How to Get Out of Debt: 13 Expert-Backed Steps for Success

Dealing with debt can feel like a hopeless situation. You try your best to make your payments, but interest charges eat up all your progress. Next month, you’re back to square one.

Best tips for how to get out of debt

1. Find Your Motivation Before you get into the nitty-gritty of debt payoff, start by figuring out the big reason why you want to be debt-free. This is crucial for keeping yourself motivated when things feel difficult, according to Fo Alexander, founder of Mama & Money and author of “Dump Debt & Build Bank.”

2. See Where you Stand Once you identify the motivation for paying off debt, it’s time to figure out where you currently stand and devise a basic budget.

3. Identify Poor Spending Habits Once you have a basic budget in place, take a look at your discretionary spending (AKA your “wants”) and look for opportunities to cut unnecessary spending. Don’t worry: You don’t have to live on a barebones budget forever.

4. Increase Your Income You can only scrimp and save so much. In addition to cutting your spending, another way to pay your debt more aggressively is to earn more income. Just keep in mind that gig workers are responsible for paying taxes on their earnings, so be sure to set aside some of your income for tax time and find out if you need to make quarterly estimated payments.

5. Narrow Your Focus Instead, focus on accomplishing one goal at a time. You’ll make progress quicker, and progress leads to persistence. For instance, work on getting rid of your high-interest credit card debt before moving on to your federal student loans.

6. Set Micro-Goals Becoming debt-free is a big goal that will likely take a long time to accomplish. If you only focus on that one big goal, it can feel like you aren’t making progress, and you might get discouraged. “We recommend breaking down your finances into micro-goals that allow you to focus on 30-60 day sprints that will build-up to the big goal,” Walsh said.

7. Start a Debt Snowball When it comes to paying off debt, the standard advice is to tackle the debt with the highest interest rate first and work your way down (also known as the “debt avalanche” method). From a mathematical perspective, this is the best way to save money in the long run.

8. Pay More Than the Minimum Paying the minimum payment due on your debts will ensure you avoid late fees. But when it comes to getting rid of your debt completely, it’s important to pay more, according to Tegan Phelps, founder of The Blissful Budget.

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