Five Steps to Get Out of Debt


If you are struggling with debt, you aren’t alone. According to, the total amount of consumer debt in America amounts to $13.86 trillion. To make matters worse, the average credit card holder has four cards and carries approximately $8,398 in debt. Having debt is stressful, and if unchecked, it can easily take over your life and prevent you from achieving your personal and financial goals. Fortunately, by taking the following steps, you can get out of debt and build a healthy financial future for yourself and your family.

1.Create a Budget

To take control of your finances, you will need to make a budget. Creating a budget can be difficult, especially if you are deep in debt, but it can be done. To begin, write down how much money you will bring in for the month – be sure to include every income source. Once you understand how much money you bring in, take your fixed expenses, such as housing, transportation, and healthcare into consideration. Subtract these expenses along with any other non-fixed expensed from your household income. The income left over is known as discretionary income.

Now, you must calculate how much debt you need to pay off. Use a portion of your income to pay off your debt each month while meeting your other financial obligations.

2.Come Up With a Repayment Plan

If you want to successfully reduce what you owe, you must come up with a repayment plan. Compile a list of debts and how much you must pay monthly to stay afloat and current. Unfortunately, if you only pay the minimum amount, it will take much longer to pay off your debt. If you want to repay your debts quickly, you will probably need to pay more than the minimal amount. You can also speed up the repayment process by:

  • Asking for a raise
  • Taking on another job
  • Selling items you don’t need

During the repayment stage, you may want to consider cutting spending. The money you save can be used to pay your bills.

3.Lower Your Interest Rates

The higher your interest rates are, the higher your payments will be. Consider talking to your debtors about refinancing your debt. If you manage to obtain a lower interest rate, you won’t have to pay so much each month.

4.Negotiate With Debtors

Did you know your debtors may be willing to negotiate with you? Debtors want to collect what they owe under any circumstances, but if you can’t pay, you can’t pay. Ideally, the bank or collection agency would rather recover some of their losses than nothing, so they may be willing to reduce your debt if you agree to a repayment plan.

5.Stop Using Credit Cards

If you are deep in debt, now may be the time to stop using credit cards. By paying for goods and services with your own cash, you will be more likely to stay within your budget. You will also be less likely to accumulate additional debt.

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