you picked.

Choose The Right Paydown Method For You To Get Out of Debt


Human nature is an interesting subject to study, and you can really learn a lot about people by how they deal with their debt and getting it paid off. Some people are more focused on numbers while others are more focused on feeling as if they’re accomplishing something. Both strategies accomplish the same thing – getting your debt paid down fast to save you a lot of interest.

Let’s understand the difference between the debt stacking method and the debt snowball method.

Debt Stacking

You pay minimum payments on all your debt other than the highest interest debt, which you pay down by funneling all your disposable income to it. Once you’re done, you move on to the next highest interest rate debt and do the same thing, combining the money you used for each debt.

Debt Snowball

This method is the same as the debt stacking method except that you start with the lowest balance debt instead of the highest interest debt. You funnel all your disposable income to the debt which has the lowest balance. When one is paid off in full, you combine that money to pay down the next lowest balance fast.

If you need to see results fast to give yourself the motivation to keep going, choose the snowball method. Having said that, this method works much better if you do have some low balance debts to get paid off in a couple months. If your consumer debt consists of all equally high balances, you’re going to save a lot more money using the debt stacking or avalanche method.

The debt stacking method allows you to save more money on your interest due to tackling the highest interest rate debt first. However, if your highest interest rate loan is exceptionally large, it might feel frustrating for a while as you feel like you’re not making an impact even though you are.

The best thing to do is to know who you are and what you need to stay motivated. Regardless of which method you choose, as long as you stick to it, the debt will eventually be paid off.

Should I Refinance My Debt In Order To Get Out Of Debt?


Whether you have a mortgage, a car loan, or unsecured debt, you may have wondered if an easy way to get a handle on your debt is to refinance it.

In case you don’t know, refinancing simply means that you take out a new loan to pay off the old loan. Sometimes you can get a lower interest rate that will help you pay off your loans faster. However, often this comes with additional fees. So, should you do it or not?

Consumer Credit Refinancing

If you have a lot of consumer debt across several different cards, you may have considered getting a personal or another type of loan to refinance the debt into one payment. This is a good idea if you can get a lower interest rate than what you have now, plus you are committed to not charging up the cards again.

The problem is that most people who need to refinance their credit cards are already so far in debt that they cannot get a good loan that pays off the entire amount to make it worth it. In other words, it’s usually a fantasy for most people because most people won’t qualify.

If you do get offers for no fee zero interest cards, transferring the balances to those cards can help you pay less interest in the short term, and if you don’t use the open credit, it can increase your score – but this again is only going to work if you are genuinely committed to your payoff plan. 

Auto Loan Refinancing

Most auto loans are front loaded, meaning that you pay off your interest in the first couple of years of the loan. The amount you’re paying on interest is less toward the end of the loan. This means that most of the time, refinancing a loan will just end up costing you more money.

You should not refinance an auto loan unless you’re at risk of losing it if you don’t lower your payments, and you need your car for work. If you can substantially reduce the interest by at least three to five percent over what you’re now paying, and you still owe a lot of your interest, this may work for you.

Mortgage Refinancing

Sometimes you can get a truly excellent deal for refinancing a mortgage loan. But again, it needs to be at least two or three percentage points different, without fees being turned back into the loan. The best way to figure this out is to do the math in full regarding your savings.

If you have a lot of equity in your house, you may be tempted to refinance and take some of your equity for paying off your consumer debt. The problem with this is that it’s only going to work long term for you if you’re committed to not charging up the cards again. Sometimes paying them off the “long” way is much better for your future. You must do the math and know who you are.

Student Loan Consolidation

This is one area where consolidation will help you tremendously. If you have a lot of different student loans, contact your loan provider to find out if you can consolidate all your student loans into one. This will save interest and make it easier to handle payments.

Having said that, if your credit score has been harmed by your income to debt ratio, even if you never miss a payment, you likely won’t be able to get any good consolidation loans that make it worth it anyway.

Now you’re about half way through this blog post, did you download it so you’ll have easy access to all the tips later?

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Student Loan Forgiveness – Does It Exist?


When you first took out your student loans, you may have hoped for a chance at having your loans forgiven based on the job you decided to take. However, you may have realized that this is probably not something you should be counting on. Even if you use the income-driven payment method plan that lets you discharge any remaining balance after 25 years of payments, there are some catches to think about.


Regular Payment Plan

The way your regular payment is figured is to divide your payment over a 10-year period. This is often too high for most new graduates. Having said that, paying your loans in 10 years will save an enormous amount of interest. If you can manage this payment plan, stick to it.

Income-Based Payment Plan

One plan that combines payments with a forgiveness program is the income-driven payment plan. Basically, they give you a smaller payment based on your income. You need to recertify every single year by giving them a copy of your taxes. If you are married, they will also consider your spouse’s income in this process. Because of this, many married couples don’t qualify unless both parties have student loans.

The way this works is you pay the payments every single month for a total of 25 years. Your payment will stay the same only year to year. You’ll need to recertify, and you’ll get a new income-based payment each year after recertification. The idea is that the payment will go up as your income goes up until it finally gets to the point you make too much income for the payment plan in which case your plan will revert to the standard 10-year payment method and you’ll end up paying back all the accumulated interest. 

If you do reach the 25 years of payments under the income-driven plan, and still have a balance, that amount is forgiven, and you will receive 1099 for the amount which must be claimed on your taxes as ordinary income. For some borrowers, this could amount to a hundred thousand dollars because if your income is too low to pay for the interest, it’s being accumulated back into the loan, which will keep going up instead of down throughout your payment plan.

Loan Forgiveness Plans

If you’re in public service, nursing, teaching, or you have a disability or serious and permanent financial hardship, you may be able to get your loans forgiven.

For public service programs, you’ll need to work with a qualifying employer in the public service sector. Currently, this program is still in place, and people are starting to have their loans forgiven. Although this process is not inevitable according to the law, it’s still an option. You can read more about this by reading about the PROSPER Act here:

If you end up on disability, you may be able to apply for a disability discharge. This program requires that you have individual government loans only and not private loans and are totally and permanently disabled. You will be monitored for three years once approved to ensure that you do meet the guidelines.

Loan Assistance Programs

If you live in a state that offers it, you may be able to apply for a loan repayment assistance program (LRAP). Student Loan Hero site has a list of state-based student loan repayment assistance programs. You can learn more on their website here:

As always, don’t pay someone to help you with this; instead, use the site as information and find the state government sites to help you free.

There is no harm in trying to apply for any of the loan forgiveness or assistance programs. In fact, if you are having any issues at all paying your loans, never hesitate to call your loan servicer to discuss your options. They will let you know what to do and what you can do to get relief. The main thing is that you never want to just stop paying your student loans without talking to your loan servicer about your options.

Paying Your Mortgage Off Fast To Get Out Of Debt


If you have a mortgage, understanding different ways that you can pay your loan faster to save money is an important part of personal finance that will really make a difference in your life.

It may seem like a good idea to always pay down your debts, regardless of the type. However, a word of caution first. If you still have high-interest consumer debt or a car loan with higher interest than your home, and your mortgage loan has a low interest, you should focus your efforts on paying down higher interest loans first.

Once everything else is taken care of, though, you may want to pay off your home for a variety of reasons. Maybe you want to be totally debt free so you can quit your job or other reasons. That’s okay. But the problem is, with interest rates on homes less than 4 percent, you can often earn more money by investing your money elsewhere. So, it really depends on your own personal goals regarding this issue.

If you do determine that you still want to pay down your mortgage fast, you can do that more quickly than you think. In fact, most 30-year mortgages can be paid off in 7 to 10 years without being too hardcore and broke all the time.

Pay Your Loan More Often

One way to pay down your loan without really trying too hard is to work with your bank to pay your mortgage bi-weekly instead of monthly. They’ll divide the payment in half, and you’ll pay it 26 times a year instead of 12. This will add one extra payment toward your principal each year (be sure to tell them to put that additional payment to the principal in full) and by paying more often, you’ll lower the principal faster.

Pay Down Your Principal

If you get a windfall, pay it toward your principal. Put all your birthday, holiday, and bonuses right toward the principal. When you do pay an extra payment of any sort to your mortgage company, it’s important that you specify that you want the extra payment to go toward the principal. When you do this, you’ll save money on your interest.

Refinance to a Shorter Loan

Another way to save money is to go ahead and refinance your loan for a shorter mortgage loan period. If you have a 30-year loan right now, you may be able to refinance to pay your loan in 15 years instead. But do understand that you don’t need to refinance in order to accomplish this. You can simply pay more to your principal on your own and avoid the refinance fees.

Now that you’ve learned the various ways you can pay down your mortgage, let’s talk about cars. Do you have a car? If you do or are thinking about borrowing to pay for a new or used vehicle, there are a few issues with auto loans that you need to know about.

Paying Down Your Car Loan To Get Out Of Debt

If you have a loan on a car, you know that it’s usually a frustrating experience. Your car lost a ton of value the moment you drove it off the lot. The interest you pay for car loans is front loaded, meaning you pay that first, with very little going to the principal. It often looks like it’s never going to be paid off. However, it will be paid off in the number of months it’s financed for if you keep paying like you normally do.

Depending on your credit history, you may have a reasonable interest rate or a bad one. Either way, you may at first be upside down on your loan – owing more than you could ever sell the car for, and that can be frustrating. If you want to pay down the loan faster, consider a few factors first.

Is Your Loan Low or High Interest?

Look at the interest rate on your auto loan and compare it to other interest rates you have. Car loans can be as low as zero percent for individuals with perfect credit and a high down payment, and as high as 33 percent like a credit card loan.

Look at your statement to determine your APR. How much from your payment is going toward the principal versus the interest each month? Understanding how this is affecting your loan is essential.

Do You Owe Money on Higher Interest Loans?

If you owe money on other loans with higher interest, it’s important that you work toward paying those down before you tackle the auto loan with the lower interest. You’re going to save a lot more money if you focus your payments toward revolving consumer credit rather than your automobile loan in this case. Credit cards aren’t like that and can keep growing again when paying only minimum payments, even if you don’t use them.

Do You Have an Emergency Fund?

Even if you don’t owe anything on your credit cards, another thing to look at is whether you have filled your emergency fund. If you don’t have six months of emergency funding, make it a priority to fully fund that before you pay down a car loan. The reason is that a car loan is set. You have only a certain number of months before it’s paid off.

Debt Management Tools to Manage Your Finances


So far, we’ve given a lot of information here. (Have you downloaded the pdf yet?) Thankfully, there is technology that can help. The debt management tools and technology that exist today really help most people get their finances in order.

If you are serious about paying down your debt, you’ll need to do a lot of math. Math with compounding interest can be confusing, but if you have one of these programs, you’ll easily be able to see when you’re going to be debt free if you stick to the plan.


You Need a Budget is a budgeting app that helps you set up a budget and then gives you the tools to stick to it. You can try this app free for 34 days to provide you with a full month to figure out if it’ll work for your needs. Check it out here:

Birch Finance

If you have credit cards, you may be missing out on some of the rewards they offer to you. This app helps you find rewards and links everything together so you can maximize the benefits of your cards.


This software does more than help you manage your debts; it enables you to manage all your finances. Use it to create a budget and follow the budget by tracking everything easily. Quicken will use the debt stack method for choosing which software to pay down first.

This is a totally free tool that you can use to set your budget and pay off your debts faster. You can choose the debt payoff method that works best for your needs, from the debt stack to the debt snowball. This even lets you see your debt payoff dates.


Want to find out how to pay off your debts in 18 to 24 months? This software will help you figure it out. It’s not free, but it is a fantastic product to help you work out a debt payoff plan that really works. You’ll know the amount you saved and you’ll easily see by when.

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How To Find Extra Cash For Debt Payoff 

When you make a choice to pay off your debt, you’ll probably want to start figuring out ways to bring in some extra cash to help. This is especially true if you find out during your budgeting process that things are worse than you thought they were. In any case, there are lots of ways to find extra cash for debt payoff. 

Get a Side Gig

You can find a side gig that you do in your spare time like babysitting, dog walking, house sitting, house cleaning, or anything you think you’d be interested in doing. Look at to get some ideas. You can also become a virtual assistant, content writer, graphic designer, or any other side hustles that will generate cash fast.

Find a Part-Time Job 

If you aren’t comfortable starting something on your own, you can also get a part-time job. Some flexible job ideas to look for include jobs like retail merchandiser, parking assistant, and other part-time jobs on job boards. 

Sell Your Junk

If you have a house (or a garage, and especially a storage unit) full of stuff you don’t even use, it’s time to sell it. You can sell things on the Facebook Marketplace, at a garage sale, and on consignment

Use Your Credit Card Rewards

Since you have credit cards, check out the rewards you’re not using. You never know when you can add some cash to your pocket from these awards. 

Set a Realistic Budget

Make sure you’ve set a realistic budget, especially when it comes to the items in your budget that are flexible. You can probably save a lot more on groceries than you think, for example. 

Stop Eating Out for Lunch

Eating out, buying coffee, and doing anything about food at the last minute gets very expensive. For the 10 to 20 bucks a day you spend eating out, you can eat quite well if you make it yourself. 

Go on a Spending Diet

This can be a fun activity. Pick a date and try not to spend anything for a month other than on things you really need. Don’t buy food unless you really need it. Don’t buy cleaning products; in fact, don’t buy a thing unless it’s on the needed list. 

Rent Out a Room

If you have an extra bedroom, consider renting it out. Depending on where you live, this can add up to several hundred dollars each month to use to pay down your debt. Don’t forget that rent is taxable income, but you can also subtract your expenses. 

Cash in Your Non-Retirement Investments

If you are paying a higher interest rate than you’re earning on any investments you currently have outside of your emergency fund, use it to pay down high-interest debt. 

Save Money on Food

There are numerous ways to save money on food. You can grow some of your own, you can shop locally via your farmers, sign up for discounted delivery via the Misfits Market, or see if you have other produce options in your area like Borderlands Produce Rescue. Of course, meal planning always saves time and money. ( )

Ask Your Credit Card Companies to Lower Your Interest Rate

When you get on the phone to find out your balance owed and your APR, ask them to lower your interest rate. If you’ve been a good customer, have a good debt to income ratio, and have good credit, there is no reason they won’t do it.

Switch to a No Fee Bank

If you currently have a bank that charges fees, find one that doesn’t. While you’re at it, find an account that pays interest on your balance. Credit unions and many online banks like are good options to lower your fees. Five bucks here and there does make a difference. 


Change Your Monthly Subscription Plans

Phone, insurance, cable, YouTube TV, and any other monthly fee is an opportunity to reduce your expenses and discover extra cash that you may not have realized was available to you. 

Use an FSA or HSA

If it’s an option for you, a great way to find more cash is using a flexible spending account or a health spending account to help lower your tax liability by paying for these expenses with pre-tax dollars. 

Where to Get Professional Help with Your Debt Problems


Now that you know how to get extra cash, you may still need additional help to become debt-free if you have a real problem. Don’t be embarrassed; it happens to the best of us. In fact, consumer debt is created to get you into trouble. 

Regardless of how bad things look to you right now, don’t skip the steps regarding adding up your debt, your income, and figuring out how much disposable income, if any, you have available to put toward your consumer debt. Even if you find out you have a serious shortfall, you at least know the truth, and you can now do something about it.

Go to Credit Counseling

Only work with a credit counselor who is certified by the non-profit National Foundation for Credit Counseling. The NFCC is a legitimate operation that will help you get your credit cards paid down and under control. You can find out more information by calling 1-800-388-2227. 

Consider Debt Consolidation Options

There are debt consolidation programs that credit counselors often want to enroll you in. These are an option but can be risky because sometimes creditors turn down the plan. Your credit will take a hit. But talking to them about the options will help you. 

Talk to a Bankruptcy Lawyer

If you have more than 20 thousand dollars of unsecured debt along with a regular income, you may be able to file for a chapter 13/100 plan, which helps you set up a payment plan to pay off 100 percent of your debt under the program. If you don’t have regular income, you may be interested in a chapter 7 if you qualify. The bankruptcy lawyer will help you. Take with you the financial information that you’ve prepared, to get help and advice. 

Certified Financial Planner or Advisor

This option is not for the person who isn’t actually making enough to use the advice, but you can often find someone at your bank or credit union who is trained to help you set up and stick to a budget. Ensure that the planner or advisor you work with is licensed and legit. They should not be committed to only offering specific plans that they make money from. Your bank or credit union may be able to advise you here. 

Find a Financial or Budget Coach 

Dave Ramsey is one of the most well-known financial coaches. They will help you set up your budget, create a plan, and identify any roadblocks (especially with your mindset) that holds you back.

The main thing to be concerned with when you seek outside help to assist you in managing your money is to do your due diligence to ensure that the person you work with is legitimate and has your best interest at heart. If something sounds too good to be true, it probably is. 

The primary way to pay off debt is to work hard and use all your disposable income to get it done as soon as you can, so you can start living your new debt-free life of freedom. 

What’s Next?


I hope you’ve found this post useful.  I’d recommend you download the pdf, if you haven’t done so already, and work your way through each section one by one. 

It’s easy to feel overwhelmed at this point and feel there’s a lot to think about. 

Start off by deciding which part you want to start with first (it really doesn’t matter … what’s important is that you start) and schedule in a 60-minute slot in your diary over the next couple of days. 

Create a non-distraction zone; switch off your phone, close down your email and shut off social media. Focused time will serve you well.

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