How To Get Out Of Debt

J is in a debt hole and needs help getting out. We’re going to give it to him:

We are pretty smart people who did some pretty stupid things and now we are just trying to get out of debt. We know exactly what to do in the future to manage our spending, savings and credit score. And we both agree that nothing is worth putting on a credit card if we cant go home and transfer money to the card to pay off the balance when we get home. But that doesn’t change the fact that we are currently facing a staggering mound of debt and see no end in sight.

J, you’ve got two choices:

To pay off your debt you will need one, a method, and two, a madness. First, pick a method: Snowball, or Highest-Interest First.

1. Commit yourself to making the minimum monthly payment on all debts
2. Figure out what extra amount you have in your budget to put towards debt repayment
3. Take your lowest amount bill
4. Pay the minimum plus the extra on that bill until it is paid off
5. After it’s paid off, put all the money you were putting towards that bill to the next lowest bill
6. Repeat until out of debt

Do the same thing as above, except choose your debt with the highest interest first.

PROS, CONS: Many people find the snowball method to be the more psychologically gratifying. The highest-interest first method will result in you paying off the debt faster and at a lower cost. If you get depressed about your debts and it demotivates you from paying it off, the snowball method might be better to go with if it keeps you on track better.

NOTE: It’s important to make sure you’re current with all your lenders. This means making regular payments and not dodging their letters and calls. They’re not just going to go away like a CD-of-the-month-club, they, or the shady debt collectors they sell your debt to, will keep after you until you pay up or declare bankruptcy. If you don’t have enough to make the minimum payment, try calling and negotiating for a lower one. They’re willing to work with you if your payments are regular and scheduled and lower than if they’re getting no money at all.

HANDY TOOL: Whichever method you use, this free Excel spreadsheet can help. Just enter your credit cards, their balance, and interest rate. Then enter your required minimum monthly payments and the maximum possible amount you could put towards it, based on your budget. Select which style of repayment you want, such as snowball or highest interest first. The program then spits out an effective payoff strategy. It calculates how much interest and the total you’ll end up paying, and how long it will take to get out of debt.


The deeper you’re in, the more hardcore you need to be about getting out. This is the “madness” to your “method”. Suffer, cut back, say no. For instance, you can cut up the credit cards and go cash only. Sell extra things around the house and use the money to pay off debts. Sell the car and get a beater, or a bicycle. Take on a second job or work longer hours. Maybe you even have to move back in with your parents while you pay off your debts. Whatever it takes, attack your debt like a hungry wolf. Intensity is the number one difference between those who become truly free and escape debt slavery, and those left staring out the prison bars.

Share your stories about struggling with debt in the comments.

(Photos:, kamshots)


Edit Your Comment

  1. Toof_75_75 says:

    That is an awesome first picture! lol

  2. Pylon83 says:

    I managed to get out of the little non-school debt that I was under by using my tax-returns to pay it all off. Granted, it was only a few thousand dollars, but at the time I wasn’t making much money. I think the real trick is to simply not get into debt more than necessary (school/house/car). I don’t use credit cards for anything other than to pass reimbursable expenses through. I do have a lot of school debt that is still mounting, but that’s really more of an investment than anything. Living within your means is the trick. Avoid going to bars, etc. if you can’t afford it. It’s all about smart money management and restraint on spending. If you under a mountain of debt, you shouldn’t be frequenting bars or concerts or shopping malls. Stick to the minimum, get out from under the debt and stay away from credit.

  3. BoomerFive says:

    I had over $20,000.00 in cc debt and back taxes from being young, stupid, and having some bad habits. I took part in a plan with a credit counseling company (which in hindsight I do not recommend, it looks horrible on your credit report) and managed to pay it all off in 6 years.

    My credit score in 2001 was around 500, it is now in the upper 700’s after much hard work. Just keep in mind two things, you CAN do it, and it is TOTALLY worth the effort, if only for the peace of mind. Make a plan and stick to it, some great advice in the article there!

    • BoomerFive says:

      @BoomerFive: One other byproduct of all that work, my wife and I now own our cars, and we REFUSE to buy anything on payments (except maybe a future car and the house). If we don’t have the money, we save it up or we go without.

  4. kaylabear says:

    I’m always open to new or interesting ways of cutting debt but it always come back to the same ideas: be frugal and pay your bills on time until they’re paid off. Or, in other words, don’t spend money on unnecessary stuff and pay off your bills. More and more, I’m faced with this reality so I can empathize.

    • trujunglist says:


      I keep reading these things somehow hoping that it’ll magically get me out of my debt without becoming insanely frugal or selling off most of my (mostly worthless monetarily, but with a high nostalgic value) stuff. Oh well, time to buckle down I guess.

  5. gqcarrick says:

    I actually had to swallow my pride and move home to my parents house for a while until my debt was under control. After that I moved back out and I have no problem paying double payments on all my school loans to get them paid off as quick as possible. Also the only credit card I have now is for emergencies, and when I do use it, I pay it off immediately. I never want to be that far in debt ever again.

  6. jscott73 says:

    Between student loans, a car loan and a couple credit cards my wife and I were in debt $41k at the beginning of this year. I was really tired of being in debt so this was the year we decided to do something about it.

    We used the snow-ball method and quickly paid of my student loan with our income tax return, we then sold a car and paid cash for an old beater with the difference. Then I transferred the credit card debt to two different cards both with 0% interest for awhile.

    While I was doing that, about 3 months ago I got a second job waiting tables at night and have earned $4100 doing that. That is sitting in an online savings account earning 3.5% interest while my credit card debt is costing me 0% interest. Once I have enough in that savings account to pay off one card, almost there, I will do that then start saving up to pay off the second card.

    Of course we stopped using credit cards this year and have postponed or eliminated any large purchases.

    We have paid off almost $20k in debt doing this and will only have one 0% interest rate credit card and my wifes loan left by next month.

    It feels good to have a plan, stick to it and see progress. It will feel even better to be debt free in about a year from now.

    • Jackasimov says:

      @jscott73: That’s awesome. I’m just about to enter a similar situation. It’s nice to hear a real success story.

      Good luck with it.

    • @jscott73: Awesome success story! My wife and I are in a similar situation. Accept with have just had terrible stuff keep happening. We first got in debt from our wedding (not to all people looking to get married. Large wedding are not worth it. Looking into that special someones eye’s and saying I do is greatest memory you will have no matter how expesive the wedding). From there we had problems with our house (pipe bursting in walls, main sewer line probems, leaking skylight, heating problems). Following that was the mother of my daughter taking me to court for custody. Although it was a fruitless effort on her part I still had to get a lawyer and travel back to my home state costing us more money. When we finally had all that under control and were going to use our tax return to pay off bills to begin the snow ball our heating/AC unit went out costing us $5,000. We finally got that paid off and plan on starting the snowball again. I am in that percentage of people that have good intentions but just run into trouble….thanks for listening to me rant.

  7. bdsakx says:

    If I had a credit card with a major bank, I would try to make the payment in person at one of their branches with real cash, not a check or transfer from my checking account online. Just the mere sight of seeing that balance go down instantly, or tomorrow (instead of the usual 2-4 day delay for an update) motivated me immensely. On top of that, my checking account already reflects the deduction. The micropayment system played well into this, too. Although, I burned gas doing this, so I don’t know how efficient all that trouble was in the end.

  8. chiieddy says:

    I had $30k in debt and killed it in 4 years by transferring balances to low interest cards using 3.99% and 4.99% offers from each and then paying more than the minimum on each, concentrating on the 4.99% first and then the 3.99% until it was gone. I had it set as auto-billpay twice a month on payday. My FICO score went from the 600s (I always paid on time but had a lot of debt) to the high 700s.

    It’s going to take time, but you have to make a commitment to do it.

    I also made sure to keep a fun fund during this time. Took European vacations, etc but never ADDED to the debt. I had a separate credit card for purchases that would be paid in full with EACH paycheck. Not each month, not with each bill, every paycheck. I go online each week and schedule a full payment with each paycheck date.

  9. billbillbillbill says:

    We paid off $14,000 using the snowball method. It took about 18 months but was so worth it. We made a budget and found a lot of money we were spending in other places that we decided that we could move over to the debt category. Just get started and you will catch the fever!

  10. "I Like Potatoes" says:

    My husband and I also used the snowball method, paying off the highest interest cards first. We are now debt free and we both have credit scores above 800. The biggest thing for us was to never miss a payment. As long as we’ve been married (16 years) we have always at least made that minimum payment on each card. After we would pay off a card, we would ALWAYS call and cancel the card. It felt great and it has not hurt our credit scores. Now we have one card that we use for purchases and we pay off the full balance every month. It feels wonderful not to be in debt to those banks!!

    • "I Like Potatoes" says:

      I should also add that if another one of our cards had available credit and a lower interest rate, we would transfer debt from the higher interest card to that card. Some of our existing cards would have balance transfer offers that we would use too, but I was not comfortable with getting new cards just to transfer balances. Quite frankly, it scared me – so we didn’t do that. I have no idea how long it took to finally get out of debt, so don’t give up even if it seems hopeless.

    • josephbloseph says:

      @algal924: That is only the snowball method if the highest interest cards coincidentally happened to carry the lowest balance. Well, maybe not coincidentally, as I’d probably avoid having the largest balance on the higher rates, but I still wouldn’t really describe it as the snowball method in that case.

      • "I Like Potatoes" says:

        Sorry – I misinterpreted the term “snowball”. I thought it applied to the payments (starting as minimum and getting higher and higher as each card gets paid off) instead of the amount of debt (lowest to highest).
        Anyway….WE’RE DEBT FREE!”

  11. Jachim says:

    Wow, what synchronicity. I was looking and looking and looking for that Excel spreadsheet only 2 days ago. Thanks for posting it again!

  12. Wow. I only have a little debt compared to you guys. ($13k including student loan).

    I think I’m gonna go freeze the one card that I do have.

  13. JN2 says:

    I like the WaMu method, become CEO for a few weeks until you get fired. With the $18 million you earn inside a month, you should be able to make a good dent in your debt.

    Repeat until the gubmint pays you to step aside.

  14. Madness? This…is…Debt Snowball!

  15. Norcross says:

    I’m about to start this process myself. My wife and I got caught with her graduating law school (and thus having in excess of $170,000 in student loans) and not finding work as quickly as expected. Couple that with our house having a sinkhole, and we got behind on a LOT of things. We’ve recently settled with the insurance company, paid off the house, and we’re about to pay off all our credit cards in full next week. We’ll be left with her loans, 2 car payments, and standard monthly bills (water, gas, electric, insurance, etc)

    Question: what is the best way to increase our scores? Other that our vehicles and her student loans, there isn’t any more debt to pay off.

    • @Norcross: Why do you want to increase your Credit Scores? If you aren’t planning on getting any more loans any time soon, there’s no point in it.

      To answer your question – pay off your bills, and stay alive. The longer you’ve had credit, the better your score. That’s the biggest thing holding me back – short credit history (I’m only 24).

      • Norcross says:

        @InfiniTrent: we have a 1 year old son, we had to get rid of that first house (the one that is sinking). we plan on purchasing another home in the next year or so

        • @Norcross: Gotcha. There’s not a lot you can actively do to improve your scores (other than pay off debt), but what you can do is resist the urge to close credit card accounts.

          If you can control your spending, leave all old credit card accounts open. That helps your average account age greatly.

          • RStewie says:

            @InfiniTrent: My mortgage dealer told me that one great way to increase your score quickly is to lower your accounts’ debt to credit ratio. Basically, they told me to transfer some of my cc debt to another card to it wasn’t close to the limit.

            I still had the same debt, but it looked better on my record because NONE of my cards were close to the limit. Even if you don’t have another cc to transfer it to, take a personal loan or something, in order to get it off the card. Typically, if all your cards are low–say at 40% of your available credit–it bumps your score about 20-50 points.

    • Pylon83 says:

      I feel you on the law school debt. It’s a pretty bone crushing amount of money to attend law school, and can be tough to find good paying work if you didn’t go to a top top top school. I’ve still got 2 years left and will be sitting on about $150k when I’m done.

      • Norcross says:

        @Pylon83: yeah, it’s rough. luckily, she went to a good school in Florida. that being said, there are some good federal programs that’ll help if you’re working for the state (she’s a prosecutor). income based repayment + loan forgiveness

    • mac-phisto says:

      @Norcross: here’s the skinny straight from the horse’s mouth –> [] has a cool tool called the “score simulator” that you get access to when you order your score (be sure to check here –> [] first to determine which products contain the simulator first – not all products give you access to the simulator).

      i’m not entirely sure how accurate it is, but assuming it’s 100% accurate, you can manipulate your credit portfolio with different variables to see how it affects your score. might be worth checking out.

      here’s a video that touches on it –> []

  16. tedyc03 says:

    I can’t stress enough the power that comes with finding even a small way to add extra money to your finances each month. If you can find a way to do five extra hours of work a month in your chosen career field, on the side, you’ll have extra money that makes the debt go down faster. That’s what I’ve done and it’s taken about $10k off my debt in the last six months.

    Also, focus on the revolving debt (read: credit cards) before the other debt if you can. They’re seen as more “junk” debt by lenders, and they’re usually higher in interest fees.

    And don’t add more to the debt, either. That makes it tough.

  17. Bahnburner says:

    My wife and I have managed to knock out $25,000 out of a $35,000 total over the last eight months using the snowball and some other aggressive short-term strategies (nix the 401k for now, up the tax exemptions, sell the car and loan for a cash car, etc.). Using the snowball method has worked well! I can honestly see the end of the tunnel and saving the six months’ emergency fund and then back to funding retirement and school for the kids. My advice? Fund your own bailout…that’s the only sure thing.

    • fashionista says:

      @Bahnburner: ‘Fund your own bailout…that’s the only sure thing.’ That’s actually part of the solution to the “credit crisis du jour.” As Americans, we carry far too much debt, which is unbalanced by far too little (if any) savings. Investment debt (i.e. student loans, necessary medical expenses) is understandable. $20K+ in credit card debt???? Insanity in its purest form.

  18. Finine says:

    We have been following the snowball method (Dave Ramsey) for about a year and it is working well for us. I just wanted to say that I saw that debt snowball spreadsheet posted on here a few months back and it is far and away the best I’ve ever seen. I like that you can adjust the amount of the snowball each month, unlike all the others I’ve seen, which will only allow the same snowball amount each month.

  19. Jevia says:

    I just want to echo the guy above about not using a credit counseling service. I tried that about 12 years ago and it was the worst experience ever. It made my credit report even worse because even though some credit cards would not negotiate a lower payment, the counseling service still paid the lower amount, so every month I was getting penalties unless I did my own separate payment. Ended up having to declare bankruptcy anyway, which finally came off my credit report a little over a year ago.

    So pick you’re own pay-off method and/or negotiate with credit card companies yourself.

  20. Alexander says:

    Need your advice fellow consumerists. My brother in law is in a lot of debt. His biggest expense each month is his fancy sport car he was stupid to buy. He has to pay a total of $700 each month (car payment + insurance) plus premium gas. His job requires him to drive like 60 miles a day. Yeah, very stupid. Anyway, I’m always telling him to get rid of his car but actually I don’t know how he can do that. What is the process of getting rid of a car that you still owe $15,000 on? You can’t give anyone the title until you’ve paid the dealer in full so how does he go about doing this? Just work it out with the buyer? Thanks for any advice…

    • Pylon83 says:

      First off, the dealer usually doesn’t retain the title unless they are also the lender. That aside, assuming it’s a normal loan, the bank usually retains the title until the loan is paid off. It’s not necessary to exchange the title at the time of the sale, and in many cases, it’s simply not possible. Some states (KS) actually keep the title if there is a lien on it. So when the car is paid off, the bank notifies the state, who releases the title to you. You then mail the title to the buyer. Usually the buyer has 30 days to register the car, so as long as they have the title within that time, there is no problem. A bill of sale is sufficient to show the transaction took place in the case of any shadiness on the part of the seller.

      • shadowkahn says:


        And most dealerships these days are just acting as the agent for a bank. I haven’t heard of any covering the loan themselves in some time.

    • jscott73 says:

      @alexander: I second what Pylon83 said. I have sold a few cars this way. In CA the bank/lender holds the title until it is paid off then they mail it to you. I got paid from the buyer and we each got a bill of sale as a receipt. Then I turned around and paid the loan off. Once I got the title in the mail I signed it over to the buyer and mailed it to them.

    • MikeHerbst says:


      If your Brother’s auto loan is at a bank or credit union, they can often accommodate these situations by sitting in as a third party on a sale.

      Buyer and Seller can meet at Bank (for example), and seller furnishes payment of full sales amount to Bank. Bank closes Seller’s existing loan and remits the balance to the Seller. If the buyer is taking out a new loan, this can also be handled in a similar way. Talk to your bank and ask what they can do. If the loan is with a loan company like GMAC, its more complicated, but sometimes they offer “resale financing” to the buyer. Although in today’s credit market, this is less likely.

      Lastly, all of the above assumes that your Brother is not “underwater” on his car. If he owes more than its worth, then he’ll have to either (a)find enough reserve cash to cover the gap to the sales price, or (b) keep the car until its worth as much or more than he owes (paid off?).

      • Yossarian says:

        @alexander: Following up on what MikeHerbst said, there’s a good chance that your brother might be upside-down on his loan due to driving his car as a commuter car – I have a friend who was in the same situation. Seems that excessive mileage drives down the resale value of a car…

        My friend confined his fancy car to the garage, using it only for short trips, and got a cheaper, more economical car for his commute. He was eventually able to work a trade for the kind of car he and his wife wanted from the original dealership, but he would’ve been able to sell it privately with that strategy after awhile too.

      • Alexander says:

        @MikeHerbst: @Yossarian: Thanks for the details! His loan is through Capital One and he is upside down on the car. He owns more than Kelly Blue Book states. It’s about a $1,500 difference so I told him he’s just going to have to eat it. I’ll have him contact Capital One and ask about “resale financing”. This should really help him. Thanks everyone!

  21. sir_pantsalot says:

    @Toof_75_75: Yes good picture but Ben needs to be more careful with the pictures and comments. A girl elf surrounded by 4 elf guys with “debt hole” and “We’re going to give it to him” written underneath. Ben or myself has issues.

  22. shamalama says:

    There are probably a gazillion sites on tips on budgeting out there, but I find it is always good to keep it simple and try to keep with the mantra of “Pay yourself first”, by that i don’t mean pay yourself before you pay your creditors, I mean don’t loose focus of your reserves.

    For example, you have 100% of monthly budget, drop x% amount into your long term savings, drop x% amount into your short term (highly liquid) savings, and drop x% amount into your “fun money” account. By informally budgeting for your “fun money” account you can save and blow this money without guilt (on yourself, or on others). Your long term savings are there for the house/retirement, your short term is there so you don’t have to fall back on the CC when you need to drop a load on new tires on the car, or when the timing belt goes, and the rest is there to cover remaining debt.

    before you know it the debt will be gone.

    For some people (including myself) it is easy to save money when you see it as a bill that you have to pay. Sure it is only psychological, but whatever helps you do it.

    • GearheadGeek says:

      @shamalama: That’s a valid long-term strategy, but if you’re making 3-4% in your savings and paying 6%+ on your debt, it doesn’t make much sense to save beyond an emergency fund until most/all of the debt is paid… at least the high-interest, non-deductible kind. Obviously you can’t wait until you’ve paid your 30-year mortgage to save, but budgeting for long-term savings when you have a 15% credit card with a balance would be folly.

  23. mike says:

    Whatever method you try, the worst way to pay of a credit card is to pay the minimum. AVOID THIS AT ALL COSTS!!!

    Every penny counts when you’re paying off credit card debt.

    You may also want to consider a consolidation loan from your bank/credit union. My CU was nice enough to give me a very low interest rate based only on my signature (no credit check required!).

  24. LoriLynn says:

    I highly recommend using one of the non-profit debt consolidation services. I remember the day I realized that what I owed every month was less than my monthly paycheck. I called a consolidation service and they went over everything with me. It does show up on your credit report, but it’s supposed to show as neutral, not negative. 4 years later I was done paying it all off. Now, 6 years later my credit score is in 700s and some of the consolidation is still on the credit reports. This was just my personal experience with it, and the company I used doesn’t exist (at least by the same name) anymore.

    It was such a stupid position to get myself into. I really wish I had taken some basic budgeting and finance courses in high school or college, but I don’t remember them being available.

    • kingmanic says:

      @LoriLynn: You have to be careful with that, some of them are legal scams. Depending on state or country they may or may not be a help. Some charge a massive fee, and take that out first and if you miss even 1 payment they cease their service, take what money you’ve paid so far and bugger off without applying any of it to your debt. Some are government funded and non profit.

  25. OULAXER11 says:

    I actually took a second job… not only did I have extra cash to pay down my credit cards, I had no spare time to spend money ;).

    I now am unsecured debt free, with a reasonable car payment (sub $225) and an even more reasonable mortgage that I split with my wifey. Now all I need to do is stop flushing money away on my roth IRA :)

  26. SadSam says:

    We did the snowball and paid off $55,000 in debt in 12 and half months.

    But in addition to a plan to pay off your debt, I suggest that you also:
    (1) Fund a small emergency fund of $1000 – $2000 first. Something will come up while you are trying to pay off your debt (for us it was a bad AC that had to be replaced and then later a big car repair) and you don’t want to add more debt while you are trying to pay off your debt.
    (2) Stop using credit cards for anything. No I don’t think credit is evil but if you are in debt you have issues with managing money and continuing to use credit will just slow down or derail your debt pay down project. Its just too easy to spend more, more, more with credit.
    (3) Track all of your spending for a month and see where the money leaks are, plug up those leaks and put that money towards your debt. Eventually you should create a spending plan or a budget.

    Good luck to you!

    • SadSam says:


      Add use the snow flake method too, every time you get your hands on a bit of cash use it to pay off your debt. We made at least two payments per month for our snowball (each pay period) and if I had extra cash I’d make a couple of other payments.

  27. Yup, have him sell the car and pay off the balance of the loan with the proceeds. Then buy a car with CASH and avoid the nasty car payment.

    Getting rid of the sports car will also lower his insurance rate greatly. He should ask his insurance agent about any available discounts, and should also solicit quotes from four or five companies in order to negotiate the best rate on insurance.

  28. amcfarla says:

    Read the book “The Total Money Makeover” by Dave Ramsey…with these methods(and two part time jobs) I was able to pay off $29,500 in 9 1/2 months making around 70K a year. Beans and Rice, Rice and beans…works every time.

  29. MoneyLint says:

    First thing first. Know where your money is currently spent. Chances are you are very well aware of where the big ($100) purchases are made and even the not so big ($25) purchases but go thru your old bank statements and classify each purchase and tally the totals. You may be surprised how those $2-$7 purchases add up over a month. I was amazed that I previously spent $400+ each month on fast food and restaurants. Ridiculous! If you can’t avoid fast food, try getting water and save $1-3 each meal. You can only change habits if you know you need to change them.

    Next, pay yourself first. Get with your employer and decide that you are going to direct deposit say $100 each check into your savings account (checking is no good because it’s too easy to get to). At the end of each month, use the money you paid to yourself to pay towards the principal (not interest) of your highest interest debt. Of course this is in addition to the minimum required payments.

    It is well worth your time to call your credit card companies and ask for a lower rate. Be realistic though. Don’t ask for 0% if you haven’t made 3 payments. Ask for a little help and most companies will be glad to both keep you as a customer AND to keep you paying on time.

    Find ways to save more of your income each month then make it a priority to pay down debt before anything else. It feels great to have zero debt. And for heavens sake don’t use a credit counseling agency. You can do it yourself.

    Good Luck!

  30. katbur2 says:

    NC keeps the title as well. The other thing for your brother in law to check is what the value of the car is now. If he is driving 60 miles a day the mileage he has racked up may have him owing more than the car is worth.

  31. nogas2speed says:

    For getting and staying out of debt you need 2 things:
    1.)Spousal Support (if married.)
    2.)Attendance of 1 of 2 courses; Crown Ministries’ “Handling Money God’s Way.” OR Dave Ramsey’s “Financial Peace University.” (they are basically the same, its just that one is more Biblically based than the other.)

    If married, it will do no good for one spouse to attend the course and not the other (see step one above.)

  32. rdm says:

    I am not a supporter of snowball unless you need a mental kick in the pants.

    I used with great success, my interest rates were very high at my worst point and they got them to a manageable level. While I was in CCCS I was also able to buy a house and 2 cars. It took 3.5 years to pay off just over $32k in CC debt – obviously we weren’t killing ourselves to do it quickly if we were also buying a house and cars.

  33. johnfrombrooklyn says:

    Several posters have recommended transferring debts to credit cards with teaser rates of 0% – 4%. I think you’ll see that those rates are not going to be available again for a long time. Better come up with a different strategy.

  34. ShyamariNarberth says:

    Get a brainless second job. I paid off 12K in credit card debt by bartending three nights a week for six months. You won’t make that kind of money at Walmart or McDonalds, but you’ll spend free time working instead of spending, and you’ll be so tired you won’t miss the eating dinner out or the movies you’d otherwise be spending cash on. It can’t last forever, but anyone can do it for six months to get back on their feet.

  35. I paid a 25K debt automating payments, plus paying any spare money I had on top of that. After it was paid off, I still used the automated withdrawals but to a savings account.

  36. TacoDave says:

    My wife and I finished paying off over $45,000 last year. We used a debt consolidation company who took a monthly amount from us ($700) and then paid all of our creditors.

    The downside: we had to pay the consolidation company a monthly fee.

    The upside: It worked. It took four years, but we paid off every penny.

  37. RStewie says:

    Check with your cc and see if they have a “payment matching” deal. It’s a one time only payment match they do, and for tax reasons, it can’t be more than $500 (in my case…I’m not sure how they get the number), but you can’t beat it.

    Maximize your payment, though, that they’re matching. Take advantage of the whole amount, even if it means rice and beans for that payday. You won’t believe the difference a single payment of almost $1K will do to your card.

    • RStewie says:

      @RStewie: Also, it doesn’t show up on your credit report at all. I did it with one card, and I got a notification in the mail the other day that another card was willing to do the same thing. Buh-bye cc debt!!

      • Tightlines says:

        @RStewie: I never heard of this before. How does it work?

        • RStewie says:

          @Tightlines: One I did with my Citibank card. I was late, and they offered it to me when I called to make the payment. Another I haven’t done yet, on my Dillard’s card, and they mentioned it in a letter to my house (again, late. oops).

          Call and ask, be ready to do it then, and the CSR should be able to help you with it. They’ve only ever mentioned it to me when I was late, but I don’t think that’s a requirement.

  38. greggen says:

    One thing you can do is to give your credit cards a call and ask them to lower your rates.
    Of the two I called in the past month, one dropped from 28.99% to 12.99% and the other refused to budge below 14.99, but gave me 1500 reward points.
    Every little bit helps…

  39. MightyJoe36 says:

    This is probably the worst time ever, but if you can get either a home equity loan, or a debt consolidation loan (unless it’s at some ridiculous interest rate) do so. That way, you’ve consolidated your debt into one monthly payment, and maybe you’ve lowered the interest on some of your debts and can pay them off sooner.

    If that’s just not feasible, go with the Higher Interest first method. Paying the minimum monthly payments will take forever. At least with the Higher Interest first, you’ve got your biggest debt out of the way.

    Definitely pay as much extra per month as you can possibly afford – and make sure you note that the extra is to be applied TOWARD THE PRINCIPLE.

    In the meantime, learn to live within your means, or for the time being, below your means. It will make it much easier to live within your means when you finally get out of this mess.

    When my wife and I first got married, I was an enlisted man in the Army. She was making more per month than I was. When we decided to have children, and that she would stay at home to raise them, as soon as she got pregnant with our first, we started putting her paycheck in the bank and just living off mine. It meant giving up a lot – the second car, going out to dinner, vacations, etc., but by the time our first was born, we were used to the frugal lifestyle and had a good savings built up. To this day, 25 years later, we still only have 1 credit card, the balance of which we pay off each month. We live in a modest house (that will be payed off in 8 years), both drive cars we bought new (not the cheapest thing on the lot, but not top-of-the-line either), and are putting our youngest boy through college (the oldest is in the service).

    Hope this helped.

  40. ZebadiahCaba?ero says:

    After making thousands of bad choices in my early 20s, I managed to rack up almost $24,000 in credit card debt. I finally broke down and joined a debt management company called Consolidated Credit Counseling Services (just google them). It was a tough, but badly needed adjustment. All of my credit card accounts (those with balances anyway) had to be closed, but CCCS was able to get my creditors to reduce my APRs, so now I’m actually chipping away at the balances instead of just paying finance charges. I pay one payment each month and they distribute different amounts to each creditor. Getting started was kind of a pain in the a**, but so far it’s been smooth sailing. I’ve also checked my credit score in the meantime, and I haven’t noticed any significant damage… yet. I’ve only been on the program since June, so we’ll see where I’m sitting in a year. All in all though, I’m happy with my decision. In a little less than 3 years, I’ll be out of the hole and will make better spending choices after being forced to live the frugal life.

  41. Tightlines says:

    I cannot stress enough the importance of setting up a budget and sticking to it. Track each and every penny that you spend for a month or two and figure out where your money is going. Once that is done, see if there is anywhere that you are spending too much. For example, cutting back on dining out can save you literally hundreds of dollars each month.

    Once you have that set, apply the snowball method. It truly is a great tool. For example, my fiance and I are at the point where we’re currently putting an extra $400 on top of her normal car payment and will have it paid off completely in a few months. Neither of us make a whole lot of money, but it’s amazing what you can do when you know exactly what your money is doing and where it’s going. We’re saving for a wedding for next year, paying down debt, and putting money into retirement–7% into a 401(k) for me, 7% of hers automatically goes into a pension, and we contribute to a Roth IRA every month–all at the same time.

    Once her car is paid off, that $635 dollars goes toward something else–either a credit card or the other car. It actually gets exciting once you see all that debt being reduced each month.

  42. viqas says:

    also make sure the value of the car exceeds the current principle of the loan. Sports cars do depreciate fast especially when he drives 60 miles a day and it will hurt the resale value.

    This is called a upside down loan. It also happens to SUVs and people go as far as hiring an arsonist to blow it up so they can collect insurance on it (not legal btw).

  43. shorty63136 says:

    I can’t lie – I’m in the hole too. I’m 25 and student loan payments haven’t kicked in yet but credit cards are bustin my ass.

    Landed a weekend job and am throwing everything from that to the debt.

    Hopefully in 6 months, I won’t be buying Ramen by the case. Oh, college memories.

  44. Japheaux says:

    Two things worked for me a couple of years ago. My wife and I hade years of credit card debt, student loans, and had fallen into the mentality we may never get out of it. You must listen to all of these people on this site telling you that YOU CAN GET OUT OF IT!

    I set up the bill-pay accounts through my bank, and made the payments as usual. Then, when I would do little things to save a few bucks (take a sandwich/lunch from home instead of eating out), I would go home an immediately do a bill pay transaction to the credit card on what I saved.

    If I didn’t eat out at lunch (fast food), I’d pay $5-10 to the credit card that night.

    More than anything, it reinforced my quest to get out from debt. It also made me more aware when purchasing items that weren’t actual needs.

    Secondly, I don’t know your religious affiliation, if any, but the Bible depicts a vivid image when it comes to debt. It basically says that debtors are actually slaves to those whom they owe [Proverbs 22:7].

    Whether you are religious or not, think about those words and look at your creditors as your personal slavemaster. They own you.

    Keep those words close…and listen to your friends on this site when they encourage you. Too many people look for the easy way out; bankruptsy, etc. Do this the right way and I guarantee you wour quality of life will improve drastically the day you fire off your last payment. You CAN do it.

  45. VA_White says:

    The biggest factor is wanting to get out of debt bad enough to cut what needs to be cut. No one ever died from going without cable TV or from wearing garage sale jeans.

    When you start looking at places to cut and all you say to yourself is “I could cut this but…” then you’re screwed before you even start.

  46. starrion says:

    The New Economy is here:

    Ramen- it’s not just for college students anymore!

  47. William Mize says:

    I sold a lot of junk on eBay and amazon, and then promised myself not to buy any more junk on eBay and amazon.

  48. ShortBus says:

    I recommend working the other end of the equation too: income. You can even do it passively to make it much easier.

    I keep an RSS feed from Craigslist’s jobs on my Google homepage. So I’m *always* glancing over the latest opportunities. This method allowed me to land a job with a +35% bump in pay a year ago. That’s pretty much like eliminating my monthly house payment.

  49. thatsnotfab says:

    After making thousands of bad choices in my early 20s, I managed to rack up almost $24,000 in credit card debt. I finally broke down and joined a debt management company called Consolidated Credit Counseling Services ([]).

    It was a tough, but badly needed adjustment. All of my credit card accounts (those with balances anyway) had to be closed, but CCCS was able to get my creditors to reduce my APRs, so now I’m actually chipping away at the balances instead of just paying finance charges. I pay one payment each month and they distribute different amounts to each creditor. Getting started was kind of a pain in the a**, but so far it’s been smooth sailing.

    I’ve also checked my credit score in the meantime, and I haven’t noticed any significant damage… yet. I’ve only been on the program since June, so we’ll see where I’m sitting in a year. All in all though, I’m happy with my decision. In a little less than 3 years, I’ll be out of the hole and will make better spending choices after being forced to live the frugal life.

    I also made serious changes in my budget by canceling unnecessary subscriptions, clipping coupons, shopping at Save-A-Lot and doing away with my $500/year parking permit (I work at a college campus).

    Even after making those changes, things are still kind of tight sometimes (which translates into maaaaany nights at home), but like I said before, I’m glad I’m finally getting it under control.

    (And yes, a similar version of this comment is probably floating around somewhere, thanks to me initially commenting as an anonymous user. Sorry!)

  50. punksmurph says:

    I took on the Sparta method. I was 10K in the hole and need out fast before I lost my job at a home builder. I sold off books and computer equipment I had, took extra small jobs to fix computers, did not go out to eat, did not go anywhere farther then 25 miles for 5 months, and cut back on the types of food I purchased. It took me 6 months to kill all 10K. Between June 07 and Jan 08 I went from -10K to +2K.

  51. Anonymous says:

    Last year I hit some unexpected unemployment after celebrating my new job and running up my credit cards. Then I had four mor motnhs of expenses added to those credit cards. Beginning this year, I ended up with close to 20k in debt. I sat down and cut back on all monthly services (internet is a utility! =p) and stopped going out for food. I did a week-to-week budget in excel, keeping a running total of money left over in my account as each bill was paid and my credit cards in a seperate column. I recently re-booted my budget using the above linked debt payment calculator, using the snowball method (I just paid off one card, and another is scheduled to be done next month) which is great for my personal outlook on finances, even though I know that higher interest first would save me a couple thousand dollars (I may switch in the new year). Either way, I’m doing exactly what this article has said, and it works.

    DO IT.

  52. I haven’t seen this suggested yet, but one thing that’s helped me is using the auto-payment feature that most credit card sites have for making a payment. What you do is set the payment amount above the minimum, the higher the better obviously, and just leave it at that until the debt is gone. Once you get used to that amount of money being paid out to the debt on that particular day of the month you don’t notice it missing as much. And the beauty is that as the balance goes down the amount of your payment takes bigger and bigger chunks out of the balance.

    • pecan 3.14159265 says:

      @IamNotToddDavis: That makes a lot of sense, especially if you (not YOU, specifically, but person in general) don’t have the discipline to make payments, or a high enough payment. But it does go against the unwritten (actually, maybe it is written somewhere) law of Consumerist that you should not ever, ever, sign up for auto-pay.

  53. fonetek says:

    First thing would be to get rid of that horrible MBNA credit csrd. They suck something awful. I was at a Jets game and they were trying to get people to fill out applications for a Jet credit card at 22%. Jesus, the Jets suck enough without getting hammered for 22% just to have their logo on your credit card.

  54. UniComp says:

    To pay off my debt, I worked my ass off. That should have been one of the suggestions.

  55. Onion_Volcano says:

    I was three grand in CC debt until yesterday. I bit the bullet and sent off my savings to pay everything off. Now I’m taking that 200 I used to send them every month and putting it into a mutual fund for my retirement.

  56. noisetube says:

    Well, spoken like an almost debt free recent grad, I’d say that the snowball method worked for me and my fiance. We were about 13k in debt and went with a credit consolidation service that we had no issues with. It sucked hard for a long time (the first year I was living on a waitress income). But we paid it all off in 2.5 years.

    Low points: no internet (which was awful for me as a web developer), no cable, and no heat one winter. Driving a 1986 Honda Prelude instead of my 1998 fully loaded Accord, etc.

    Eventually my income went up and every chance we got we paid extra on the big balances. The hardest part was knowing that our monthly payment to the credit consolidation people was $20 less than our *rent*.. but totally worth it.

    And starting in December I get to do it all over again with student loans. Yay..

  57. Confuzius says:

    I’ve got a line of credit that’s currently got all of by debt resting on it (~10K).
    It’s set up to take auto payments that taking interest into account will pay itself off in 3 years.
    Plus I do micro payments when there’s spare cash around (although probably not as much as I should)

    That being said, I have two credit cards that I use on a regular basis, and always pay down to zero as soon as I get home from spending on them. They both offer %2-3 cash back. So in January all of the money that I get from my cash back is going to my line of credit.

    Kinda like a stick it to the man with their own credit money.

    I can even pay my rent with a credit card, so there’s gonna be some nice cash back.

  58. crouton976 says:

    As much as everyone has been praising the “ladder” method (highest interest first)and “snowball” method(or as I originally heard it 10 years ago, the “reverse ladder” method), absolutely nothing beats adding more cash coming in. Sure, there drastic measures you can take to increase your cash flow, but when it’s all said and done, there are only so many things you can sell and there are only so many hours in the week for your second job (hey, you have to sleep sometime).

    I have always been an advocate of finding small ways to increase your income, as well as been a champion of efficiency (life hacker, anyone?). So, why not combine the two things? My wife and I recently purchased our first home. It’s a Craftsman style, built in 1948, and needs a lot of work. In the process of fixing the old place up, I pulled LOTS of old galvanized steel and copper pipe out of the crawlspace, 2 old window a/c units, an old huge antenna and a few cast iron sinks. combined with the aluminum and tin cans we set aside for recycling, we made $80 in a month, without really doing anything different from what we had planned. I’m just waiting to see how much it will cost us to re-side the house when I deduct the cash from all of the aluminum siding that I’ll take to the recycling center.

    It’s simple… green begets $green$

  59. AdrienneCaban says:

    Everyday I look at the money I spent on on things that weren’t a necessity, like a latte, a book, a cd, etc. I take 10% of what I paid and transfer it into my savings account. At the end of the month, I take what’s accumulated in the savings account and put it toward my debt, basically making an extra payment every month. This way, I am less apt to buy things I don’t need, because I am essentially taxing myself 10%… while at the same time paying down debt a little quicker.

  60. GuinevereRucker says:

    I recommend keeping track of everything. I wrote my own custom Perl program to do this easily, and even put it online so you can do it too:

    That’s a simple version of a program like Quicken or whatever. You can’t always cut down on food and stuff, but it really helps to see “where it all goes” and the results after a couple of years may surprise you.

    My wife and I make under $40k a year combined. We own a house, two cars we paid cash for, and the only debt we’re in is for our mortgage. Our current system is:

    Base income -> taxes -> give 15% -> save 15% -> pay bills -> fun money (split 1/2 for each person) Some months we don’t get any extra money, some we get hundreds!

    I do NOT recommend just taking another job to pay off debt. Not only will you get more stressed by working too much, that doesn’t help the problem. The problem is probably that you’re overspending what money you DO have, and working more isn’t going to help that much.

  61. Is it bad, that I’m jealous of many of you?? LOL. We don’t have much credit card debt, but I’d love to be able to pay off my car. ($9K left) I’ve been paying ahead, but we don’t make NEARLY as much as some other people on here, probably $35-$40K a year. OUCH.

    Someone spot me a ten?

  62. sponica says:

    I was doing fine until I had a dental emergency and THEN my student loans for the summer session were fooled around with. So yeah, what little emergency money I had went to travelling home to get my dental work done and I had to finance the remainder after I maxed out my dental benefits for the year. Then my loans were not approved in the manner I anticipated so I had to live on credit cards for a couple months (not a strategy I recommend to anyone).
    Still haven’t gotten out of the debt hole, and since my raise got effectively eaten up by the increase in food and other necessities, I haven’t been able to contribute more to the payments. However, I have put myself on a cash allowance. 80 dollars a week, it works for me as a good magic number, sometimes I go down as low as 60. If I want to spend it all on groceries, that’s my choice. If I want to go out and skimp on groceries, also my choice. It does seem to be working. With luck, I should be able to get my finances all straightened out by the end of the year.

  63. Etoiles says:

    It’s entirely school debt that’s killing me now, and for the rest of my life. I do have a credit card balance, but that mostly came from a really desperate year of un- and under-employment (got to buy groceries somehow, and that emergency $1500 ER bill sucked, too). I’ve got a plan for paying off the card and as it’s a USAA Mastercard, the interest rate and terms are excellent.

    But my student loans… the interest rate on my private ones just went up 3% without notice when the economy started tanking, from 5% to 8% even though I always pay on time. (And they will not negotiate with me in any way shape or form. When I asked if I would at least get notice of rate changes in the future the “connection dropped.” Mmm-hmm.) I am currently paying $170 monthly on one loan and $550 on another, to increase (for the final time in my graduated plan) to $275 and $550 in February. That’s equal to my rent and utilities, and I live in a not-cheap part of Arlington, VA.

    Student loans SUCK. And there’s not a thing I can do about them. But I’m still better off with the degree than without… just thanks to the economy, that nice new salary doesn’t buy me jack shit.

  64. resonanteye says:

    The impending re-set of the credit system makes me wish I had more debt than I do (says the woman who’s only got about two grand, never more)

  65. kwsventures says:

    Unless you rob a bank, paying with cash only will not allow you to live above your means. Therefore, you will leave the credit card debt to those that don’t understand financial personal responsibility.

  66. kwsventures says:

    In 2007,a new guy bought the condo next door. He put in new hardwood floors. New drapes. New granite counter tops. Bought a new flat screen TV. Remodeled the fireplace. He tricked the place out. He spent $45,000.00 on all this great stuff. One problem: he put the entire $45k on the old credit card. Later, I found out he had over $80,000.00 in total credit card debt. He had a zero down payment, interest only mortgage loan. He was out of control, living way above his means. The man made $105,000.00 per year. He DIDN’T lose his job. One year later, a foreclosure notice was stuck on his front door. He is gone. Pure genius.

  67. lisbet says:

    Wow, this article actually made me feel better about my two sources of debt- student loans (good debt, if there is such a thing), and an interest-free loan from my in-laws to buy our house. We’re actually focusing on the in-laws though, because they’re family and we want them to be able to put their money back where THEY can collect interest on it, and just paying the min on my student loans- which is still $500/month.