How to Get out of Debt

06:20 AM September 17, 2019

The biggest concern among the nation is how to get out of debt. The high-interest rates that are involved with the credit card companies make it very difficult to be debt-free.

The interest that has already been added to debt can be compounded.


This means that the interest that has already been added due to the delinquency, might have more interest added on top of that.

That is considered delinquent as well.

The balance will continue to grow and grow.

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Interest accumulates just like the snowball method.

It gains momentum and will continue to grow bigger and bigger until it is eliminated.

Albert Einstein once said, “Compound interest is the eighth wonder of the world.

He who understands it earns it…He who doesn’t… pays it.”

Debt comes in a wide variety, which most of us have – almost all of us. Here are just a few examples of what different kinds of debt we have:

  • Credit card debt
  • Home Loan Debt
  • Student Loan Debt
  • Car Loan Debt
  • Medical Loan Debt
  • Payday Loan Debt

This list could be expanded exponentially, but we will send it right there.


There are many reasons and ways for us to go into debt.

The important thing to realize is that there can be an end in sight. The end may be very distant in the future, but there is an end.

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Understanding your own finances is going to be the ultimate game-changer. In order to make changes, one must understand what is wrong. These are the five important steps to budgeting:

  1. Track Spending: In order to know what needs to be changed, we need to take a look at all of the transactions that occur.
    This can be done on a spreadsheet on the computer, with a pen and paper, or even an app that is linked with a corresponding bank account that is being monitored.
  2. Reduce Expenses: We must analyze the transactions that occurred since documenting them.
    Looking over a three-month time frame is a decent amount of time to evaluate averages.
    Whether eating out is a large portion of a month’s spending or even paid subscriptions that are not being used.
  3. Action plan: Create a plan to alter poor spending habits.
    Have a goal in mind. There must always be a goal in place.
  4. Fulfill plan: Start applying the action plan to reach your goal.
  5. Reevaluate: Continue to track your spending patterns and analyze them to see if there need to be further changes made.

Once these five steps have been applied to your finances, make sure that they are being done constantly.

In order to take this very seriously and make sure that it happens – try and have a mind that debt is not an option.

Hopefully, this will be able to help guide you in the right direction to avoid it at all costs.

Credit Reports

Credit scores will ultimately fall in the event of delinquency.

In this case, the debtor should always be paying more than the minimum payment.

If that is the only amount of money that is being paid, then interest is going to pile on.

Once delinquent, the three major credit bureaus will show that delinquency on their credit reports.

Reaching and maintaining a good credit score is far more important than a lot of us realize.

It affects how much will be paid on future loans.

Not just the amount of repayment but the potentiality of getting denied as a borrower of funds.

Types of Debt Repayment

Just like it is previously stated – all of us, if not all of us, have some type of debt.

We can take advantage of a few different options to really work hard on paying it off.

Professionals: There are many professionals in the world that have educated themselves to pay off debt efficiently.

It requires money to pay them upfront because they are unwilling to do it for free. T

his is their business and they have to make money somehow.

Debt Consolidation

This can be very beneficial, but also risky.

This will take some of your loans, that have different interest rates, and combine them together to have the exact same rate.

It then all becomes the exact same payment. This is simply just called a consolidation loan.

The goal would be to have it all be a lower interest rate in order to help save money in the long run.

If it does not decrease the average interest rate, then it might be wise to stay away from this option.

Self Repayment

This may be the best method of paying off debt, and there are a few different ways to do it.

There is one thing to understand though. The best way to pay off debt – is to invest more money into it. T

here is a very applicable calculator that demonstrates how it is done on the Financial Healthiness website.

The best way to explain an effective pay off method is with an example. Keith has 3 debts: auto loan for a Ford vehicle, another auto loan for a Toyota vehicle, and the last one is a student loan. He only has a few months remaining on his Toyota Auto Loan. Here is a list of the loans with their monthly payment and interest rate:

  • Ford = 5 years with a monthly payment of $400 @ 4.15%
  • Toyota = 6 year with a monthly payment of $250 @ 4.25%
  • Student Loan = 10 year with a monthly payment of $270 @ 4.00%

Once Keith has paid off the Toyota Auto Loan, it would be wise to use that $250 and put that extra money towards another debt.

Instead of using that for additional spending money throughout each month, it should be used to pay off more debt.

He should put it towards the loan with the highest interest rate in order to save as much money as possible.

In this example, he should put it towards his Ford loan and pay $650 a month instead of the normal $400. One the ford loan is paid off, he should be putting all $920 towards his student loan. This method is an excellent way to focus on paying off credit card debt fast.

How to Start Paying Extra

Most debts are a monthly payment which is a fantastic way for us to attempt to eliminate debt.

A lot of employees get paid bi-weekly (every other week), which is the cherry on top of this pay off method.

Using Keith’s Ford auto loan as the example – if he gets paid biweekly, then he can make biweekly payments of $200 to go towards his loan.

There will be two times throughout the year that he will receive three checks in a month.

Those two payments will help Keith get a payment ahead on his auto loan.

If he did not make a single additional payment throughout the loan, except making these two extra payments yearly, he would be making 5 additional payments, which will help him pay it off in 5 months less than the full loan.

That will help him save money on the loan itself.

This example can be used for every single debt in the book, it can make it difficult when the employee is not paid biweekly, but it can still be done.

Check if you qualify in two simple steps

  • Step 1 – Select your debt amount below to see if you’re eligible
  • Step 2 –Answer a few quick questions & join hundreds of thousands of Americans on the path to becoming debt-free

Selling Old Stuff

Many of us have a lot of different items in our home that are unused or just old.

Thanks to the internet, we have many different options to sell these items.

These items can be placed on Craigslist, eBay or even on Amazon.

They all create very simple ways of selling merchandise.

This has more than one benefit. It will help create some extra cash to either pay money towards delinquency, or debt in general.

A huge benefit is that it will help clear a lot of the clutter in your living space.

Clean living space will create a better area to live, which will assist in being effective in more than a few ways in your life.

Spend less or Make more

The title of this section is the backbone of tackling debt.

We have two options: we can spend less money on our variable costs from day to day, or we make more money to pay off our debts.

Utilizing both of these strategies is the ultimate strategy.

There are numerous methods to decrease our spending habits; however, on the other hand, we have many options to make more money.

We can either find another job that will pay us more, have part-time jobs, or we can start a side hustle,

Side hustles are extremely popular right now, especially with millennials.

It is just a job that they get outside of their regular 9-5 job to make additional income.

Some of these include: driving for uber/lyft/door dash or other driving services like that, window cleaning, selling books, bookkeeping, freelancing, starting a business, or even walking dogs.

Many people take advantage of such opportunities. Many companies help support these side hustles to assist in extra income.

Maybe the side hustle could potentially replace the 9-5 day job.


Tracking spending habits and paying close attention to budgeting can be very exhausting.

We have to be able to find the enjoyable part of going through all of this effort.

One way to be able to enjoy this grueling process is by rewarding yourself.

For example: at the end of every month you reward yourself with your favorite treat, new books, new video games, new shoes.

Whatever the case may be. This is hard work, but it will pay off in the long run.


We live in a world that gets what we want when we want it.

It can be difficult to be patient and wait for the things that we want.

The credit card companies make it very simple for us to go into debt by providing such incredible offers.

We always have to ask ourselves in the back of our minds this question: Do I need it or do I want it?

There are a lot of things that we want, but not a lot of things that we need.

Either we pay interest, or we make interest. This is our decision.

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TAGS: Debt, Finance, USFINANCE
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