How to Get Out of Debt: A Complete Guide

Getting out of debt is one of those goals that sounds simple but feels impossible when you’re in the middle of it. You know you need to pay more than the minimums. You know interest is working against you. But between the bills, the stress, and the sheer number of decisions, it’s hard to know where to actually start.

This guide is where you start. It covers everything from your first step (writing your debts down) to the final stretch (staying motivated when the finish line is still months away). No judgment, no gimmicks. Just a plan that works.

Step 1: Audit Your Debts

You can’t build a plan for money you haven’t looked at. The first step is to list every single debt you owe. Not an estimate, not a ballpark. The real numbers.

For each debt, write down four things:

1. Who you owe (creditor name)
2. Current balance (log into each account or check your latest statement)
3. Interest rate (APR)
4. Minimum monthly payment

Here’s what a typical debt audit looks like:

Debt	Balance	APR	Minimum Payment
Credit Card (Visa)	$6,200	24.99%	$155
Credit Card (Store)	$1,800	27.99%	$45
Car Loan	$8,500	6.5%	$285
Personal Loan	$3,000	11.5%	$95
Medical Bill	$2,400	0%	$100
Student Loan	$12,000	5.5%	$135
Total	$33,900		$815

Once everything is on paper, add up the total balance and total minimum payments. These two numbers tell you the size of the problem and the baseline cost of servicing it each month.

Next, check your debt-to-income ratio. This compares your monthly debt payments to your gross monthly income and tells you how stretched you are. A DTI under 36% is considered manageable. Between 36% and 50% means you’re under pressure but can likely handle it with a plan. Above 50% means you may want to explore professional help options (more on that below).

Step 2: Choose a Strategy

There are several proven approaches to paying off debt. The right one for you depends on your personality, your debt mix, and how much extra you can pay each month. Here are the main options.

The Snowball Method

You line up your debts from smallest balance to largest and attack the smallest first. When it’s gone, you roll its payment into the next smallest. The wins come fast, and each one gives you momentum.

Best for: People who need motivation from visible progress. If you have several small debts you can knock out in the first few months, snowball is powerful.

Run your numbers through the snowball calculator to see your projected payoff date. For a deep dive, see the debt snowball method guide.

The Avalanche Method

You line up your debts from highest interest rate to lowest and attack the most expensive debt first. This saves the most money in total interest over the life of your payoff plan.

Best for: People motivated by math and long-term savings. If there’s a big spread between your highest and lowest interest rates, avalanche saves real money.

The avalanche calculator will show you exact timelines and interest savings. The full debt avalanche method guide covers the approach in detail.

Debt Consolidation

You take out a single lower-interest loan to pay off multiple high-interest debts. Instead of juggling five payments at different rates, you have one payment at a lower rate. This simplifies your life and reduces your total interest cost.

Best for: People with decent credit who are carrying high-interest credit card debt. A $15,000 consolidation loan at 10% saves thousands compared to the same amount at 24% on credit cards.

See the full debt consolidation guide and run your scenario through the consolidation calculator.

Debt Management Plans

A nonprofit credit counseling agency negotiates with your creditors to reduce your interest rates (often to 0-8%) and combines everything into one monthly payment over 3-5 years. You don’t need good credit to qualify.

Best for: People with high credit card debt who can’t qualify for a consolidation loan or balance transfer. A DMP is often the most effective option when your credit is already damaged.

Learn more in the debt management plans guide.

Which One Should You Pick?

If you’re not sure, here’s a simple rule. Run your debts through both the snowball and avalanche calculators. If the difference in total interest is less than $300, go snowball for the motivation. If it’s more than $300, go avalanche for the savings. And if most of your debt is high-interest credit card debt, seriously consider consolidation or a DMP.

For a more detailed decision framework, see how to choose a debt payoff strategy.

Step 3: Build Your Budget

A payoff strategy tells you which debt to target. A budget tells you how much you can throw at it each month. Without a budget, your extra payments will be inconsistent, and inconsistency is what kills payoff plans.

You don’t need a complicated spreadsheet. Start with this:

1. Add up your monthly take-home pay. All income after taxes.
2. List your fixed expenses. Rent/mortgage, car payment, insurance, minimum debt payments, subscriptions, anything that’s the same every month.
3. Estimate your variable expenses. Groceries, gas, dining out, entertainment, personal spending. Look at your last three months of bank statements for a realistic average.
4. Subtract expenses from income. What’s left is your margin.

Your margin is the money available for extra debt payments. If it’s $200/month, that’s your starting extra payment. If it’s $50, that’s your starting point, and the next section will help you grow it.

The key insight: your budget isn’t about restriction. It’s about deciding where your money goes before it disappears. People who track spending pay off debt 2-3 times faster than people who don’t, not because they earn more but because they stop the leaks.

For a complete walkthrough, see how to create a budget.

Step 4: Find Extra Money

Most people think they need a higher income to pay off debt. Sometimes that’s true. But more often, there’s money already flowing through your accounts that’s being lost to unused subscriptions, unfavorable rates, and spending habits you haven’t examined.

Here are specific places to look, with realistic dollar amounts.

Cut the Leaks ($50-200/month)

Cancel unused subscriptions. The average American spends $219/month on subscriptions. Go through your bank and credit card statements for the last 60 days and flag every recurring charge. Cancel anything you haven’t used in the last two weeks. Typical savings: $30-80/month.

Negotiate your bills. Call your car insurance company, phone carrier, and internet provider. Say: “I’m looking to reduce my monthly expenses. What can you do for me?” If they don’t budge, ask about their new-customer rate and whether they can match it. Average savings: $50-100/month across all three.

Reduce food waste. The average household throws away $1,500 in food per year. Meal planning, shopping with a list, and using leftovers can realistically save $100-150/month.

Generate One-Time Boosts ($500-5,000)

Sell what you don’t use. Clothes, electronics, furniture, sports equipment, tools. A serious weekend of listing items on Facebook Marketplace, eBay, or Poshmark can generate $200-1,000. Apply it directly to your target debt.

Redirect your tax refund. The average tax refund is about $3,100. That’s a massive one-time payment that can knock out a small debt entirely or put a serious dent in a larger one.

Cash in forgotten money. Check unclaimed property databases in every state you’ve lived in (missingmoney.com). Check old bank accounts. Check rebates you forgot to claim. It’s not uncommon to find $50-500 you didn’t know you had.

Increase Your Income ($300-1,000/month)

Pick up temporary side work. Freelancing, tutoring, driving for a rideshare, weekend shifts. Even 8-10 hours per week at $15-25/hour adds $500-1,000/month. You don’t have to do this forever. Many people work a side hustle for 6-12 months during the most aggressive phase of their payoff, then stop once the high-interest debt is gone.

Ask for a raise or promotion. If you’ve been at your job for over a year and haven’t had a raise, ask. The average raise for someone who asks is 5-10%. On a $50,000 salary, that’s $200-400/month after taxes.

Sell a skill online. Writing, design, bookkeeping, social media management, data entry. Platforms like Upwork and Fiverr make it possible to earn extra money from home on your own schedule.

Every dollar you find gets applied to your target debt. These small amounts compound fast when interest stops working against you.

Step 5: Stay Motivated

The math of debt payoff is straightforward. The hard part is sustaining effort over months or years. Here’s what actually works.

Track Your Progress Visually

Print a chart, fill in a thermometer, or use an app that shows your balance shrinking. People who track their progress visually are significantly more likely to complete their payoff plan than those who don’t. There’s something about watching that line go down that keeps you going when the numbers feel abstract.

Celebrate Milestones

When you pay off a debt, mark it. When you hit a round number ($20K remaining, $10K remaining), acknowledge it. The celebration doesn’t need to cost money. It just needs to exist. Tell someone. Post about it. Write it down. The act of recognizing progress builds the motivation to continue.

Expect Bad Months

You will have months where you can only make minimums. The car will break down. A medical bill will appear. Something will happen. This doesn’t mean your plan failed. It means life happened, and your emergency buffer (keep $500-1,000 set aside) absorbed the hit instead of your credit card.

Plan for setbacks and you won’t be derailed by them.

Find Your People

Accountability matters. Whether it’s a partner, a friend, or an online community like r/debtfree, having someone who knows what you’re working toward makes you more likely to follow through. Weekly check-ins, even informal ones, create a rhythm that sustains effort.

Step 6: When to Get Professional Help

Doing it yourself is great when the math works. But sometimes the numbers point to getting help. Consider professional assistance if:

• Your minimum payments exceed 50% of your take-home pay. You may not be able to budget your way out of this.
• You’re falling behind on payments. Late fees and penalties can accelerate the problem faster than extra payments can solve it.
• Your debt is mostly high-interest credit cards above $20,000. A debt management plan can cut your rates dramatically and save thousands.
• You’re being contacted by collectors. A credit counselor can help you understand your rights and options.
• The stress is affecting your health or relationships. Financial distress is a medical stressor. Getting help is not weakness.

Where to Get Help

Nonprofit credit counseling (free). Start here. The National Foundation for Credit Counseling (NFCC) provides free financial reviews and will help you evaluate all your options. They don’t sell you anything.

Debt management plans (low cost). Through a nonprofit agency, a DMP consolidates your credit card payments at reduced rates. Typical setup fee is $30-50, with monthly fees of $25-50. For someone with $25,000 in credit card debt at 24%, a DMP at 6% can save $15,000+ in interest.

Debt settlement (use caution). For-profit settlement companies charge 15-25% of enrolled debt and require you to stop making payments, which damages your credit. You can negotiate with creditors yourself for free. See our debt negotiation guide.

Bankruptcy (legal reset). If your unsecured debt exceeds what you could realistically pay off in 5 years, bankruptcy is a legitimate tool. Chapter 7 discharges most unsecured debt. Chapter 13 restructures it into a 3-5 year plan. Consult a bankruptcy attorney for a free evaluation.

Your First Steps Today

Don’t try to do everything at once. Here’s what to do in the next 48 hours:

1. List every debt with its balance, rate, and minimum payment (30 minutes)
2. Calculate your DTI using the DTI calculator (5 minutes)
3. Run your debts through the snowball calculator or avalanche calculator to see your projected payoff date (10 minutes)
4. Pick your first target debt and make one extra payment, even if it’s $25

That’s it. You don’t need to have the whole journey mapped out. You need to take the first step. The plan gets clearer as you move.

FAQ

How long does it take to get out of debt?

It depends entirely on how much you owe, your interest rates, and how much extra you can pay. A rough guide: $10K in credit card debt with $200/month extra takes about 2.5 years. $30K with $500/month extra takes about 3 years. $50K with $800/month extra takes about 2.5-3 years. Use the avalanche calculator with your actual numbers for a personalized timeline.

What’s the fastest way to get out of debt?

Combine the highest extra payment you can sustain with the avalanche method (targeting highest-interest debt first). Add balance transfers or consolidation to reduce rates. Apply every windfall (tax refunds, bonuses, money from selling things) as a lump payment. The fastest path always comes from attacking from multiple angles at once.

Should I save or pay off debt first?

Both. Keep a small emergency buffer of $500-1,000 so unexpected expenses don’t go back on credit cards. Beyond that, direct your money toward debt, especially high-interest debt. Every dollar sitting in a savings account earning 4% while you carry credit card debt at 24% is costing you 20% per year. See emergency fund while in debt for the full breakdown.

Is it possible to get out of debt on a low income?

Yes, though the timeline is longer and the strategies shift. Focus on snowflake payments (small irregular amounts), negotiate with creditors for hardship programs, explore debt management plans for rate reductions, and look for any way to boost income even temporarily. The path exists at every income level. See paying off debt on a low income for specific tactics.