7 ways to get out of debt

Once you’ve fallen into the pit of debt, it can feel impossible to climb out.

7 Ways to Get Out of Debt
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Debt can be absolutely crushing and wreak havoc on your financial well being. Fortunately, it doesn’t have to be this way. You can get out from under your debt and regain control of your finances, and there is more than one way to do it. Dedicate yourself to the idea of being debt-free, take a deep breath and then formulate a plan for how to get there.

Stop Digging

When you find yourself in a hole, the first step is to stop digging. Cut credit cards so you stop using them and go to a cash-only system. Start shopping at thrift stores and grocery outlets and eliminate or cut-back on unnecessary services like cable television and cellphone data. Start cutting coupons and make meals and coffee at home. The first step is to cut corners anywhere you can to stop the bleeding.

Work More

Once you’ve cut expenses, the next step is to increase your income if at all possible. Although certain costs and other factors must be considered, you’ll get out of debt faster if you can take on a second job. It’s inconvenient and tiring, but it’s also temporary. Working evenings and weekends for a few months can give you extra money that will get you out from under your creditors faster.


Getting out of debt is easier if you can reduce the amounts you owe, and simply asking may be the key to doing so. Call your creditors and explain to them that you wish to get out of debt. Tell them you’re struggling and let them know that though it’s difficult, you want to pay them. Some companies are willing to lower interest rates or forgive part of a debt rather than risk a debtor filing bankruptcy. Be aware, however, that forgiven debt is taxable. Plan accordingly.

Choose Between Ladder and Snowball

Many credit gurus suggest using the ladder method to pay off debt. To do so, you keep making the minimum monthly payments on all of your obligations except for the one with the highest interest rate or the one on which you are paying the most interest. Pay as much on this debt as you can each month. Once you’ve paid it off, send the money you were giving them to the bill with the next highest interest rate. In this way you move down your debt ladder one rung at a time, saving the accounts with the lowest interest for last.
The ladder method saves money, but it takes time to see results. If you need to see results to stay motivated, use the snowball method instead. This method involves starting with the debt that has the lowest balance. Pay it off and then shift the payments to your next lowest debt. In this way specific debs get erased more quickly so you can feel a sense of accomplishment earlier in the repayment process.

Credit Repair

Know that many other people are struggling with you and there is an entire industry that has evolved to help people get out of debt. Known as credit repair companies, these services will examine your debt and help you plan your way out of it. They will negotiate with your creditors on your behalf and establish repayment plans with each of them. They will then collect these payments from you once a month and distribute them to your creditors in the most beneficial way for you.


The decision to file bankruptcy is a difficult one, but it is the best option in some instances. If you qualify, bankruptcy can clear you of all your eligible debts. Though considered the option of last resort by many debtors, it is an option and should be examined. Bankruptcy will damage your credit and stay with you for seven to ten years, but it can also give you a clean slate from which to start again. If you are financially sound now, the credit hit might be worth the risk. Talk to your lawyer about all the pros and cons, however, as some debts, like student loans, will still need to be paid after a bankruptcy.

Kevin FaberAbout the Author:

Kevin Faber has been in the commercial finance and banking industry for most of his professional life. He graduated at UC Davis with a B.A. in Business/Managerial Economics. His experience in credit analysis, finance, and management led him to be the founder of Silver Summit Capital. He enjoys working in the financing industry and building connections with industry leaders.



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