Paying off debt can be frustrating and confusing if you don’t have the right plan. For more than 25 years, Dave Ramsey has taught people a step-by-step approach to slashing their debt called the 7 Baby Steps.
On Baby Step 1, you save $1,000 in a starter emergency fund, and on Baby Step 2, you pay off all your debt (except the house) using a method called the debt snowball.
How to Pay Off Debt: The Debt Snowball Method
- List your debts from smallest to largest regardless of interest rate.
- Attack the smallest debt with a vengeance while making minimum payments on the rest of your debts.
- Repeat this method as you plow your way through debt.
Look, Baby Step 2 takes a few months to finish for some people and a few years for others. So if you’re on this step and laser focused on paying off that last debt, it’s possible the grind is starting to become . . . well, a grind. Maybe you’re exhausted and feel like it’s going to take forever to become debt-free.Hold that thought, because we’re here to give you our top 25 ways to get out of debt so you can be debt-free even sooner.
How to Get Out of Debt With Frugal Living and Smart Shopping
1. Start couponing.
You’ve probably heard this a thousand times—but are you doing it? You can save a ton of money just by showing a coupon to the cashier. Just be sure you’re using coupons for products you already buy, otherwise you could end up overspending on items you’ll never even use. That’s how you end up with 10 bottles of spicy mustard sitting in your pantry.
2. Try consignment shopping.
Kids grow out of clothes at the speed of light (or so it seems). And let’s be real: It’s not worth it to go into debt for your 2-year-old’s ever-changing wardrobe. Check out your local consignment stores that sell pre-loved outfits in good condition. If you’d rather shop online, no problem. Sites like thredUP and Swap.com are great resources to get adult and children’s clothing at a fraction of the cost.
3. Cut the cable.
Welcome to this millennium, where you can watch most of your favorite shows online. If you haven’t cut the cord yet, do it! Put that $100 cable bill toward your debt each month and watch just how quickly your debt snowball starts rolling.
4. Stop going out to eat.
We get it. Going to a restaurant or hitting up the drive-thru is so much easier than making meals at home. But while you’re enjoying the freedom of not having to cook for those picky eaters, you’re spending way more eating out than you would by eating in. Want a creative way to socialize and share a meal? Invite friends over for taco night instead of meeting up at a restaurant. And hey—if you want to splurge for guac, we’re not judging.
5. Break up with your barista.
If you don’t know where all your money’s going each month, we’re pretty sure your favorite coffee shop can find it for you. Brewing your own coffee at home is a simple way to save money fast.
6. Visit the library.
Remember libraries? They have plenty of books and movies you can check out—for free! Your wallet has never loved movie night more than it does now.
7. Plan your grocery trips.
Make a list and stick to it! Use the calculator app on your phone while you browse the aisles to make sure you’re sticking to your budget. Do impulse items always end up in your cart? Try ordering your groceries online and then picking them up curbside at the store. Oh, and don’t ever shop on an empty stomach!
8. Avoid expensive hobbies.
Do you really have $200 a month to spend on golf? Are you serious? But it’s not just the golfers out there who need to rethink their club dues. Do you spend a ton at craft stores but never get around to starting your project? Home improvement stores can also cost you several Benjamins in one visit.
9. Ditch the gym membership.
You can still go for a run outside—for free. Gather some friends and start a running club. Or do those fancy HIIT workouts at your local park. Listen, it’s a free country. Well . . . mostly.
10. Find free entertainment.
Put a spending freeze on your entertainment costs for a little while. This means no going out to the movies, concerts, mini golf, bowling or whatever you do for fun that costs money. Instead, challenge yourself to find free ways to stay entertained. Take the kids to the park, go for a walk or a hike, enjoy a free concert, or look for a free event in your community.
Dave Ramsey’s Basic Tips for Getting Out of Debt
11. Start a side gig.
Starting your own business has never been easier! Do you have a knack for making things? Sell your products online. Are you an animal lover? Take up dog walking or pet sitting. Do you have a good eye and a nice camera? Start taking on clients for photo sessions. Christy Wright’s Business Boutique is a great resource to show you how you can turn that hobby into a serious money-making machine!
12. Get a part-time job.
Not into starting your own business? Then consider becoming a driver for Lyft or Uber. A pizza delivery job at night could also bring in extra money. You can even deliver other types of food in your spare time by working for places like Uber Eats or Grubhub. Sure, you’ll have to put aside your pride and give up some nights and weekends of downtime. But that’s a small sacrifice for extra cash in your pocket.
13. Sell the car!
The average monthly payment for a new car is $554.1 That’s just outrageous! Think about how much faster your debt snowball could move if you threw that $550 at it every single month.
14. Cut up your credit cards.
Shred ’em. Burn ’em. Shoot ’em. You’ll never get out of debt until you stop making debt a way of life.
15. Use the envelope system.
When you pay with cash, you actually feel your money leaving your hands. Ouch! Nobody likes that. People tend to spend less when paying in cold, hard cash. With the envelope system, you'll see that cash going down so you can keep track of how much you’re spending.
16. Stop investing.
Yep, you read that right. And yes, we even mean stop contributing to your 401(k). Right now, you want all your income to go toward getting out of debt. Once you’re debt-free and have saved three to six months of expenses in an emergency fund, then you can resume your contributions. By then you’ll be on Baby Step 4 and can start putting 15% of your income toward retirement.
17. Ignore your broke friends.
Stop trying to keep up with the Joneses! Remember, you’re living like no one else now so that later you can live and give like no one else. In 20 years, you won’t have a financial worry in the world while everyone else will still have car loans, mortgages and credit card bills.
18. Make a budget!
Budgeting should be easy and—dare we say it—fun! Use our free budgeting app, EveryDollar, and focus your money on what matters: day-to-day spending, those pesky debts and wealth building.
19. Tell the kids you’re on a budget.
When it comes to money, the kids can be a worse guide than your stomach. Be open with them about what you do and don’t have room for in the budget. And remember: Never be afraid to use that magic word no.
20. Listen to The Dave Ramsey Show.
Listening to the show will encourage you when you feel like you aren’t making progress. Every day, Dave helps millions of people across the country find hope and make a plan for their money. Their successes will inspire you to keep moving forward.
Other Creative Ideas to Get Out of Debt
21. Ask for a raise.
What do you have to lose? Michael Jordan always says, “You miss 100% of the shots you don’t take.” Thanks, Mike.
22. Learn to say no.
Make it a new part of your vocabulary. Love it. Embrace it. Because when it comes to spending money, you’ll be saying it quite often.
23. Sell items on Facebook Marketplace or Craigslist.
One person’s trash is another person’s treasure. Dig through your kids’ rooms and the abyss of your closet to find things you can part with to make some quick cash.
24. Give more.
Wait a minute—give? Yes! Giving changes you. It changes your spirit. Make giving a priority in your budget, no matter what your income is, and you’ll feel like a million bucks.
25. Take control of your money with Financial Peace University.
Financial Peace University is the proven plan that will get you out of the cycle of living paycheck to paycheck. Financial Peace is the membership that will teach you how to pay off debt, budget, save big, and give like no one else. And right now, you can try it with a free trial of Ramsey+! You’ll get all nine video lessons that break down the proven plan—the 7 Baby Steps, plus other awesome tools and resources to help you get your money on the right track right now!
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But if you’ve already had the opportunity to go through the class, maybe it’s time to lead others through it. It’s one of the best ways to stay gazelle intense (and keep yourself accountable). Take it from us: Watching others change their lives feels pretty darn good.
There you have it—25 ways to get out of debt and breathe fresh air into your debt-free journey. Try a few of these tips and see if they work for you. When you hit a wall and feel like you’ll never figure out how to get out of debt, just keep working the plan! Over time, your dedication will pay off!