How to Get Out of Debt in 10 Tried-and-True Steps

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Financial stress has a way of touching every part of your life. The anxiety that comes with carrying debt can show up in your relationships, your work performance, and the pit in your stomach when you check your bank account. According to the New York Fed’s Q2 2025 Household Debt and Credit Report, U.S. household and consumer debt climbed to over $18 trillion, and credit-card balances rose to approximately $1.21 trillion — both marking historic highs. For millions of people, this means living paycheck to paycheck, postponing dreams, and feeling like there's no clear path forward.

Here's what you need to know: learning how to get out of debt is possible, and we're here to guide you through it. We’re sharing why eliminating debt transforms more than just your finances, with 10 practical strategies to help you reduce your balances and reclaim control of your money.

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What Getting Out of Debt Can Do For You

Before we dive into the how, let's talk about the why. Clearing your debt creates ripple effects that touch every corner of your life.

• Emotional Relief & Mental Clarity: Debt carries a heavy emotional weight. The constant worry and shame can lead to avoiding your account balances altogether, while anxiety about making ends meet can consume your thoughts and energy. When you eliminate debt, you lift that burden and create space for mental clarity and peace of mind.
  
• Financial Flexibility & Control: Getting out of debt lets you reclaim your ability to make choices on your own terms. You can switch careers, relocate to a new city, launch a business, or take a vacation without guilt.
  
• Improved Relationships & Reduced Conflict: Money stress often spills into conversations with partners and creates tension with family members. When you relieve the pressure of debt, communication becomes easier and conflicts decrease, creating more stability and trust in your most important relationships.
  
• Stronger Savings & Emergency Preparedness: Once debt payments stop draining your account each month, you can redirect that money toward an emergency fund. Having savings gives you a sense of security when unexpected expenses arise. You no longer need to reach for a credit card and restart the cycle.
  
• Opportunity to Build Wealth & Invest: Being debt-free opens doors to investing for retirement, saving for a home, or building assets that grow over time. While debt delays wealth-building, eliminating it accelerates your progress toward financial security.
  
• Better Credit Score & Financial Opportunities: Paying off debt improves your credit utilization and payment history, which boosts your overall credit score. A stronger score means lower interest rates on future loans and easier approval for housing or business opportunities.
  
• Sense of Accomplishment & Personal Empowerment: Becoming debt-free is a significant achievement. The pride that comes from reaching a challenging financial goal changes how you see yourself and shows that you're capable of transformation.
  
• Health Benefits & Reduced Physical Stress: Chronic financial stress can affect your body as well as your mind. Trouble sleeping, persistent headaches, and elevated blood pressure are common symptoms of debt-related anxiety. As you reduce what you owe, you may notice improvements in your physical health.

Once you clear your debt, you'll have more than just extra money in your account. You'll have the mental space, physical energy, and emotional freedom to move forward with your goals.

How to Get Rid of Debt

Now that you understand what's waiting for you on the other side, let's explore proven ways to get out of debt that will help you get there. These 10 approaches work together to shift both your mindset and your money habits.

1) Upgrade your Debt Identity to a Wealth Identity

When you've carried debt for a long time, it can start to feel like part of who you are. You stop seeing it as a temporary situation and begin believing you're just someone who has debt. This shift in identity creates a real problem: humans don't do things that conflict with how we see ourselves. Even when we try, those changes rarely stick unless we update our self-perception first.

Think about your future self. When you picture yourself a year from now, is the debt still there? If the answer is yes, it's time to rewire your identity through new thoughts, new actions, and new emotions practiced consistently over time.

Your beliefs drive your daily habits. Someone with a wealth identity makes different choices each day:

• They check their account balance without dread.
• They wait 24 hours before buying something unplanned.
• They get excited about making an extra payment.
• They talk about money without shame. 

These aren't personality traits you're born with. They're simply behaviors that flow from seeing yourself as someone who builds wealth instead of someone who carries debt.

Take a minute right now to close your eyes and imagine how it will feel to be free of your debt.

• What happens to your energy level?
• How do you feel about yourself?
• What do you feel capable of?

Write down a few notes about what you imagined. Then each day, take a moment to reconnect with that vision of your debt-free self. Let those feelings guide your choices as you move through the strategies below.

If you want to assess where you currently stand with your money knowledge, take our financial literacy test.

2) Assess your debt triggers, spending, and saving habits

Before you can pay off debt, you need to understand where your money is going. Start tracking every dollar that comes in and every dollar that goes out. We recommend setting up a weekly money ritual to review your finances consistently.

Tracking your spending is just the first step. The bigger question is why you spend the way you do. Most overspending happens in response to emotional triggers like stress, boredom, loneliness, or guilt. Maybe you shop online after a hard day at work. Maybe you order takeout when you're exhausted. Maybe you buy gifts to prove you care.

Each week, write down one or two moments when you spent money unexpectedly. What were you feeling right before? What were you trying to fix or avoid? The goal isn't to judge yourself but to build awareness.

Understanding your triggers is how you get debt down sustainably. When you know what drives your spending, you can address the real issue instead of just trying harder to resist.

3) Reduce your existing expenses

If you're spending more than you earn, it's time to get creative about cutting costs. Put everything on the table during your brainstorming phase, even expenses that feel fixed. Go through each line item and ask yourself how you could reduce it. 

• Could you downsize to a cheaper living situation?
• Switch insurance providers for a lower rate?
• Pause subscriptions you're not using?
• Negotiate bills or fees with service providers?

Write down every possible way to cut your expenses, then assign deadlines to each one. Some actions you can take today, like canceling a streaming subscription. Others might take longer, like finding a more affordable place to live by the end of next quarter. The key is to approach this with openness and follow through with timelines that keep you accountable.

4) Build Emergency Savings While Paying Debt

It might seem counterintuitive to save money while you're trying to pay off debt, but having even a small emergency fund can prevent you from going deeper into debt when unexpected costs arise. A $500 to $1,000 cushion means you won't need to reach for a credit card when your car breaks down or your pet needs a vet visit.

Savings and debt repayment can happen at the same time. This approach prioritizes stability over speed, and that's okay. If you're living paycheck to paycheck and wondering how to pay off debt with no money, protecting what little you have with a small buffer is how you avoid the cycle of paying down debt only to rack up more when life happens.

Start small. Even setting aside $25 or $50 per paycheck adds up over time. The goal is to create breathing room so that one emergency doesn't derail all your progress. This isn't about perfection. It's about building a foundation that keeps you moving forward.

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5) Create a Sustainable Budget You’ll Actually Stick To

Most people avoid budgeting because it feels like putting themselves on a financial diet. But a good budget does the opposite. It shows you exactly how much you can spend guilt-free while still making progress on your debt. Think of it as a plan that protects your priorities instead of a list of things you can't have.

Different systems work for different people. 

• Zero-based budgeting assigns every dollar a specific purpose before the month starts. 
• The 50/30/20 method divides your income into needs, wants, and financial goals. 
• Some people track every category in detail; others just need to cover their basics and funnel extra money toward debt. 

Pick whichever approach you'll follow month after month, because consistency beats perfection.

If you've tried budgeting before and quit, you're not alone. Rigid rules lead to burnout. Instead, focus on value-based spending: put your money toward what genuinely matters to you and cut back on what doesn't. When your budget reflects your real priorities, it stops feeling like a sacrifice and starts feeling like a strategy. Explore our recommended budgeting apps to make the process even easier and less overwhelming.

6) Renegotiate Terms and Lower Your Rates

You don't have to accept the interest rates and fees you were originally assigned. Calling your credit card companies, lenders, or service providers to ask for lower rates or waived fees can make a real difference in how fast you pay off your debt. Many companies would rather work with you than lose you as a customer, especially if you have a history of on-time payments.

Renegotiation is a process, not a one-time conversation. You might need to call multiple times, speak with different representatives, or try again in a few months if you're initially turned down. Each small reduction in your interest rate shortens your payoff timeline and saves you money. Taking this proactive step builds financial confidence and proves you're willing to advocate for yourself. 

Debt Consolidation Programs

If renegotiating individual accounts feels overwhelming or hasn’t produced the results you want, you might also explore debt consolidation programs. These programs can combine multiple high-interest debts into a single payment, often at a lower overall rate, making it easier to stay organized and make steady progress toward becoming debt-free. We’ve even done the legwork for you and compiled our best debt relief services into a simple list, so you know where to start.

For more ways to consolidate your debt and lower your rates, explore our guide to balance transfer cards and check out our recommendations for which balance transfer cards to try based on your situation.

7) Make a debt paydown plan

We recommend using what we call the "intelligent debt snowball method." Start by listing all your debts with the amount owed and interest rate, ordered from smallest balance to largest. Pay the minimum on everything, but put any extra money toward your smallest debt first. When you knock that one out, celebrate it. You're building wealth and leaving your debt identity behind.

Here's where the intelligent snowball differs from the traditional method: after you pay off that first small debt, look at your remaining balances and tackle whichever one has the highest interest rate next. This approach builds your confidence with an early win while also reducing how much you'll pay in interest overall. Once you've cleared those first two debts, continue paying down the rest in order from highest to lowest interest rate.

8) Build a Support System and Accountability

Learning how to get out of debt is a long game, and trying to do it alone makes it harder than it needs to be. Sharing your goals with trusted friends, your partner, or a supportive community gives you people to celebrate wins with and lean on when progress feels slow. Talking openly about money can feel vulnerable, but the right people will cheer you on instead of judging you.

Accountability creates consistency, especially during months when progress stalls or motivation dips. When someone else knows what you're working toward, you're more likely to follow through. This could mean checking in with a friend weekly, joining a group focused on financial goals, or simply telling your partner when you've made an extra payment. 

9) Protect Your Progress With Spending Guardrails

Once you start making progress on your debt, the last thing you want is to slip back into old spending patterns. Small friction points can help you maintain healthy habits without relying on willpower alone. 

• Remove saved credit cards from your browser and shopping apps so you have to manually enter payment information each time. 
• Implement a 24-hour pause rule before buying anything nonessential. 
• Set app-based spending limits or use cash envelopes for categories where you tend to overspend.

These guardrails aren't about restricting yourself. They're about creating intentional space between impulse and action. When you add even a tiny barrier to spending, you give yourself a chance to pause and decide if the purchase aligns with your goals. 

10) Make paying down your debt fun

Most people treat their debt like a burden they're dragging behind them, but paying it off deserves to feel good. 

• Create a visual progress tracker—draw something yourself or find a template online—and color it in every time you make a payment. Put it on your fridge or somewhere you'll see it daily. 
• Celebrate milestone moments with small rewards that don't derail your budget, like a favorite meal at home or a day trip you've been wanting to take. 

Letting yourself feel proud of each win rewires your motivation and builds the consistency you need for the long haul.

Reduce debt, live a better life

Getting out of debt is less about how fast you move and more about building consistent habits and trusting yourself to follow through. If you've read this far, you've already taken an important step. Take a moment to recognize the progress you've made, even if you're just starting. Every small action counts.

Here's what to do next:

• Identify which of the 10 steps you've already mastered. Give yourself credit for what you're already doing well.
• Choose one new habit or system to put in place this week. Start small and build momentum.
• Celebrate a recent win—however small—to reinforce your progress and motivation. Maybe you tracked your spending for the first time or made an extra payment. That deserves recognition.

Ready to take the next step? Watch the Free Masterclass to learn how to take control of your finances with confidence. You can also take the Financial Roadmap Quiz to see where you are now and where you're headed, or explore the Million Dollar Year program to get the support and community that makes debt payoff easier.

FAQ: How to Reduce Your Debt

Is $20,000 in debt a lot?

Whether $20,000 in debt is a lot depends on your income, interest rates, and ability to make consistent payments. For most households, this amount can take several years to pay off if only making minimum payments, but with a solid payoff strategy, you can eliminate it faster.

What is the 777 rule for debt collection?

The 777 rule (also called the 7-in-7 rule) refers to a debt collection practice where collectors cannot contact you more than seven times in seven days about a specific debt. This rule helps protect consumers from harassment, though enforcement varies by state and creditor.

How do I get out of debt if I live paycheck to paycheck?

The best way to get out of debt while living paycheck to paycheck starts with building a small emergency fund, reducing expenses where possible, and negotiating lower interest rates on your existing debt. Even small payments above the minimum can accelerate your progress over time.

How much debt do people carry on average?

The average American carries around $104,000 in total debt, including mortgages, auto loans, credit cards, and student loans. Credit card debt alone averages between $6,000 and $8,000 per household, though this varies widely based on age, income, and location. This is why knowing how to get out of debt is such an important skill.

What impact does debt have on my credit score?

Debt impacts your credit score primarily through credit utilization (how much you owe compared to your available credit) and payment history. Carrying high balances or missing payments can lower your score, while paying down debt and staying current can improve it over time.