If you’re like most people who want and need to get out of debt, you probably feel overwhelmed and aren’t sure where to start.

This article will outline a plan with the specific steps you should take to get out of debt. A lot of this advice may seem like common sense to some people, but for others of us (including me), financial organization and discipline are not exactly second nature to us, and it can really help for someone to just spell out exactly what we need to do to get our finances under control.

Figure out exactly how much you owe. Gather all the credit card bills and other loan bills you receive each month. Don’t forget to include any credit cards or loans that use “paperless” billing or automatic drafts. Add up all the balances.

Stop using your credit cards inappropriately. Credit cards should never be used to buy unnecessary items that you can’t afford.

The right way to use a credit card is to charge only small amounts on it and pay it off each month. That way, you build a positive credit history (yes, you have to actually use your cards in order for them to benefit your credit history), but you don’t pay interest and you don’t get into debt. Please note that while you should stop using your credit cards unnecessarily, you generally should not close the accounts; that will hurt your credit scores.

Get organized and develop a payment plan, and stick to it. Determine which card or loan has the highest interest rate. You’re going to pay that one off first while making the minimum payments each month on the others. When the first one is paid off, you’ll move to the one with the next highest interest rate, and so on. You should pay as much as you can possibly afford on your highest interest rate card/loan each month. If you only pay the minimum payment every month, it can take literally decades to get out of debt, plus it can cost thousands and thousands of dollars in interest.

If you’re having trouble coming up with much beyond the minimum payment, you may want to take a closer look on exactly where all your money is going. Start keeping track of what you spend every day for at least a week. If you’re like most people, you’ll find that you are spending a lot of money on unnecessary things like coffee shop coffee, takeout food, bottled water, etc. Those are all examples of things that are much cheaper when you make or get them at home!


If that doesn’t help, evaluate your household expenses. Do you really need 500 cable channels, or could you drop some of them and save some money on your bill? Many of us are also wasteful–we leave every light and TV in the house on at once, we buy food at the grocery store and then let it go bad and have to throw it away, etc. Energy and food are too expensive nowadays to waste, especially when you’re trying to get out of debt!

If you have a savings account, you should use that money to pay off debt. Money in savings accounts generally earns much less interest than you’re paying on credit cards/loans, so it doesn’t make sense to contribute to a savings account when you’re in debt!

Last but not least, get your bills organized so that you don’t lose them and/or forget to pay them! (This is a common pitfall for a lot of people with bad credit.) Late payments are very costly: you get hit with late fees; possibly raised interest rates; damaged credit, which of course leads to higher interest rates; and worst of all, this all translates to more debt! It’s a vicious cycle that you must break if you want to get out of debt and/or restore your credit rating. You must pick one spot and one spot only where you will keep your bills. It should be in plain sight so that you can’t forget about them. You can get a letter tray for this purpose, and there are also mail organizers that hang on your wall. Also, get yourself a calendar and mark off the due dates for your bills. Again, it’s best to store your calendar where you will see it often.

Get professional help if you need it. If you’ve tried all the strategies above and you still can’t seem to keep your head above the water, it’s time to seek professional help. Some options for you might be debt settlement, debt consolidation, or as a last resort, bankruptcy.