We’ve shared quite a bit of information about budgeting and getting out of debt. However, I realized recently that we’ve never really shared information on what someone needs to do to get out of it. So with no need for a long introduction, here are 6 things you need to do to get out of debt.

1. Recognize that you’re in debt and want to get out.
You have to be serious about wanting to get out of debt. This is where you develop your “why”. Your “why” should be something that builds up enough emotion in you that motivates you to keep going when the journey becomes tough. Because trust me, it’ll be tough at some point.
2. Stop your old habits.
There’s essentially no point in getting out of debt if you’re still going to practice the same habits that got you into it in the first place. Excessive shopping, eating out too much, using credit cards, living above your means, etc., etc., etc. This list could go on and on, but you know what caused your problem, and those habits are the ones that need to change.
I know some people may like using their credit cards for points. However, until you’re out of debt AND know how to use a credit card “responsibly”, then I suggest not using a credit card at all. Instead, use cash or your debit card. And while you’re at it, learn to save for any purchase that you can’t cash flow. Sinking funds are great for this purpose.
3. List your debts.
You need to know where you stand with ALL your debts. So take your time and make a list of everything (excluding your house). This would include any credit card debt, student loans, car loans, medical bills, etc. List the debts, the amounts owed, and the interest rates.
4. Choose a plan you want to use for paying off your debts.
There are two popular methods – the debt snowball method and the debt avalanche method.
With the debt snowball method, you pay off your debts starting with the smallest one. Once that one is paid off, use that amount to throw towards the next one, essentially creating a bigger and bigger “snowball” to throw at remaining debts.
With the debt avalanche method, you pay off debt starting with the highest interest rate. Once that one is paid off, you move to the next one with the highest interest rate.
When using either method, you would pay your minimum payment on all your debts except the one you’re focusing on paying off. That’s the one any extra money would go towards.
We each used the debt snowball before marriage to pay off our separate debts and after marriage to pay off my remaining student loans and my car. We preferred this method because we liked having the “small wins” of having another debt to cross off the list faster.
5. Start doing a budget.
The words “doing a budget” often have a negative connotation. However, is it really negative if it’s possible that doing a budget can help you pay off debt and even help you reach other goals? If you need help with where to start with doing a budget, click here.
Once you start doing a budget, you can figure out ways to cut back on your expenses. Or it might be that you need to consider working overtime or a second job to
Be honest with yourself AND your budget.
If you’re investing, decide if it’s worth it to YOU if you’ll continue investing the same amount or decrease it or if you’ll stop altogether so that you can put the extra towards your debts.
6. Save up a mini emergency fund.
The point of a mini emergency fund is so you don’t risk accruing more debt by using a credit card or taking out a loan when something unexpected happens. You should have $1500 – $2000 in your mini emergency fund.
Final Thoughts
It’s up to you to decide if you’re going to stay out of debt or not once you finish paying off your debts. The journey to debt freedom can be a long one depending on the amount and your income. But if it’s something you can commit to and hang in there when it gets discouraging and frustrating, it’ll be worth it in the end!