How To Get Out Of Debt In 7 Simple Steps

Discover how to get out of debt and stay out of debt for good!Want to learn how to get out of debt…and STAY out of debt!? I share the 7 keys that I used to finally beat consumer debt (after failing several times) once and for all!

1. Pledge To Stop Borrowing Money.

This is the first and probably most important step in your debt elimination plan. If you truly want to be debt-free one day then you have to stop borrowing money today!

Promise yourself that you will never borrow money again. That means no loans from banks, friends, family, no using credit cards (not even for the reward points), nada!

Do whatever it takes to avoid borrowing. Personally, I had to remove all credit cards from my wallet. I haven’t carried a credit card in over 3 years. I even removed my credit card from my Amazon account and I LOVE me some Amazon! I just use my debit card now.

Some people ask me if I’m afraid to shop online with my debit card. I tell them I’m more afraid of going back into debt!

If you are afraid that someone is going to steal your information and spending all of your REAL money then do what I did…open an account at another bank and make small monthly deposits to cover your shopping habit expenses so that way if the account is ever compromised the thieves won’t have access to your entire fortune!

So in summary, rule number 1 is STOP BORROWING MONEY!

2. Establish A Small Emergency Fund.

Back when I was first trying to get out of consumer debt I noticed I kept paying my accounts down to zero and then a few months later I would find myself in debt again.

At first I didn’t know why that was happening to me. I consider myself to have slightly above average intelligence so I when I set a goal I expect to succeed! I wasn’t succeeding though.

What would happen was I would pay off everything to zero with a vengeance…deploying every penny I earned to beat my debt to a bloody pulp and then something would come up…a birthday, Christmas, a sale at Express and then I would just HAVE to go back into debt!

Finally I figured out the SECRET…you have to save up a little bit BEFORE starting your debt elimination plan.

A small emergency fund in the amount of $500-$1000 should do the trick.

With a small emergency fund in place you can tackle any surprise expense that comes your way without suffering a setback.

3. Organize Your Debts.

This step is just as critical as the first two steps. If you don’t face your mess then you are not going to be able to clean it up!

The best way to organize your debts (from a psychological standpoint) is to write all of your account balances in order from least to greatest on a single sheet of paper.

Next to the account balance, write down your current interest rate.

You are going to prioritize your payments on these debts in the order that they appear on your paper. In other words, you will be paying off your lowest account balance first, the second lowest second, and so on (a method I learned reading The Total Money Makeover by, Dave Ramsey).

Do not worry about interest rates right now, you just want to start making some progress to build your motivation!

4. Budget. 

A budget is simply you telling your money where to go. Now that your debts are all nice and organized, use your budget as your written plan to start knocking them out one by one.

Remember you will be attacking the debt with the smallest balance with all of your might meanwhile, you will continue to make minimum payments on the rest of the debts. Once the first debt on your list is knocked out, begin attacking the next one and continue to make minimum payments on the rest.

Adjust your budget monthly to maximize the amount of money you are allocating to you debt repayment plan.

5. Create A Visual To Keep You Motivated.

Get creative with this. There are all kinds of ways to create a visual for your debt elimination plan. Here are some examples:

                         

Personally I’m really simple so whenever I have a financial goal I just make something that resembles a number grid and I color boxes as I go. Here is an example of what my visual would look like:

pfjunkie.com

6. Brainstorm Ways To Earn More Money.

Once you start your debt elimination journey you will probably notice yourself becoming more and more intense about paying off your debt. That is totally natural.

As your desire to get out of debt intensifies, consider ways to earn more money to pay down your debt even faster.

Work overtime, get a second job, start a side hustle or two and ask for a raise! Until you are totally debt free, make it your mission to earn more money every opportunity you get.

7. Throw All Extra Money At Your Debt.

The final key to a successful debt elimination plan is to throw all extra money at your debt. Tax refunds. Birthday money. Work bonuses. All of it.

Getting out of debt is hard. Because you will be working so hard to beat your debt, you might be tempted to tell yourself that you deserve a vacation, or a new pair of shoes but that’s a LIE!

What you deserve is to be debt free so that your money can become YOUR money again.

Resist all temptation and stick to the 7 keys…they work. Lot’s of luck!

Why do you want to get out of debt? How many times have you tried to get out of debt?

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