How to Get Out of Debt and Stay Out of Debt


This post may contain affiliate links to products that I recommend and I may earn money or products from companies mentioned in this post. Please check out my disclosure page for more details.


To get out of debt and stay out of debt, you need an action plan. I am sure you are living paycheck to paycheck trying to keep everything a float, like I was doing at one time.

You probably feel trapped and stuck like you are riding some type of financial debt rollercoaster that never stops.  It is a very stressful way to live and takes a toll on your family lifestyle and dynamics both physically and mentally.  Your family does not have to go through life like this.

There is a better way to live for both you and your family and there are things you can do such as using a personal finance flowchart to help prioritize your money.

get out of debt

How to Get Out of Debt Fast with an Action Plan

You can get out of debt fast with an action plan by following these steps below.

1.  Look at your situation and set goals

The first step to get out of debt fast is that you have to take a look at your situation.  Where are you at?  When I say that I mean, how do you think about the reality of your debt?

Are you open to making a change?  Do you want to repair your credit yourself? Or do you want to continue with a financial façade that everything in your life is great and wonderful?

get out of debt fast

I thought my life and family life was WONDERFUL and thought I had “made it.”  I had a McMansion, new cars, a beautiful pond in my backyard, and wildlife galore.  My family and I lived in an upscale suburb in the Midwest.   I had created this environment that I thought was representative of what success was.

If I conform like every other modern family on these items then surely that will show and demonstrate success in my life right?!

As many years went on, I struggled to keep my everyday bills and debt in check.  It eventually began to take a toll on my mental health.  I learned that having these status items and living this lifestyle representative of every other upper-class modern family, was the furthest thing from happiness, success, and truth.

Mentally, it felt like I lost 15 years of my life living this way.  I was riding this financial roller coaster for 15 years before I could get it to stop.

After a decade and a half, I decided I wanted to change my life.  I decided that I wanted to put a greater value on financial freedom and not having financial constraints such as large bills, huge debt balances, and a lavish lifestyle.  You can read in more detail about my Journey to Financial Freedom.  

Everyone has a choice to make with regard to change.

To get out of debt, you have to create a mindset that is open to changing.  This might include drastic steps such as moving in with parents to save money and get ahead. Let’s face it nobody in the world likes change and it was really hard for me to make that change in my particular situation.

Once you make the pledge for change, you have to come up with a plan on how to achieve that.  There has to be a goal.  If you have several credit cards, then have a goal of picking one and working on eliminating that.

If it is important for you to be mortgage-free, make that your goal.  To get out of debt you have to have a specific goal on what you are working towards.

2.  Look at Your Household Budget

Take a look at your household budget and see what extra money is available for you to contribute towards your goal every month.

It may be necessary for you to make adjustments on your household budget to get out of debt.

If you are self-employed and have variable income and do not have a budget set up yet for your household, be sure to read:  How to Build a Household Budget for the Self Employed Family.

Most budgets include the basics which are fixed costs, variable costs, and some portion of savings or savings-related goals such as retirement or vacations.

If there is extra income available each month, start focusing that extra income towards your one goal to get out of debt.  All that has to occur is a re-direction of your miscellaneous spending.  Take that money and put it towards paying down the debt you are trying to eliminate.

Similarly, if you have savings or savings-related goals, put those on hold while you use that money to pay off your debt goal you are trying to achieve to get out of debt.

If your debt is growing, chances are that you do not have any additional money available without making adjustments.  Look at where your money is going.

Start off by focusing first on your variable costs.  This would include discretionary areas such as:

Entertainment

Gifts

Eating Out

Vacations

Starbuck’s Runs

Golf

Yoga Classes

Gym Memberships

If that money can be redirected to your get out of debt goal, then that should be done.  There were a bunch of things I stopped buying in my everyday life that saved me over $10,000.

You can also take a look at your fixed costs and making changes there if you can.  Things like refinancing your mortgage loan into a lower payment would go a long way to get out of debt and your goals.

3.  Call Your Credit Card Company

If your get out of debt goal is to eliminate a credit card balance, there are things you can do to help with that.  First call your credit card company and tell them you are trying to get out of debt by making extra payments.  You definitely need to do this if your card has a high APR and interest rate.

Call your credit card company and see if they will lower the interest rate while you are making payments on the balance.  I have done thins a couple times, and one time I got the rate lowered by a full 5%.

Once I explained to them how I was making additional payments to my balance, they were even more willing to lower the rate to help me out.

4.  Automate Payments

Another thing you can do to get out of debt is automate your payments towards your get out of debt goal.

Once you find the extra money to put towards your goal be sure to set this up with your bank as an automatic payment.

how to get out of debt

This helps because once you have the routine extra payment set up, you are not tempted to use the money for something else.

Additionally, if you happen to come into a windfall or extra money, you can also put that amount as well as an automatic payment and pay it towards the debt right away.

I do this with some debt that I have on a credit card.  Through my bank, I have set up an automatic payment plan in the amount of $300 each month that I have been putting towards a credit card.

I recently found some extra money while redoing my household budget and I was able to make a second larger payment on the credit card to help get out of debt.

5.  Balance Transfers Friend or Foe?

Another avenue you can pursue to get out of debt is to do a balance transfer.  These can be great things to help with debt elimination provided,

1.  You have the money always to make the monthly payment

2.  You are dedicated to make the payment

If you can’t do those two rules, then do not do a balance transfer because you will end up right back where you started…IN DEBT!

I once refinanced $24,000 for a truck I owned that was at 5.9% onto a 0% credit card for the life of the balance transfer.  The only condition was that I had to make two purchases of any amount which had a whopping 24% interest rate on those two purchases.  The payments I made had to be applied to the balance transfer first than the other charges.

So, what I ended up doing was that I would go to the local hardware store and I would buy a hex nut for .4!  What did I care about a 24% interest charge on the purchase of .4?!  A whole extra penny was my interest charge.

I did this for a while, probably two years then I could not find the nuts anymore.  I then switched to a gas pump and I would literally hit the gas handle as fast as possible and hang up the pump.  Sometimes it ended up being like .02 worth of gas!

After doing this for 4 years, the whole amount charged with interest came to something like $50!  I literally saved over $3,500 by doing this type of balance transfer than sticking with my traditional 5.9% auto loan.

6.  Earn Extra Money

If you are able to get a second job or a side hustle BTW here are 40 [Lucrative] Creative Ways to Make Money you can put this money towards your debt elimination action plan.  By earning extra money, you can get out of debt even faster should you decide to put that money towards your get out of debt goal.

I decided to do this with some debt that I had for buying carpet on a credit card for a house I owned once.  The balance was something ridiculous like $3,500!  You would think that this carpet was fit for a President or something but it was just your general run of the mill carpet.

I was able to come up with some money from a side job and I increased my monthly payments and paid the carpet off a full six months earlier than what I would have been able to do normally.

You can do a few things for earning side money such as a garage sale, or selling big ticket items on craigslist.  I once sold a swing set for $250 (sorry kids!).  By selling a couple big ticket items around your house, you might actually already have the money to get out of debt.

IT IS YOUR CHOICE

Once you choose to change your mindset and tackle your debt, you CAN get out of debt with an action plan.  There is a way to overcome your debt.  I am a perfect example of that.

Yes, I was once a “Jones” living in a lifestyle I could not afford.  I wasn’t happy and it took a big toll on my physical and mental health.  Then I made a decision to change.  I chose to change my mindset and I followed the steps above.

One by one, I eliminated most of my debt obligations.   Now I have financial freedom in my life and it has made me a better person all around.


If you are looking for more information on budgeting, be sure to check out our budgeting resources page for additional resources!


 

HAVE YOU BEEN ABLE TO GET OUT OF DEBT?

BG Vance

For over 20 years, BG Vance has been a leader in public and personal financial management. He's developed and managed public budgets in excess of hundreds of millions of dollars. He is passionate about the FIRE movement and was featured in the Detroit News in 2001 about saving for retirement. Through the years, he's assisted families and individuals with getting their finances on track. He holds an MPA, is a licensed Realtor, and is currently working on a book about personal finance.

Recent Posts