12 Steps For Digging Yourself Out Of Debt

If you’re in debt and you don’t want to be, (and who wants to be?) you might want to take a look at Zen Habits 12-Step Get Out of Debt Program.

Leo describes it as an emergency program, but it seems to us that it has good advice for anyone whose spending is out of control and who wants to be more responsible… but doesn’t know where to start.

The important thing to remember is that you really do need to follow a program and tackle your debt systematically, like you would a weight-loss program. Crash diets don’t work any better for your wallet than they do for your ass.

The 12-step Get Out Of Debt Program [Zen Habits]
(Photo: bookish in north park)

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  1. Crazytree says:

    step #1: realize that you’re not a millionaire and you can’t afford half the shit you buy if you’re in debt. although your dream in life is to emulate your favorite stars you see on E! by driving a C-Class and carrying a LV wallet… you’re way out of your league and you have sold yourself into credit card slavery. gj

  2. mefinney says:

    Sounds a lot like Dave Ramsey’s “Baby Steps”

  3. anatak says:

    Step one> copy Dave Ramsey’s plan
    Step two> turn his first two steps into twelve
    Step three> there is no step three

    All kidding aside, its good to get out of debt no matter whose plan you use.

  4. j-o-h-n says:

    It would be interesting to see a numerical comparison of his ‘pay extra on smallest debt first’ method vs. the more traditional advice to ‘pay extra on the highest interest debt first’.

    One can certainly see the psychological advantage to paying off from smallest to largest — particularly for those who have problems with delayed gratification (which probably is many people deep in dept).

  5. not_seth_brundle says:
  6. nlatimer says:

    Step 3) Profit

  7. bohemian says:

    Paying off smaller debts first can work if many of them are medical bills. Having three creditors instead of twelve to negotiate with, deal with, sort mail from or potentially try to stave off collections can work to your advantage. As long as the big creditors are cooperative. Getting them to accept small payments or wait to start getting payments is a tougher trick.

  8. howie_in_az says:

    I’ve found that setting up automagic bill pays via my bank helps out dramatically. I get paid on the first and the fifteenth of every month, and I’ve organized the bills into ones paid on the same dates. The bank I use charges a small ($7/mo) fee for this but I think it’s well worth it; my bills are always paid and never late. Car payments, mortgage payments, credit card payments, gas, electric, etc, all are automatically paid for me.

    Most companies will offer a managed payment plan of sorts (I know my electric company does, for instance), so that’s all good — automatically mail them the same amount of money every month. Your bank should also allow for automated savings deductions, so set those up as well. Whatever is left is yours to blow on stupid plastic crap.

  9. leo.babauta says:

    Paying off the highest interest debts first obviously make more sense mathematically (though not by a huge amount, usually, in the overall scheme of things) … but what that approach ignores is that this advice is aimed at people who are having major debt problems.

    They wouldn’t be in such dire straits in the first place if the rational mathematical approach worked for them. They’d have paid off their credit cards each month, instead of letting it pile up and generating high interest charges.

    The snowball approach is designed for people who need motivation to get out of debt, and conquering a $500 debt in a couple of months, rather than a $5,000 debt in a couple of years, is major victory that’s within grasp — and much more likely to happen.

    Btw, I haven’t read Dave Ramsey (although obviously I know about the snowball effect) so I couldn’t have copied him. :)

  10. Triteon says:

    @howie_in_az: I’ve found that setting up automagic bill pays via my bank helps out dramatically.
    The automagic (sic, yet– it is subliminal?:) payments help…they do!, especially in regards to establishing a decent credit history. (Note: this does not establish a credit rating or score, but for those of us with no credit history [until recently] it is a great help.)

    But the main thought with automatic/magic payments is budgeting, the idea that most of the other post-ers have hinted at– as Crazytree succinctly stated.

    To others, sorry– when I think about “Baby Steps” I still think about Dr. Leo Marvin. Dr. Marvin, I’m sailing!!

  11. jetfxr27 says:

    “If you can afford the minimum payment why pay any debt off?”,
    My College economics professor.

  12. Crazytree says:

    @jetfxr27: aren’t you the one who said you were too busy counting your millions to get a credit card?

    guess your econ professor didn’t mind paying $25,000 over 20 years paying off a $5,000 debt.

    great advice, no wonder you are such a rich man. [rolleyes]

  13. jetfxr27 says:

    Yeah that was me crazytree.
    I think he was saying NEVER pay any debt off. Just pay minimums. Until you die. I believe he was trying to make a point about the US economy. Oh and by the way , I am not rich. I am a prodigious accumulator of wealth.

  14. anatak says:

    @leo.babauta:
    “The snowball approach is designed for people who need motivation to get out of debt, and conquering a $500 debt in a couple of months, rather than a $5,000 debt in a couple of years, is major victory that’s within grasp — and much more likely to happen.

    Btw, I haven’t read Dave Ramsey (although obviously I know about the snowball effect) so I couldn’t have copied him. :)”


    Go read Dave Ramsey.

  15. anatak says:

    @Triteon:
    Where do you think Dave got the phrase “Baby Steps” from? And yes, he does give credit to the movie.