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How to Get Rid of Debt

If you’re trying to figure out how to get rid of debt, you might have a lot of different feelings. Excitement. Worry. Hope. And maybe confusion about where to start. (To be honest, some moments you might have all of those feelings at once.)

Well, first of all, bravo for taking a step toward getting debt out of your life. Paying for your past is good for one thing only: holding you back. When you get rid of debt, you put yourself back into the driver’s seat with your income—so you can start going where you want with your money.

But how? How can you get rid of debt? Just. Like. This.

  1. List out your debts.
  2. Get your starter emergency fund in place.
  3. Make a budget.
  4. Start the debt snowball.
  5. Put in the work to get rid of debt.
  6. Avoid scammy debt relief strategies.
  7. Find help along the way.
  8. Never give up!

How to Get Rid of Debt

1. List out your debts.

Okay, so listing out all your debts is probably the last thing you want to do right now, but it’s the first thing you should do. You can’t successfully climb a mountain if you know nothing about it. You need to get real, with yourself and your situation. Take a deep breath and list out every single one of your debts.

2. Get your starter emergency fund in place.

Okay, you might think we’re taking a detour. You just want to know how to get rid of debt, and now we’re talking about saving an emergency fund. Stick with us!

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If you don’t have $1,000 in savings right now, get that in place before you do anything else. Why? Life happens. When you’re paying off your debt, this $1,000 in savings is a buffer between you and those moments, so you aren’t tempted to pay for those surprises with the credit card you’re trying so dang hard to pay off. You’ll be able to pay cash and keep moving forward with your debt payoff plans!

3. Make a budget.

After you’ve listed out your debts and set up that starter emergency fund, you need to make a budget—aka a plan for your money. A plan for everything coming in (income) and everything going out (expenses).

Budgets get a bad rap, but they are the foundation for making any money goal happen. You’ll get the clear view on what your money’s doing right now so you can start making it do what you want. Which is? Attack your debt!

4. Start your debt snowball.

You’ve got the plan for your money. Now make your plan of attack: Start actually paying off your debt using the debt snowball method. What’s that? It’s the best way to get rid of your debt.

And here’s how you do it:

First: Take that list of all your debts and put them in order from smallest balance to largest (no matter the interest rate).

Then, start paying on the smallest debt first. Attack it with that all the extra money you can. (See step 5 for more on that.) At the same time, keep paying the minimum on the rest of your debts.

After you’ve paid off the first debt, move to the second-smallest. Take everything you were throwing at the first one and add it to the minimum payment for the second.

Once that debt is paid off, move on to the next one and the next until you’ve paid off everything. Just like the momentum of a snowball going down a hill, your debt snowball gains speed every time you roll in another payment. Eventually, you become an unstoppable, debt-crushing machine.

The secret to the debt snowball is that it gives you quick wins early. Those quick wins are key to keeping your motivation going until the debt is gone. Forever.

5. Put in the work to get rid of debt.

Okay, so how do you get extra money to make your debt snowball go even faster? It’s time to put in the work. That can mean lowering expenses, cutting spending, or upping your income (hello, side hustle).

Two callouts here. First, when you free up more money in your budget because you get your expenses down or your income up, make sure you don’t forget your goal to get rid of debt.

Keep your eyes on the debt-free prize and put all that “extra” toward your goal.

Second, we won’t deny that getting rid of your debt is hard work. But we want you to hear that it’s worth it. Write it on a sticky note and post it on your mirror so you don’t forget: It’s. Worth. It.

6. Avoid scammy debt relief strategies.

Here’s the deal. While you’re working hard to get rid of debt, you might hear about debt relief “strategies” that can sound pretty tempting during the grind. But most of these are risky at best and scammy at worst. Let’s take a quick look at four types of debt reduction strategies (and the only one we can get behind):

A debt consolidation loan is a kind of personal loan that combines several debts into one monthly payment—but it comes with an extended payoff date, extra fees and usually a higher interest rate than what you started with! Plus, you might have to put up your home or vehicle as collateral.

Credit card balance transfers work by giving you a new credit card that combines all your credit card debt into one monthly payment—while also tacking on fees and a huge spike in interest if you make a late payment.

With a home equity line of credit (or HELOC), you borrow against the equity in your home, get a secured loan, and use that money to pay off your other debts. In other words, you give up the part of your home you actually own when you borrow against the equity. And what do you get in return? More debt.

One final debt reduction strategy is student loan consolidation. It works only with federal student loans, rolling them into one lump payment. It’s the only strategy we’re okay with—if make sure you aren’t charged to consolidate, you get a lower and fixed interest rate, your repayment period is shorter (never longer), and your motivation to pay off your debt doesn’t drop off.

So, if you’ve got student loan debt, look into student loan consolidation. Those other three? Avoid them with everything you’ve got.

7. Find help along the way.

If you’re drowning in debt—or if you’re just sick and tired of working so hard and watching your money go to a lot of debt payments—you might feel lonely. But hear this. You. Aren’t. Alone. And you don’t have to figure it out alone! Get help along the way. It’s not a sign of weakness. It’s a sign of maturity!

You can learn the step-by-step plan for how to get rid of debt and save money for the future in Financial Peace University—available only in Ramsey+. This plan actually works—to the tune of the average household paying off $5,300 in the first 90 days of working it. And you can give it a test-drive with a Ramsey+ free trial.

8. Never give up!

The thing is, a couple years from now will come no matter what. You can put in the work now to be debt-free then, or you can keep living this same, stressed, just okay life. Stop settling for okay. Stop handing over today’s income for purchases from the past. Take back your income—all of it—and go for awesome.

You have what it takes to get rid of your debt. When it gets tough, remember—you’re tougher. Know that, start your Ramsey+ free trial, and never give up. Seriously.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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