Seven Strategies for Climbing Quickly Out of Debt

Larry Alton

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The vast majority of Americans carry debt... some good and some bad. If you feel as if your level of debt is weighing you down, you do have ways to get out from under it.

You have to apply the right strategies. First and foremost, you need to understand the difference between good and bad debt.

Good debt includes well-controlled and necessary debt that will help to establish credit. Examples include a mortgage, student loans, a business loan, or a conservative car loan.

Bad debt consists of the unnecessary forms of debt that are difficult to keep up with and can readily damage your credit. These includes exorbitant car loans, high credit-card balances, gambling debt, and overdue outstanding balances.

Your goal is to eliminate your bad debt as quickly as possible, while making sure to keep up with the payments on your good debt. Once you've gotten all your bad debt payments taken care of, you may shift your focus to chipping away at your good balances.

If you adopt the right strategies, this process won't take as long as you might assume. But it will require self-discipline and a desire to stay on top of everything.

Here are some strategies you can use.

1. Establish Good Financial Habits, Now

You have to develop good financial habits. If you don't exert control over your finances, nothing can prevent you from spiraling deeper into debt.

Good habits include:

  • Developing and staying within a budget
  • Maintaining an emergency fund
  • Monitoring your credit reports
  • Eliminating or limiting your credit card spending
  • Refraining from the creation of further debt
  • Making time to manage your finances
  • Establishing a pattern of continuous learning


2. Increase Your Debt Repayment Percentage

If you've been making only the minimum payments but could afford to do more, then do it. Aim to commit at least 15 to 20 percent of your paycheck to making debt payments. Do more if you have the flexibility to manage it, but make sure you have a sufficient amount of savings to keep you afloat in the event of an emergency.

If your budget is already tight, you may have to accept some sacrifices to increase your debt repayment percentage. For example, you might have to alter your lifestyle in various subtle ways, such as eating out less, canceling monthly subscriptions, and trimming your discretionary spending budget in general.

3. Tap into Savings

As a rule, you should keep an amount equivalent to between three and six months' worth of expenses in a savings account. If you have more than that, you might use some of it to pay down your debt.

Remember that your debt will increase because of interest accrual. The longer the money you owe various businesses and institutions sits in an account, the more you'll have to pay off in the end.

It might be effective to pay off a large chunk of debt right away than to maintain a large savings account for months or years.

4. Negotiate Lower Interest Rates

If there's any way you can lower the amount you pay in interest each month, go for it! Many people don't realize you can talk to your creditors or refinance a loan and negotiate for a potentially lower interest rate.

Most creditors are willing at least to talk about the possibility if you've maintained a good relationship over the most recent couple of years. It can't hurt to ask, and if you succeed, you could save thousands or more over the life of your loan.

5. Visualize a Debt-Free Life

Sometimes the key to getting out of debt is primarily mental. Try this practice: Close your eyes and imagine the way you'd live your life if you didn't have to make debt payments.

How does it feel to have that burden lifted? What would you spend the extra money on? What goals would you finally accomplish?

If you can get past the mental block that has helped to keep you on a financial treadmill, debt repayment is largely just a matter of strategy. Do this visualization practice whenever you start to wander off your financial track.

6. Sell Things You Don't Need

If you don't have extra cash to throw at debt payments, you might be able to find some. Maybe you have a more expensive car than you need, or exercise equipment standing around that you never use. Items like these might fetch a great price, and thereby help you to reduce or eliminate much of your debt.

If you're strongly motivated to dispel your debt, think about the possibility of selling some of your larger possessions that you acquired and keep around primarily for their luxury value if you can be honest.

An entertainment system, fancy furniture set, yard equipment, old books, and many other things might be sold to alleviate your debt situation. The sale of all these items can add up and get you a giant step closer to debt freedom.

7. Take on A Second Job

When you're in need of extra cash to pay off debt, a part-time job or side gig may be the answer. Your options vary, depending on your abilities, but you might consider one of the following:

  • Lyft or Uber driver
  • Freelance writing
  • Consulting
  • Pizza delivery
  • Customer service representative
  • Caregiver
  • Pet sitter or dog walker


Dozens of opportunities can serve to generate a little extra cash, and whittle down your debt-to-income ratio in a way that gets you closer to achieving total freedom from debt.

Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

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