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how to get out of debt

How to Get Out of Debt

If you’re reading this article, there’s a good chance that you’re scared. You might have creditors calling you, and you might not know what to do next or might even be worried that you’re never going to be able to get unburied from the mountain of debt that you’re under.

I know how you’re feeling because I’ve been there too. I know what it’s like to lie awake at night, scared about the future because you don’t know how—or if—you’ll really be able to pay back all the money you owe. I know how it feels to have that pit in your stomach and that worry in the back of your mind that doesn’t quite completely go away, no matter what you’re doing. It’s pretty awful.

One of my favorite quotes—a very sobering quote—about debt is by J. Reuben Clark. As he describes it: “Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours . . . it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” If you have felt crushed by the weight of debt, as I have, don’t give up. You can get unburied from your mountain of debt, as we did.


Our Own Debt Story

Fifteen years ago, my husband and I were really in a financial mess—even though we didn’t completely realize it at the time. We’d purchased a home with virtually no down payment, with a first and second mortgage back when banks were eager to make those kinds of loans in the years before the real estate bust. And we had over $40,000 in additional debt. We didn’t really know anything about personal finance, and we made some pretty dumb decisions. But through a fluke we learned about the power of compound interest (in a college class we were taking at the time that had nothing to do with personal finance). That glimpse into the power of compound interest really rocked my world, and from that point on I was on a quest to learn everything I could about personal and family finance.

As we learned we became determined to eventually be debt free—so that we would never have the fear hanging over our heads that someone could take our home or repossess our vehicle or seize the money in our bank account.

By committing to live within our means (in other words, to spend less than we earned) and by spending very intentionally and through a little luck and a lot of hard work, we were able to pay off all of our debt—including our mortgage—in less than 10 years. Fortunately, we had bought a modest home where our payment was manageable, and I worked a lot of overtime and had a second job and my husband worked part-time while he went through school (which he also did debt free, without any scholarships or grants!).

You’ve got a mess to clean up, a problem to fix—but I know that you can get out of debt, because we did! Whether you’ve got credit card debt, student loans, car loans, medical debt, a hefty mortgage, or even all of the above, you can eliminate them all by systematically working to pay them off as you follow the steps we have taken to pay off over $160,000 in debt.


1. Examine your spending habits to determine the reasons for your debt.

If you want to get out of debt and stay out of debt, the first thing to do is to look at your spending and figure out why you are in debt. And if you are a perpetual overspender, you’re going to have to make some difficult changes for your long-term financial well-being. In order to end a debt habit, you may need to plug the money holes in your life. But I promise you it will be worth it!


2. If you regularly spend more money than you earn or just more than you want to or plan to, determine what you can do to stop overspending.

If you are in the situation of regularly spending more than you earn, there are many things you can do to stop overspending. If you want to get out of debt and stay out, you need to understand why you are in debt in the first place. To determine why you overspend, review your purchases and expenses over the last week or two. Did you spend money when you were bored or anxious? Did you spend way too much eating out or on entertainment? Or do you have a car you can’t really afford or maybe a house or rent you can’t afford? Understanding your financial situation will help you know what you can do to turn things around.

If you are in debt because you truly have a low income or because, low income or not, you regularly spend more money than you bring home, then also look at ways to increase your income. If you want to learn actionable steps you can take to be able to make more money in order to eliminate your debt and to reach your financial goals and dreams, then sign up for the 10-day Earn More Money, Change Your Life challenge!



3. Know your financial why.

One of the best books I have ever read is Simon Sinek’s Start with Why. In this book the author illustrates the importance of knowing the true purpose for why you are doing something, such as why does your business exist? When it comes to your money, understanding your why can be a huge motivator.

Maybe your why for getting out of debt is so you’ll gain financial peace and never be worried about your finances again. Maybe it’s so you’ll have financial independence and freedom when you’re older. Maybe it’s so you can pay for your kids’ college and weddings without debt and stress.

Maybe it’s so you can have the courage to walk away from a job you don’t like to pursue being your own boss and doing something you’ve always dreamed. Write down your why, and put it in a place where you will see it often to help you remember your deeper reasons for getting out of debt.

4. Start tracking your spending and begin to use a budget.

Beginning today, start tracking your spending and start using a budget. You’ll feel like you got a raise (really!), and you’ll be able to really start making progress toward ditching your debt.

In order to start working your way out of debt you need to be able to gain financial traction, and the way to do that is to optimize the power of your income. By really digging into the numbers you’ll start seeing places where you can cut spending. For example, most people can reduce spending almost immediately on groceries and especially eating out, clothing, and entertainment. You can use this worksheet to start tracking your spending, and download our free budget worksheet here.


5. Stop going further into debt.

The first step to getting out of debt is to stop going deeper in debt. So stop using your credit cards, and don’t take out any more loans. If you know from previous experience that you’re likely going to be tempted to use your credit card when you can’t pay the bill in full, then cut up your credit card and close the account. You won’t be able to start winning with money until you stop spending more than you have.


Related articles:

21 Top Tips to Reduce Your Spending

16 Must-Know Tips for How to Stop Living Paycheck to Paycheck


6. Negotiate to lower your bills.

In some cases, you might be able to negotiate with creditors to lower the balance of your debt—to accept less than what you currently owe. If the lender has tacked on a bunch of late and other types of fees, for example, there is a good chance you can get those waived. Especially if you have old, bad debt that you haven’t paid on for a while or that you’ve only been able to pay on sporadically, there is a good chance you’ll be able to persuade the creditor to waive some of the fees and maybe even settle for less than the actual debt that was originally owed. If your creditors do agree to do this, make sure that you get it in writing so that you have proof in case there are any questions that come up later.


7. Determine whether to use the snowball method or the avalanche approach to pay off your debt.

The snowball method of paying off your debt is where you list your debts smallest to largest and you begin paying them off one by one in that order. This method can be very effective (it’s the method we used) because it allows you to see that you are making progress and you can get a lot of quick wins, which can really help you to stay motivated.

On the other hand, the avalanche method is where you list your debts in order from highest interest rate to lowest interest rate, and you start attacking them that way. If you are a math nerd and seeing the gains from paying off the higher interest rates is what will best help to keep you motivated, then use this method.

8. Pay as much as you can toward your debt.

Don’t just meander out of debt—crush your debt! Pretend your pants are on fire, and get that debt paid off as quickly as you possibly can. The sooner you get your debt paid off, the sooner you will free up, as Dave Ramsey calls it, your largest wealth-building tool: your income. Here are several ideas for things you can do to reduce your spending in order to pay more on your debt.

  • Lower your ongoing expenses. Turn up (or off) the air conditioner (to 78 or higher, for the most savings), lower the furnace (to 62 or below, for the most savings), slash your grocery spending, lower your cell phone bill, drive less and bike or walk more, and reduce your other transportation expenses. Read this article to find lots many more ideas to reduce your spending.
  • Replace expensive hobbies with free or cheap ones. Tell the kids you’re on a mission to crush your debt. Find tons of ideas here for free and cheap ways to have fun with your family.
  • Sell stuff around the house. Do you have electronics, appliances, toys, furnishings, or other items you’re no longer using or don’t need? Sell them on Craigslist, Facebook Marketplace, or your local classifieds.
  • Cut your discretionary expenses. Cut cable or satellite, stop eating out for a time, stay out of the movie theater, reduce or eliminate other paid-for entertainment for a time, cut back on your fun or spending money, cut your clothing budget, reduce your spending on your pet, reduce your Christmas spending and other gift giving, and cancel (or adapt) this year’s vacation plans. It’s time to get serious about getting out of debt and getting back control of your life.
  • Look into selling your car. If you have a significant amount of car debt, look into selling your car (or cars) both to reduce your overall debt and to free up room in your monthly budget. Or if you don’t owe much (or anything) on your vehicle but can go from two cars down to one by selling one of them, then that’s another great option to help you get out of debt more quickly. We’ve been a one-car family for most of our marriage, and it’s helped us to save a lot of money over the years in not only the purchase cost but in gas, maintenance, insurance, registration, and so on.
  • Do what you can to reduce your housing expenses. Here are some ideas:
    • Find a cheaper place to rent. If you’re renting, shop around to see if you can find a less expensive place. You might check different neighborhoods or a nearby town.
    • Get a roommate. Find a roommate or housemate. Or two. Or more. 🙂
    • Rent out a room in your home to vacationers. Consider renting out a spare room or two in your home on Airbnb or Booking.com. Sign up here on Airbnb and get $40 to go toward your first stay.
    • Sell your home. I know that this is a big move—pun intended. 🙂 If you’re ready to make this fairly drastic change, consider selling your house and using the equity to pay off debt—but only if you won’t rack up debt gain. If you’re really serious about getting out of debt and you have a good amount of equity, then this could be a good option to really kickstart your debt payoff (or to get out of debt completely).

For many more ideas on how to cut your housing expenses, read this article.


Related articles:

7 Simple Steps to Create Your Emergency Fund
13 Top Tips to Help You Stick to Your Budget
7 Simple (and Crucial) Steps to Put Your Money on Autopilot for Financial Success


9. Enlist support, and ignore the naysayers.

You might find it easier to stick to your debt payoff goals if you have the support of friends and family. If they understand your goals, they’ll be less likely to invite you out for expensive meals or activities, for example. And they can give you encouragement if your motivation wanes. But if some of your friends and family or other acquaintances ridicule you for your goals or try to covertly (or overtly) sabotage your efforts, then just ignore them or politely explain why this goal is important to you and change the topic or end the conversation.


10. Increase your income.

Realistically, there’s a limit to the amount of money you can save, but the amount of money that you can earn is literally limitless. That’s one reason that yours truly, a once very much nonentrepreneurial soul, has changed my tune.  Here are some ideas for increasing your income.

  • Ask for a raise or promotion. If it’s been a couple of years or more since you received a significant raise and you’ve been an exceptional employee at work, catalog your contributions and your accomplishments, and schedule a meeting with your boss to request a raise or a promotion. Focus on ways that you’ve earned the company money or saved them money. If you learn that a raise or promotion isn’t going to happen right away, ask what specific steps you can take in the next year or two to make it a reality. Read this article for more information on how to seek a raise or promotion.
  • Get a (second) job. If you are a one-income family, or if one of you works only part-time, you might want to consider reentering the workforce or going full-time, at least temporarily. Though raises and promotions are awesome because you’re earning more money without necessarily having to spend any more time, you’ll generally make a lot more by working at another job. (And of course, if you and your spouse both get a raise and a second job, then you take advantage of both methods of increasing your income.)
  • Start a money-making blog. The potential for significant income is one of the reasons that I started this blog. If you love helping people and enjoy writing, being a blogger might be a great fit for you. In addition to great income potential (check out these amazing income reports of bloggers who make $10,000 to $100,000 or more per month!), there are many other benefits of being a blogger, such as being able to be your own boss and work on your own schedule. Learn how to start a blog for cheap.
  • Start a side hustle. If you would rather earn money without working another regular job, there are a lot of things you can do to earn a little extra income. Some ideas include starting your own small business where you turn a hobby into a money-maker, being a virtual assistant, or driving for Uber or Lyft. Learn how to start a side hustle and find out about many side hustles that you can explore.
  • Earn passive income. Some options for earning passive income are to create a product you have someone sell, write a book, create a money-making podcast or vlog, develop an online course, or participate in affiliate marketing. Read this article to learn more ideas for earning passive income.
  • Use rebate apps like Ibotta and Ebates. With rebate services such as Ebates and Ibotta, you can earn money by shopping for things and at places where you would shop anyway. With Ebates, you generally buy items through their website to save up to 40 percent on purchases. It is primarily an online service. Ibotta, on the other hand, is an app you use primarily after you make purchases at brick-and-mortar stores. Because of this, you can actually sign up for and use both apps to save on purchases. Sign up for a free Ebates account here, and sign up for a free Ibotta account here. You can literally sign up for both in just seconds and let the savings start stacking up.
  • Sell stuff on eBay or Amazon. If you have a good eye for a bargain, you can buy items at thrift stores or garage sales and sell them for a profit on eBay, Amazon, Craigslist, or your local online classifieds.
  • Sell your clothes to consignment shops. If you’re like most people, you probably have more clothes than you need. So use them to bring in some quick cash!


Are you ready to start making more money? Sign up below to participate in the free 10-day Earn More Money, Change Your Life challenge and learn actionable steps you can start taking today to really increase your income!

11. Stop investing for a time.

While you’re working to get out of debt, stop contributing to your retirement accounts, kids’ college funds, and similar investments. If you can’t bear the thought of losing your company match if you receive one, then at least reduce your investment withdrawals to the minimum to receive the match. But really, you’ll get better results if you throw all of your energy at one major financial goal at a time, and if you have nonmortgage debt, then getting out of it should be your major financial goal. I’m a firm believer in the power of just attacking one thing (goal) at a time, knocking it out, and then moving on to the next thing. That’s the method we used to pay off over $60,000 of debt, and we used that same single-minded determination to then pay off over $150,000 of mortgage debt.



I know that having a lot of debt is a very scary place to be. I’ve been there—and that’s when I determined I don’t ever want to be there again. And even though having a lot of debt is somewhere that I wish I’d never had to be, it has helped to shape who I am. I’m sure it’s helped to fuel my passion for personal finance. (Though it was learning about the amazing power of compound interest that really got me interested in personal finance—and ultimately influenced me to start this blog!—a desire to get out of debt definitely contributed to my desire to learn all I could about finance.)

And though debt is a place where no one really wants to be, the results of getting out of debt can bring about positive results, such as building character like determination and a strong work ethic. If you’re in a lot of debt and you’re scared and you’re ready to change, then I want to help you on the journey to change your life. You can do this! And I’m here to help.


What are your biggest triggers for going into debt? What is the one top thing that you feel could help you have the motivation to get out of debt or stay out of debt? Or what have you done to help you pay off debt or stay out of debt? Leave a comment below and let me know! I would love to hear your thoughts. 


Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help a family member or friend or people in general? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being with others. Thank you!

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Join our closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

how to get out of debt