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How to Get Out of Debt in 8 Easy Steps

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Racking up the balance on your credit card is a little too easy these days. With online stores galore, and cost of living always rising, you can find yourself in debt real fast.

Once you’re in, it can be so hard to get out of debt. Paying off your debt can seem even harder when you’re broke, have no money, live on a low income or you have bad credit.

While getting out is definitely no easy feat, it’s legitimately possible for anyone, regardless your circumstances.

Thankfully, becoming debt free is pretty cut and dry. Here are 8 simple steps that you can follow to get debt out of your life for good.

Man jumping in the air with a floral shirt surrounded by hills.
Photo by Caleb Wood on Unsplash

1. Calculate your debt

Though this is one of the easiest steps, it’s for sure one of the scariest. Coming face-to-face with the full sum of your debt is no fun, but it’s so necessary.

If you’re ever going to get out of debt then you can’t be clueless to how much you owe overall. So, bust out your calculator — it’s time to put your elementary math skills to use.

Pull up all your accounts and jot down who you owe, how much you owe, the interest rate, and the required monthly minimum payment. Now, tally up the sum of your debt and feast your eyes on it.

Take a breath. You’re going to be alright.

2. Calculate your monthly expenses

Now that you know how much you owe, calculate your regular monthly expenses. This includes rent/mortgage, insurance, groceries, savings (i.e. emergency fund), transportation costs, etc.

Knowing this gives you a clear understanding of exactly how much money you have post-bills each month. You definitely can’t make a strategic get out of debt plan if you don’t know how much money you’re working with.

3. Choose your strategy

So many people attempt to get out of debt, but they give up along the way. Often times it’s because they lacked strategy in their approach.

In the past when I didn’t strategize my efforts, things would start to get weird fast. I’d feel like I wasn’t making any meaningful progress and ultimately I’d throw my hands up and just walk away from even trying.

Rather than aimlessly throwing your money at your various debts, choose your strategy.

Two strategies that are widely known and used are the debt snowball method and the debt avalanche method.


This strategy simply prioritizes your debts from smallest to largest.

  • Pay your debt with the smallest balance first
  • Make minimum payments on the rest of your debts
  • Once you pay off your smallest debt, you’ll snowball the money you were putting toward that debt toward the next smallest debt
  • Snowballing means the total sum of money you put toward your debt each month will never change until you’re debt free
  • This way is generally more effective as paying debts off sooner provides motivation for most to stick with it


This strategy prioritizes your debts from largest interest rate to smallest.

  • Pay your debt with the highest interest rate first
  • Make minimum payments on the rest of your debts
  • Once you pay off your largest interest debt, move on to the debt with the next highest interest rate
  • The goal is to minimize your overall interest costs by putting more cash towards your principals
  • You can generally get out of debt faster and potentially cheaper this way

Choosing Which Strategy is Right for You

Ultimately, you have to be honest with yourself.

Are you someone who needs to see progress in order to remain motivated and disciplined? Or does the idea of unnecessarily paying more money toward your debt make you sick to your stomach?

Regardless what you choose, both options are viable and come with their own perks. Depending on the size of your debt, you just need to have a realistic view of your overall timeline.

4. Create a monthly budget

Now it’s time to put everything you’ve done in steps 1 through 3 into an actionable plan. It’s time to create a budget — oh the joy!

I get that the word budget might rub your wallet the wrong way, but stick with me here.

Budgets are one of the most effective ways to get out of debt. A budget is pretty much your road map for how you’re going to get where you’re going. It gives you a step-by-step plan for what to do with your money each month.

Rather than looking at having a budget as a bad thing, change your perspective and see it as the tool you need to achieve your financial dreams.

How to Create a Budget in 7 Super Simple Steps
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6 FREE Budgeting Apps That Will Manage Your Money For You
What is the 50/20/30 Budget Rule?

Hand holding a spread of U.S. money. Reduce your expenses and pay off your debt.
Photo by Jp Valery on Unsplash

5. Reduce your expenses

If you want to streamline your way toward financial freedom, then you’re going to have to make some sacrifices.

Chances are there are certain things you pour your money into every month that could and should be cut from your spending.

That $5 Starbucks purchase you get on your way to work every morning? That’s $100 you could funnel toward what you owe every month. That subscription service to that website you haven’t used in six months? Time to kick it to the curb.

Here’s some creative ideas for reducing your expenses:

  • Refinance your student loans
  • Consolidate credit card balances onto a promotional interest-free credit cards
  • Cancel all subscription services you haven’t used in the last 3 months
  • Make your own food, reduce eating out

6. Increase your income

Today there are so many ways to make money, it’s sick. Whether you’re looking for a part-time or full-time job, or just a side gig to increase your current income, there are plenty of options for you.

The ultimate goal in increasing your income is to put more toward your debt, which means you’ll get out sooner.

While taking on an extra responsibility isn’t always desirable, if you’re able to do it without neglecting any priorities in your life (i.e. your marriage, children, etc.), then why not do it?

For instance, if you sign up as a driver with Lyft you can wake up a bit earlier than you normally do and do a few runs on your way to work. This way you’re not taking time away from your family (because they’re all sleeping in the morning anyway), but you’re bringing in extra money!

Whatever you decide, get creative and work smarter, not harder.

7. Reassess

As you continue on your journey, you’ll hit milestones along the way. Whether you choose to snowball or avalanche your way there, you’ll eventually start paying debts off, and man it’ll feel good.

With every balance paid, reassess your finances and timeline if necessary. If you reduced your expenses and increased your income, see how it’s impacted your debt free deadline.

Even if nothing changes, reassessing your budget and timeline can help to put a fire back in your belly if it’s faded at all. Seeing how close you are to achieving each milestone can revive your motivation and get your head back in the game.

8. Pay off debt and keep it that way

Finally, we’ve reached the best step in this whole process — paying off your debt.

So, you’re debt free and you couldn’t be happier. Yet, because you now have all this money floating around, you start to feel the urge to spend frivolously again.

I know… I’ve been there. I’ve paid off my credit cards before, only to find myself back in debt by a couple thousand dollars. But why do we do this to ourselves? Did steps 1 through 7 not teach us a good enough lesson the first time around?

We can find ourselves in debt again because we let our guard down. We simply get too comfortable and take our eyes off of the prize. That’s why, in reality, step 8 doesn’t really ever end.

If you truly want to live a financially free life, then you’re going to have to permanently adjust the way you view money, and how you handle it. You can’t go back to your old ways, because that’s what got you where you are in the first place.

Getting out of debt is great, but staying out of debt is where the true richness is. When you’re getting out you might still be struggling to get by. Once you’re out, you’ll have more freedom than you know what to do with.

Freedom to work less. Freedom to do what you want to do with your time. Freedom to be free.

So, whatever it takes for you to stay in-line and out of debt, do that. Don’t let your guard down, maintain a budget, and live debt free!

Woman celebrating with confetti in the air. You can feel as happy as she does when you finally get out of debt!
Photo by Clay Banks on Unsplash

Final Thoughts

With so many Americans bogged down by debt today, debt relief is highly sought after. While our culture has instilled in us a mindset that causes us to desire a lifestyle outside of our means, we have to choose a different way if we ever want to kick the cycle.

The road toward financial freedom isn’t an easy road to walk — but it’s a necessary one. Debt was never meant to have a place in your life, so it’s time to get out of it.

Follow the steps above and before you know it you’ll be debt free!

Happy Planning!

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