The Complete Guide to Getting Out of Debt

Imagine the excitement.

It’s your last day of owing someone else money and you can barely contain your enthusiasm.

You’re finally getting out of debt and you love it.

Your mind starts racing in a million different directions.

Your pulse starts pounding.

You start imagining all the new possibilities.

And when you finally make that last payment, there’s no telling what you might do. You might shout out loud with unfettered joy. You might laugh, cry, or do both at the same time.

You’ll experience a gambit of emotions like you haven’t felt in a while.

It’s an incredible feeling of relief, happiness and… freedom.

No more worrying about your financial future.

No more sleepless nights.

No more living in fear of your creditors.

You’ve finally liberated yourself from the dread and anxiety that comes with excessive credit card debt. But first, you have to get there.

And to get there, you have to learn the debt-reducing-steps that can make that last day of debt possible. You have to learn the steps that take you from the very beginning, all the way through to the end… to that glorious last day.

This simple and easy-to-follow guide shows you those steps. Here, you get precise directions for getting rid of your debt in the smartest and most strategic way.

You’ll learn the same proven strategies thousands of Americans before you have used for getting out of debt and taking charge of their financial life.

All the Steps … All in One Place

From the preliminary steps you need to take before you even start the process… to the more direct steps like creating a budget and cutting your expenses, this guide breaks it all down for you with simple and easy to understand explanations.

Every part of debt elimination is covered. Nothing is left out.

If you’ve been having trouble lowering your debts because you weren’t sure of how and where to start, then this guide is for you.

It was created for beginners and assumes you know nothing about the process. Everything is explained in plain English. There’s no confusing financial jargon. No theories. No guesswork.

And every step is given to you in the order you should apply it, which helps you learn the right sequence for putting these measures into action.

So no matter where in the process you currently are, or how much debt you’re dealing with, or how terrified you may be of tackling this problem, the steps listed on this page can help you get out of debt … one logical step at a time.

Let’s get started…

Conquering the mental part of debt…

Before you even begin the process, you need to get in the right frame of mind and have the right mentality. Without that, you’re doomed to failure.

This is the part many people get wrong.

They wind up losing the battle before they even start because they weren’t aware of the proper way to attack this problem from the psychological side of things.

So step one is…

#1 – Get Serious and Start Believing

Many people start the whole process without truly believing they can pull it off. Because of this lack of belief, they go about it in a half-hearted way.

They will even say things to themselves like “ah what’s the point, I can’t succeed with this anyway”.

This type of mentality leads to them giving up.

Don’t be that person. Your mentality is a crucial part in putting an end to your debt troubles. Simply put, you have got to believe you can do it.

Confidence and belief can carry you a long way on this journey.

Remember, you’re not the first person to ever be in debt. Millions of other Americans have been in your situation and clawed their way back to financial health. You can do the same. So get serious about it and start believing it’s within your reach… because it is, it really is.

#2 – Accept Change… Embrace It

Change is good.

But when you’re in the process of getting out of debt, change is better than good – it’s absolutely necessary. You need to make changes that are going to give you the right results and not make your situation worse.

For example, you might need to change your spending habits. You might need to make changes to the way in which you earn money (getting a part-time job). You’ll need to change your mind set on how you view credit cards, money and finances in general.

The point is, you need to embrace change and not fear it.

Change is a part of life. And the right kind of change, at the right time, can lead to big improvements in your lifestyle.

This is especially true when you’re in debt. So don’t fear it, accept it. Remember this, if you don’t change, your debt and financial situation will only get worse, not better.

You can end up losing a lot more and experience a bigger hardship than what you’re going through right now. So mastering these first two mental steps is crucial to your success.

Once you understand them, it’s time to…

Do the Preparation Work

The “prep work” is the work you need to do before you actually start the process of paying down your debt. It’s another vital part of the process.

It makes all the other steps that are involved much easier. It helps you know where you stand and what needs to be done to eliminate your debt.

The people that take the time to prepare are the ones that reap the rewards and avoid the blunders made by the unprepared.

So please, don’t skip the prep-work.

Here is what you need to do…

#3 – Rein in Your Spending & Stop Using Credit Cards

Some people go into debt because of circumstances beyond their control. But most people go into debt simply because they spend more money than they have. And credit cards are a big part of the reason. Credit cards make overspending too easy.

They are like an Uber driver for spenders. They take overspenders to their shopping addiction fast and without much effort.

Look at it this way, if your friends told you they were throwing a party but it was 100 miles away from where you live and you would have to walk there, you probably wouldn’t go.

But if they told you they were going to hire an Uber driver to get you there and they were going to pay the fee, you’d go in a heartbeat.

That’s how credit cards are for people who spend too much. They make it too easy and convenient for you to get to the shopping party.

So the first thing you need to do to curtail your spending is stop using your credit cards. Use cash instead. Study after study has shown that people who use cash to buy things wind up spending much less than people who use credit.

The second thing you need to do to put an end to your spending is to control you impulse buying. One of the best ways to do that is to make a list of what you need to buy before you go shopping. Only buy what you need and stick to your list.

If you feel the urge to buy something you don’t need, stop and ask yourself if you really need it, or is this something you want.

Understanding needs and wants plays a big role in all of this. When you’re in debt, you should only be buying things you absolutely need, not what you want.

However, it’s okay to indulge yourself every now and then.

Otherwise, spending, budgeting, and getting out of debt become too difficult, too restrictive, and makes your life miserable. This could lead to you giving up and falling back into more debt. Consolidating credit card debt with a program from another company may be a good option for you, but that’s explained in the steps ahead.

#4 – Write Your Debt Down to Gain Clarity

The simple process of writing all your debt and interest rates down on a piece of paper gives you a clear picture of exactly how much you owe.

It also prevents any surprises down the road from a debt you hadn’t remembered.

In addition to the benefits listed above, writing it all down makes creating your budget easier and more precise, which is extremely important when you’re trying to dig out of your financial deficit. Be sure to include all of your debts such as credit cards, department store cards, car loans, student loans, and your mortgage if you have one.

Write down the interest rates too.

#5 – Creating that Financial Plan… Your Budget

Did you write down all your debts and interest rates? Great, now you’ll need to write down all of your other monthly expenses and jot down your total income. Then, and only then, will you be able to create an accurate budget.

Your budget is like a GPS system. It helps you get from point A (where you are right now) to point B (debt-free).

Along with the rest of the steps mentioned on this page, your budget will give you turn-by-turn directions to help you get out of credit card debt. It even alerts you to all the dangers that lie hidden within your finances.

Start by writing down your housing expenses like rent, property taxes, insurance and maintenance. Include your utility costs like gas, electric, telephone, water and any other type of utility you may have.

Add your car costs like a lease (if you have one), insurance, gas, parking, public transportation and all other costs associated with transportation.

Also, include any expense pertaining to education and healthcare. Write down your food and grocery costs. Put down every single monthly expense you can think of.

If there is something you pay on a yearly basis, divide the total cost by 12 months and add that number to your monthly totals.

Don’t forget your childcare costs like child support or babysitter fees.

The whole point is to include every expense you can think of so you get a clear picture of exactly what you’re spending money on every month.

If you feel like there might be some expenses that you can’t think of right now, or you are unsure of the exact daily cost of some of these expenses, carry a notebook around with you for a month and write down every expense as you go. This will help you be more exact.

Be sure to save the receipts also.

Ok, so far you wrote down your debts including the interest rates, and you’ve written down all your other monthly expenses.

Now, all that’s left is to do is factor in your monthly income after taxes.

So write down your monthly income after taxes are taken out. Include every single income stream you may have. After you do that, add up all your monthly expenses.

If your expenses are less than your monthly income, then the amount you have left over will be used to pay your monthly debt. For example, if your monthly income after taxes is $4,000 and your total monthly expenses add up to $3,000, you would have $1,000 left over for your getting out of debt funds.

If your expenses are more than your monthly income, or the money you have left over every month isn’t enough to cover your debt costs, then it’s time to move onto the next step…

#6 – Reduce Your Costs Wherever Possible

If you still don’t have the required funds to pay down your debts, even after creating a budget, eliminating unnecessary purchases, and no longer using credit cards, then it’s time to start looking at where you can trim your monthly expenses on the stuff you buy on a regular bases. And there are plenty of places to cut costs here.

For example, you can try cutting your car cost like finding cheaper insurance. Maybe you can trade in your car for an inexpensive one. You can save money on gas by carpooling to work or taking public transportation if that costs less.

Do you eat out often? Then you can save money by doing less of that. Take a long, hard look at your monthly entertainment costs. Whatever you don’t really need, get rid of that expense.

If you go out every weekend or entertain friends often, then you might have to cut back on that. Do you pay for lunch at work every day? Start bringing your own lunch or find the cheapest alternative. You can slash your grocery bills by switching to cheaper brand names, using coupons, and looking for sales flyers.

The point here is that you should be taking a look at all of your monthly expenses and seeing where you can bring your costs down.

Again, it all comes down to needs and wants. The needs are more important, so you should keep them and get rid of the wants.

Here’s another way to cut your costs…

#7 – Talk to Your Creditors And…

Ask them to lower your interest rates. Explain your situation to them. Tell them you are in the process of getting out of debt and you need a little help.

This might seem like a long shot but it’s worked before. Here’s what one person in debt had to say about this on a forum…

It might not be as easy for you to get a reduction in rates, but it is possible.

What’s the worst that can happen when you ask for a reduction of your interest rate? They say no? It’s definitely worth the phone call, even if you only get a few percentage points taken off the interest. Just make sure you come across as being sincere and genuine.

If they think you are trying to get a deal simply for the sake of getting a deal, they will be less likely to want to help. After all, they are in business to make money.

By trying this tactic, you have nothing to lose and everything to gain. So give it a shot.

Once you perform all these preliminary steps, you’re ready to move on.

After the Prep Work is Done…

You’ve finished all the prep work, now what? The next logical step is to start the actual process of paying down your debt.

But, if after doing all the steps above, you still don’t have enough money at the end of the month to pay off your debt, then you can skip this next step and move on to step #9.

Keep moving through the steps until you know you have enough money at the end of the month to start paying your debt.

You can then come back to step #8 when you’re ready – when you feel like you have the funds to do this step.

#8 – Paying Off the Debt on Your Own

There are 2 ways – two main philosophies – to go about paying off your debt. They have been the subject of much debate. Some experts agree with one philosophy, while some experts choose the other way of doing it.

I will not attempt to decide for you.

The strategy you decide to use depends on your financial situation and which solution you feel gives you the best chance to succeed. I will simply explain each way of doing it and then you can make the decision for yourself.

So here they are…

The first way is to pay off the debts with the highest interest rates first. The reason for paying these off first is because the longer you allow these debts to go unpaid; you actually wind up paying interest on your interest.

This adds substantial costs to your overall repayments.

The second method and school of thought is to pay the debts with the lowest interest rate first. The idea behind this strategy is that when you wipe out one or two of your smaller debts, this will give you confidence and motivation to continue with your debt reduction plan.

In other words, you are more likely to stick with it.

Get the External Help You Need

If using all the steps above don’t help you accomplish your goals of getting out of debt, or if you feel that you’re not trimming your debt fast enough, then it’s time to start looking at ways of bringing more money in to help you get the job done.

The 3 best ways to get ahead of your debt is to spend less, earn more, or do both. We’ve already discussed how you can cut costs and spend less, now we will focus on earning more and getting other external help.

#9 – Bring in Money by Selling Stuff

Whatever you have lying around the house that you don’t need, try selling it.

You can do this in a number of ways. You can sign up with Ebay or any other auction site and sell your things through there.

You can also host a garage sale and sell things that way. Lastly, you can ask family, friends and coworkers if they are interested in what you are selling.

Now, this isn’t going to put an end to your debt completely, but it can help. Every little bit counts, especially if you have a lot of debt.

Many people do this step and it’s a good way to clear out things you really don’t use anymore. It’s better than hoarding these things or just throwing them out.

You benefit in 3 ways… you clear out the things you don’t use anymore, you get some money for your stuff, and it helps your debt cause.

#10 – Bring in Money with Extra Income

Without a doubt, this is one of the most effective ways to speed up your debt reduction timetable. If you are able to increase your income, you’ll be out of your financial jam a lot faster. There are a few ways you can accomplish this.

You can try to get a raise at your present job. You can get a part-time job. You can get another, better-paying full time job.

Or you can do a combination of the three. It’s up to you to decide which of these options fits your situation the best. If you make the decision to get a second job, don’t limit yourself to your local geographic area.

Thanks to the internet and the gig economy, you have many more options today than people had 20 years ago.

For example, you can try getting a job with one of the ride-sharing services like Uber, or you can use the skills you have to get a job with one of the many freelancing sites like Upwork, Guru.com and Freelancer to name a few.

11. Use a Reliable Debt Program

So you’ve tried all the steps mentioned on this page but you’re still unable to make serious inroads with your debt. What’s next? What are your options after trying all the steps listed above? The next logical step is to use a debt program. But not just any program, use one that actually works… one with a track record of success.

There’s actually a logical sequence of programs you should try. Obviously, you want to try a program that can help you get out of debt with the least amount of risk.

If you don’t qualify for the first program, you move onto the one that’s the next most effective and has the least amount of risk.

And you keep moving forward in this way.

You keep going from the most effective and least risky to the next most effective and least risky. This logical sequence will minimize your risk and helps you avoid adding extra costs and fees to your monthly debt.

So what are these programs? And what is the logical sequence for trying them? I’m glad you asked. Here are the programs in the sequence you should try them…

• Balance Transfer Credit Cards
• Debt Consolidation Loans
• Debt Settlement
• Borrow from Family and Friends
• The Dreaded Bankruptcy

With the first 2, balance transfer cards and debt consolidation loans, you need good credit to qualify for them. If you do have good credit, they will help you reduce your monthly debt and your interest rates.

Debt settlement is your next best option if you can’t qualify for the first two.

The last option is not a very good choice, but if you have way too much debt that you can’t pay off on your own, you might have to consider it. It should always be a last resort though.

You can also try credit counseling. But with this solution, your credit counselor just consults with you on your debt and helps you create a budget.

Credit counselors also try to help you get a handle on your spending.

They are basically debt consultants and coaches. But they don’t offer an actual debt reducing program. If you feel like you just need some coaching for creating a budget and controlling spending, then give them a shot.

That is their specialty.

Keep Working the Plan

While getting out of debt and working your plan, you might suffer some setbacks along the way. But don’t let that bring you down completely.

Remember, if this process was easy, then you and everyone else in debt would have accomplished your debt reduction goals a long time ago.

It’s not going to be easy. But it’s not impossible either.

Over the last 50 years, millions of Americans have been in the same situation you’re facing right now. And they persevered. They succeeded.

They eliminated their debt, reclaimed their lives from creditors, and got back to living a more fulfilling life. You can do the same.

You just have to believe it’s possible and keep working the plan. Use all the steps mentioned in this guide to help you along your journey. They work.

And no matter what setbacks you may suffer, keep at it and keep moving forward.