How to Get Out of Debt

Start with a Complete Picture

Before choosing a strategy, list every debt: balance, interest rate, minimum payment, and lender. Total your minimum payments and compare to your monthly income. Calculate how much you have left over after essentials -- this is your debt payoff fuel.

Monthly surplus = Take-home pay - Essential expenses - Minimum debt payments
Every dollar of surplus directed to debt is money you stop paying interest on

Strategy 1 The Debt Avalanche (Mathematically Optimal)

Pay minimums on all debts. Direct every extra dollar to the debt with the highest interest rate. Once that is paid off, roll its entire payment to the next highest-rate debt. Repeat.

The avalanche saves the most money in total interest and eliminates debt fastest. The downside: if your highest-rate debt also has a large balance, you may go months without the satisfaction of fully eliminating a debt, which can be discouraging.

Strategy 2 The Debt Snowball (Motivationally Powerful)

Pay minimums on all debts. Direct every extra dollar to the debt with the smallest balance -- regardless of interest rate. Once eliminated, roll that payment to the next smallest balance.

The snowball costs more in total interest than the avalanche but provides quick wins that build momentum. Research shows people using the snowball method are more likely to stay on track and complete their payoff plan. Choose the strategy you will actually stick to.

Accelerate with Consolidation

If you have multiple high-rate debts, a debt consolidation loan can lower your weighted average interest rate and simplify to one payment. Use our debt consolidation calculator to see if the math works for your specific situation.

Warning: consolidation only helps if you stop accumulating new debt. Paying off credit cards and then running them back up leaves you worse off than before.

Negotiate with Creditors

Many borrowers do not realize creditors will negotiate:

Interest rate reduction a simple call asking for a hardship rate reduction works more often than you might expect, especially for long-standing customers
Hardship programs most major lenders have formal hardship programs that temporarily reduce payments or interest during financial difficulty
Settlement creditors may accept less than the full balance on charged-off accounts, though this damages your credit and may create a tax liability on forgiven amounts

Increase Your Payoff Rate

Every dollar above the minimum goes entirely to principal. Ways to find more money:

Direct tax refunds, bonuses, and windfalls entirely to your target debt
Reduce discretionary spending temporarily -- streaming services, dining out, subscriptions
Sell unused items -- electronics, furniture, clothes
Take on extra work temporarily -- freelance, gig economy, overtime

Even an extra $100/month makes a meaningful difference in both timeline and total interest paid. Use the early payoff calculator to see exactly how much.

Frequently Asked Questions

What is the fastest way to get out of debt?

The debt avalanche -- paying minimums on all debts and directing every extra dollar to the highest-interest debt -- eliminates debt fastest and saves the most money mathematically. The debt snowball (smallest balance first) is slower but provides motivational momentum that helps some people stay on track.

Should I pay off debt or save money first?

Build a small emergency fund first ($1,000-$2,000) before aggressively attacking debt. Without an emergency fund, unexpected expenses force you back into debt. Once you have a buffer, direct all available cash toward high-interest debt before investing beyond any employer 401(k) match.

Is debt consolidation a good idea?

It depends on whether you can qualify for a lower rate than your current weighted average. If yes, it saves money and simplifies payments. If no, it just restructures without saving. See our guide on How to Consolidate Debt for a full breakdown.

How do I negotiate debt with creditors?

Call your creditors directly and ask about hardship programs, interest rate reductions, or settlement offers. Creditors would often rather negotiate than write off the debt entirely. Be honest about your situation and get any agreement in writing before making a payment.