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How to Get Out of Debt

written By
Kimber Severance
Reviewed by
Tracy Rawle
February 19, 2025

Lines of credit can be a helpful tool, but understanding how to get out of debt and discovering the best way to pay off debt are essential steps toward financial freedom.

There are many good reasons to get into debt, like buying a house to live in, purchasing a car to get yourself to work, or paying for tuition for higher education. But it's still nice to learn how to get out of debt fast, especially if you want to practice debt-free living. A low debt-to-income ratio helps build up your credit score, and a debt-free lifestyle can be less stressful and more fulfilling. 

Achieving complete debt relief typically requires multiple steps and strategies. Explore the best ways to pay off debt below so you can create your own debt management plan.


 

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1. Try a Debt Management Strategy

There are many debt management strategies out there, each with pros and cons. Some will help you learn how to pay off debt fast, others will help you stay free from debt altogether, and others will help you use certain debt types to your advantage.

A debt management strategy is a specific method for getting out of debt. It might involve budgeting, financial planning, consolidating debts, or other other practices specific to your financial needs, current situation, and debt payoff goals. Let’s explore some common debt management strategies. 

Debt Snowball Method

The debt snowball method is for paying down debts. It involves paying off the smallest loans first and working your way up to paying off the debts with the highest amounts. Rather than paying off the debt with the highest interest rates, you focus on the debt with the smallest debt balance. 

The debt snowball method requires you to:

  1. Identify which debt account has the smallest, most manageable balance.
  2. Make extra monthly payments on this debt until it’s fully repaid while you continue to make minimum payments on other debt.
  3. When you eliminate the smallest balance, you’ll add that monthly payment to the minimum payment for the next smallest debt and pay that amount each month until that is paid off. 
  4. Repeat these steps until all of your debt is repaid.

This method is great for boosting your confidence when tackling debts and giving you smaller wins sooner to help keep you motivated. However, you might pay more in interest in the long run.

Debt Avalanche Method

The debt avalanche method, also known as the stacking method, works by paying off the debts with the highest interest rates first and the debts with the lowest interest rates last. While you make extra payments toward the debt with the highest interest rate, you’ll still make minimum payments on the rest of your debts. 

As you figure out how to get out of debt, this method is a great way to reach more of your savings goals because the highest interest rates will cost you the most the longer they remain unpaid. However, it may not be the best option if you need to see a quick payoff for motivational purposes or your highest-interest debt is also the debt with the largest balance.

Debt Relief Programs

Debt management programs, also known as debt relief programs, help you reorganize and make plans around your debt, usually to relieve or forgive the debt partially or in full. This might take the form of lowering the principal amount owed, reducing the interest rate, extending the loan term to provide more time for repayment, and more. 

Debt management programs may be offered by debt relief companies, nonprofit organizations, government entities, and directly by lenders. If you work with a for-profit organization to help you achieve debt relief, make sure you understand their fees completely.

Some common types of debt relief programs include debt settlement and bankruptcy.

  • Debt settlement is a payment plan that helps you get back on track with monthly payments or allows you to pay your debt off in a smaller lump sum. 
  • Bankruptcy is a last-resort option involving court-mandated payment plans or selling your assets.

While you might struggle with the idea of some debt management programs, they can be great for borrowers with limited options and a debt-to-income ratio that's too high.

2. Pay More Than the Minimum Payment

One clear-cut method for how to get out of debt is to pay more than your minimum monthly payments. This is an especially beneficial practice if you want to know how to pay off credit card debt fast or reduce loan terms. 

When you pay more than your minimum payment, you can apply the excess amount to your principal balance and reduce how much interest you pay in the long run.

This is also a generally good method for improving your credit score. Your larger payments will reflect on your credit report, and you’ll have more available credit — which looks good to creditors.

3. Look Into Debt Consolidation Loans

A debt consolidation loan is a type of personal loan that takes all the debt you’ve accumulated on multiple accounts and combines them into one account. This method is great for getting you one interest rate, one minimum payment, and one credit account instead of multiple ones compounding on top of each other. It greatly simplifies the process of paying down your debt.

You can use debt consolidation loans to combine credit card balances, store or gas card accounts, unpaid personal loans, medical debts, and more. Many banks, credit unions, and other financial institutions have debt consolidation loans available. You may also be able to access other options, such as home equity loans or borrowing against your retirement.

Before making any moves, make sure to gain some awareness of the risks associated with your debt consolidation options. Look into the long-term costs of your loan, such as interest rates that may rise or longer terms that increase your overall debt.

4. Update Your Budget

Sometimes, the key to how to get out of debt is very simple — you might just need a better budget. Sticking to a budget is especially important when you're trying to pay off debts so you can turn to living a debt-free life. 

One of the best ways to get started on your budget is to get familiar with your current financial situation. Gather the following information:

  • Income and sources, including average income amounts and any anticipated upcoming changes
  • Regular expenses like rent, utility bills, food, transportation, and other daily life costs
  • Asset accounts, balances, and interest rates
  • Debt accounts, balances, interest rates, minimum payments, and prepayment penalties

Before you set your budget, also take some time to track your current spending. Don’t make any changes at first, but focus on gaining awareness of how you spend your money. This will give you an idea of where you need to improve your budget.

Some popular budgeting methods include a zero-based budget, where you aim to deduct expenses from your income until you have no money left, and the 50/30/20 budget, where 50% of your income is allocated to needs, 30% to wants, and 20% to savings and debt. 

The pay-yourself-first budget can also be helpful for those prioritizing debt payments and savings since these costs are deducted from your income before anything else.

You could also use an envelope system to help you stop overspending, or you could use a budgeting app. Budgeting apps can link to your existing financial accounts, so you don't have to switch to cash to organize your expenses and debt payments.

5. Reduce Your Expenses

Look for ways to reduce expenses. The less you spend, the more you'll have to put toward your debt payoff plans. Reduce costs by eliminating what you can and making economic substitutions to save money on the things you can't eliminate.

Here are some ideas for how to cut your expenses:

  • Cancel subscriptions you don’t need or use. You can also look for ways to save on subscriptions, like splitting the cost of family packages.
  • Switch to a cheaper phone plan. You can also negotiate some of your bills by researching competitor prices and products. Some bills that you might be able to reduce include phones, internet, credit card interest, insurance, utilities, or gym memberships.
  • Eat out less. Try to pack lunch for work or eat more meals at home. Consider switching to generic brands that often have cheaper prices. If you have a knack for gardening, try growing your own produce.
  • Save on gas. Use public transportation, walk, ride your bike, or carpool. 
  • Look for deals. Use coupons when shopping and stay up to date on current promotions. You can also look for cheaper items at thrift stores, yard sales, and neighborhood marketplaces.
  • Use less. Be mindful of how much stuff you’re using, especially regarding utility bills. Try using less water, electricity, or heat.
  • Invest in reusable products. You can find reusable products like towels, beeswax wrap, reusable baggies, and more that might help you save in the long run.
  • Plan free activities. Instead of paying for day trips and fun outings, try hiking or attending free community events.

6. Increase Your Income

Increase your income, so you have more money each month to go toward credit card debt, car loans, student loan payments, and essential expenses. Making more money will also allow you to increase your loan payments and pay off debts faster.

Try out these methods for making more money:

  • Start a side hustle or small business. Some options include freelancing, rideshare or delivery apps, photography, renting space or items, taking surveys, or participating in research studies.
  • Sell things you don’t need anymore. Try listing them online in local groups. Look for apps that allow you to sell clothes or electronics. You could also try hosting a yard sale for in-person sales.
  • Ask for a raise. Put together a compelling argument, make yourself presentable, and learn some negotiation skills to help convince your boss to increase your earnings.
  • Receive passive income. Some passive (or mostly passive) income options include selling digital products, affiliate marketing, or renting.
  • Make profitable investments. Start by educating yourself on your investment options and how to set up an investment account.

What Comes Next?

Every small step you take brings you closer to financial freedom. Begin by envisioning the life you want — free from the weight of debt — and use that vision as your compass. Seek support from trusted friends, family, or financial professionals when needed. At Check City, we’re here for you each step of the way with debt consolidation resources and tools to streamline your debt management. 

The road to getting out of debt might be challenging, but the financial independence, peace of mind, and freedom that result from it are well worth the effort. Your future self will be grateful.

Keep Learning

15 Frugal Tips that are Super Simple
20 Tips for How to Save Money
How to Budget in 5 Steps

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