How To Actually Get Out of Debt

Debt is a real thing, a sometimes scary thing, and often times it can feel easier to just simply plug along month to month rather than actually develop a real strategy for how to get out of debt. We’re going to break down the basics on how to get ahead of your debt, these simple steps will leave you feeling more empowered, in control, and able to smell the roses instead of focusing on the looming debt cloud above your head. It can feel intimidating at first but, much like starting a savings plan, the biggest step you can take is just getting started!

Debt is a real thing, and often times it can feel easier to just simply plug along rather than actually develop a real strategy for how to get out of debt.


As Americans, we’re burdened with the question of how to get out of debt. The average college student from 2014 graduated with around $29,000 in student loans and has to deal with them even before that shiny diploma is framed and hung. Americans have an outstanding $4,717 in credit card debt and that’s not to mention the $8 trillion (yes, trillion, with a T) in mortgage debt across the country.

With all of the various types of debt out there, it can be difficult to know how much you owe at any given point, especially with all of the websites, accounts, and passwords to manage – it can feel overwhelming and overbearing. While it can be a headache to figure out the details, knowing how much you owe gives you a starting place to launch off of in your quest to reduce your debt. A great place to start is by checking your credit report- free once a year at and at (it’s totally free and won’t affect your score by checking). The score itself is not important yet (we’ll cover credit down the line) but it aggregates all debt from companies that report. Just make sure to add in all that pesky debt that might not be listed like loans from family or friends.

One way to bring all of this information into one place so it is easy to see and understand is to use While a technology platform like Mint will help gather information automatically for you and allow you to see your outstanding debt, another more simple way to track this is to write your balances down on a piece of paper or put it into a word doc or for the type-A’s out there (, try excel or Google Spreadsheets.

At this point in the game, you’re just trying to list everything in one spot so if you’re rounding your student loans to $15,000 instead of $15,231.67, that’s totally fine. The idea here is to get a grasp on the big picture and cut through the unknown and ambiguity that often surrounds our debt.

Americans have an outstanding $4,717 in credit card debt and that’s not to mention the $8 trillion (yes, trillion, with a T) in mortgage debt across the country.


As you create your quick list, write down the interest rate associated with each account. For example, your student loans might have an interest rate (aka Annual Percentage Rate or APR) of 6% and your credit card might be at 18%. Once you have the interest rates for each, rank them from highest to lowest interest rate (regardless of the balance). By doing this, you are identifying the order in which you should pay your debts down. Fortunately, this is where the strategy becomes more pointed and allows you to target the most expensive debt first, which in the long run can save you hundreds and even thousands of dollars in avoided interest.

As a quick example, if you have $4,000 in credit card debt at 18% and make the $160 minimum monthly payment, you would end up paying a whopping $2,273 dollars in interest. This jaw-dropping amount can be lessened if you tackle it aggressively by making a larger monthly payment of, say $250. By increasing your monthly payments, you will end up still paying some interest, but now you’re only on the hook for an extra $608. This would save you over $1,600 and help you to gid rid of this pesky credit card in just under 2 years instead of the 10+ years you’d have the balance if you only made the minimum payments. Not a bad tip!

One important distinction here is to focus on the interest rate (APR) and not the balance itself. Sure, the sheer size of something like student loans can seem daunting, but the smaller, higher interest rate debt, such as credit cards or retail cards, can be a subtle and pernicious drain that is much more important to focus on first in your quest to reduce your debt.


What will help the medicine go down is focusing on one area of your debt at a time. Now that you have your list ranked according to interest rate, your job is to make minimum payments on everything except for the highest interest rate debt. On this highest interest rate item, the challenge is to make the largest, but still realistic, monthly payment you can. The highest interest rate debt will most likely be a retail card (such as a Target or Best Buy card) or a credit card. Once you have identified your highest interest rate debt, start tackling it aggressively to get out of debt fast. Like in the example above, paying more than the minimum is the surest way to saving potentially thousands in interest. The rubber certainly meets the road here and it can feel really tough to find extra cash to put towards this, but being creative and thinking of small wins to give yourself this ability can put you quickly onto this accelerated path of debt reduction (packing a lunch on Mondays and Wednesdays instead of going out? Getting pro at doing your own nails?).


Debt isn’t always evil or bad, as much as we’re taught that it is. Think about it: if you had to pay for your car in cash, you might not have a way to get to work. If you had to pay upfront for college, then millions of people wouldn’t go to school at all. Debt can and is a useful tool and it helps us to live a more dynamic life, but if we don’t actively tackle the most expensive debt on our list, it can quickly become extremely costly and feel like a perpetual weight that we have to carry around. Debt isn’t going to magically disappear tomorrow, next month, or next year (as nice as that would be). For the vast majority of us, we have to face the music, buckle down and get ready for the long haul. Chip away slowly, but surely and over the course of time, you will find more and more room in your budget and less and less debt. Breathe a sigh of relief now that you have the knowledge that you can own your debt instead of having it own you.





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