The Smart Way to Get Out of Debt (and Stay Out)
Feeling overwhelmed by debt? You’re definitely not alone. Debt can feel like a huge weight, but the good news is that with the right strategies, you can not only manage it but also create a sustainable path to financial freedom. Building a debt-free life isn’t about quick fixes—it’s about making steady, realistic changes and learning practical skills to take control of your finances for good.
I’m Brian, and as someone who’s been through the trenches of managing my own debt, I know how daunting it can feel. But trust me, there’s a light at the end of the tunnel, and every small step you take will lead you closer to financial freedom. Let’s dive into the key steps that helped me and can help you too.
Understanding Your Debt Situation
Before we even talk about paying off debt, we need to get the whole picture first. When I was at my lowest point financially, I used to avoid opening bank statements because seeing the numbers stressed me out. But here’s the deal—you can’t fix what you don’t see.
1. Write It All Down
Grab a notebook, a spreadsheet, or even an app—whatever works for you—and make a list. Include every single debt you owe. Credit cards, student loans, car loans, medical bills—everything. Jot down the balance, the interest rate, and the minimum payment required for each one.
I’ll admit, when I first saw my full list laid out, it wasn’t pretty. But once it was all in one place, it felt like I was taking back control. There’s nothing scarier than the unknown, and this step eliminates that.
2. Add It All Up
Now, here’s the intimidating part—add up those numbers. You need to know your total debt to understand where you’re starting from. Seeing that big number might make your stomach drop (I know mine did), but don’t panic. This isn’t about feeling bad—it’s about facing facts so you can start crushing them. Trust me, in a few months, watching that total shrink is going to feel amazing.
3. Rank Debts by Interest Rate and Impact
When you’ve got the list, rank your debts by interest rate. High-interest debts—usually credit cards—are the ones that cost you the most over time, so you’ll want to prioritize them. But we’ll talk strategy next.
Creating a Debt Repayment Plan
This is where we get down to business! When I started tackling my own debt, I realized that having a plan made all the difference. Wandering in blind? That’s overwhelming. But a good plan? That’s empowering.
1. Decide on Your Strategy
There are two main approaches to debt repayment, and I’ve tried both over the years. Here’s how they work:
- Debt Snowball: In this approach, you focus on paying off your smallest debt first, regardless of interest rate. This can give you a quick win, boosting your motivation to tackle the next one.
- Debt Avalanche: Here, you prioritize debts with the highest interest rates. While it might take longer to pay off your first debt, this approach saves you money in the long run.
When I was paying off my credit cards, I started with the snowball method because motivation was what I needed most. Seeing one card paid off completely gave me the energy to keep going. Later, when I was more disciplined, I switched to the avalanche approach to save on interest. Choose what works for you, because any forward motion is good motion.
2. Set Clear and Realistic Milestones
Here’s a little trick I learned to stay motivated—set clear, small goals. For example, I decided my first milestone would be paying off one specific card within six months. When I hit that milestone, I treated myself to something small and guilt-free (a pizza night with friends—nothing crazy). Breaking the big debt mountain into smaller hills made it feel manageable.
3. Automate Your Payments for Consistency
One of the smartest moves I made early on was setting up automatic payments. Not only did it ensure I was consistent, but it also took the mental load off. I didn’t have to remember every due date or worry about forgetting. And, fun fact, making consistent on-time payments also helped my credit score recover over time!
Budgeting and Cutting Expenses
Alright, budgeting. I know, it doesn’t sound fun, but I promise, it’s not about deprivation—it’s about choices. When you start seeing your budget as a tool instead of a punishment, it gets way easier.
1. Watch Your Spending
Back when I first started budgeting, I tracked every. Single. Dime. And wow, was it an eye-opener. Did I really need to spend $8 a day on takeout coffee? Probably not. Did all those little purchases add up to hundreds a month? You bet.
2. Build a Simple Budget
Eventually, I landed on using the 50/30/20 rule. I put 50% of my income toward essentials (like rent and bills), 30% for personal or “fun” spending like eating out, and 20% went directly toward debt or savings. It worked like magic because it left room for enjoyment while still focusing on the bigger goal.
3. Cut Down Where You Can
I still remember the month I canceled three streaming subscriptions I barely used. That saved me about $30, which I threw straight into debt payments. It might not sound like much, but those little wins add up fast.
One of the habits I still follow today is the 24-hour.” Whenever I want to buy something that’s not essential, I wait 24 hours before deciding. Nine times out of ten, I don’t even want that item anymore!
Increasing Income Streams
Cutting expenses is great, but you can only cut so much. That’s where increasing your income comes in.
1. Side Hustles to the Rescue
When I was aggressively paying off my debt, I picked up freelance gigs in graphic design on the weekends. Did I have to give up some free time? Sure. Was it worth the extra cash to crush a credit card balance in record time? Absolutely.
Think about what you’re good at. Whether it’s tutoring, delivering groceries, or selling handmade crafts online—those extra dollars can go a long way.
2. Negotiate Your Salary
This is a tip I don’t see enough, but I’m telling you—it works. If you’re doing great at your job, don’t be afraid to have the conversation about a raise. Early in my career, I asked for a salary increase after hitting my goals for two straight quarters. Guess what? My boss said yes. That extra money went straight to debt repayment.
3. Explore Passive Income Streams
Passive income, like renting out a spare room or creating digital products, can provide a steady flow of extra money. I started a small blog on the side that eventually generated ad revenue—it was a slow start, but it became a helpful income stream.
"The IRS explains that passive income generally comes from two sources: renting out property or investing in a business you’re not actively managing."
Changing Spending Habits
Changing your approach to spending is one of the most powerful ways to create a sustainable financial foundation.
Practice Conscious Spending
Before buying anything, ask yourself if it aligns with your goals. Switching to cash for discretionary spending made a huge difference for me. It’s harder to part with physical money, which helped me stay mindful of my purchases.
Set Clear Spending Limits
Set spending limits for different categories in your budget, like groceries, entertainment, and clothing. Use budgeting apps to stay on top of these limits, and consider them as tools for creating a more balanced lifestyle.
Rewarding yourself when you hit financial milestones can reinforce positive habits. Choose non-financial rewards, like treating yourself to a favorite activity or relaxing day, to celebrate your progress without compromising your budget.
Building an Emergency Fund
An emergency fund is your safety net, preventing you from falling back into debt when unexpected expenses arise.
Start Small and Gradually Increase
When I started my emergency fund, I aimed for one month’s worth of expenses. Over time, I built it up to six months. Even small contributions add up, so don’t worry about starting slow.
Keep It Accessible But Separate
I opened a high-yield savings account for my emergency fund—easy to access in a pinch but separate enough to avoid dipping into it for everyday expenses. This simple move kept my fund intact for true emergencies.
Staying Debt-Free
Achieving a debt-free lifestyle is a huge accomplishment, but staying debt-free requires ongoing effort and mindful planning.
1. Continue Using a Budget as Your Financial Foundation
Your budget remains your best friend. Regularly review it to ensure it aligns with your goals, and adjust as needed for life changes like moving or career shifts.
2. Build Long-Term Savings
Redirect the funds you once used for debt payments into long-term savings or investments. This can include an emergency fund, retirement savings, or specific goals like travel or homeownership, setting you up for future financial security.
While having credit can be beneficial, approach new debt cautiously. Only take on new debt if it aligns with your long-term financial goals, and make sure you have a repayment plan in place.
3. Surround Yourself with Financial Support
Staying connected with like-minded friends or mentors can help you stay on track. When I hit a tough spot, having a support system made all the difference.
Crushing Debt, One Payment at a Time
I get it—debt can feel like a heavy thing to carry around. I’ve had my share of those moments too. But here’s what I’ve learned over the years—it’s all about taking small, steady steps forward. The first step is just getting a clear picture of where you stand. Write it all down, even if it’s uncomfortable. Once I took that step and made a simple plan to tackle it, things started feeling much more manageable. A practical budget made a big difference for me too—not about cutting out everything fun, but finding a way to guide my money toward what truly mattered.
Progress doesn’t always feel fast, but trust me, with every payment made and every smart choice, you’re getting closer to freedom. It’s about consistency and patience—steps, not leaps. That’s the key to reaching the point where money supports your life instead of controlling it. You’ve got this, and every little move you make gets you closer to living the life you want.
