10 Ways to Get Out of Debt On Your Own

Pay off your debt by committing to not taking on new debt, getting organized, earning more, and paying down one debt at a time.


January 23, 2023 – By Aubrey Chapnik

Growing up, my parents talked about debt a lot. I frequently found myself privy to discussions about how they planned to finance the needs of our family, including housing, cars, schooling for my sister and me, vacations, etc.

I’ll always remember those discussions because of how stressful they sounded. Ever since then, I have been committed to learning as much about debt as possible so that when the time came to pay off my own, I’d be prepared.

Having debt is stressful because it gets in the way of your financial security and freedom. In fact, 42% of U.S. adults report that money concerns and dealing with debt negatively impacted their mental health, leading to a host of problems such as anxiety, stress, and depression. With total U.S household debt topping $16 trillion in the first half of 2022 and rising, it’s never been a better time to get a better handle on your debt.

1. Stop taking on new debt

First things first, if you want to pay off your debts you need to stop taking on new debt. Easy for me to say, right?

But if you stop taking on new debt, and continue to pay your current debts, eventually you’ll be come debt free, even if don’t pay anything extra to your debts every minimum payment reduces your balance. If you keep going and don’t add new debt, sooner or later your balances will reach zero.

However, if you continue to take on new debt you’ll just keep digging yourself deeper and deeper into a hole.

To pull this off you’ll need an emergency fund and a budget. That way you have cash for emergencies and your budget will ensure you aren’t taking new debt to pay your living expenses.

If you want some help budgeting here’s our free budgeting template.

Knowing where you are spending lays the foundation for how much income you can allocate to debt payments.

With this information in hand, start thinking about where you can cut spending to unlock more funds for debt repayment.

2. Pay More Than the Minimum

If you’ve committed to not taking on new debt and you really want to supercharge your debt pay off strategy then put as much as you can towards that debt. Every incremental amount can make a big difference.

For example, if you have a $15,000 personal loan at a 5% interest rate and minimum monthly payment of $300, it would take you over 4.5 years to pay that balance off. If, however, you increase your payment to $500, you’d pay that loan off in 2.7 years.

Additionally, making more than just the minimum payment reduces your total debt utilization ratio which in turn, can improve your credit score.

3. Reduce your interest rates

Paying less interest means that more of your payment goes towards bringing down the balance. For example, let’s say you have a credit card with a $5,000 balance and an 18% interest rate. You’ll pay about $70 a month in interest.

If you make a $100 payment to that account $70 will pay the interest and only $30 will go towards paying down your balance.

However, if you can do a balance transfer to a card with a zero percent introductory offer your full $100 payment would go to the balance. Clearly that would be a big help in bringing down your debt.

Even if you don’t qualify for a zero percent balance transfer, you might still be able to reduce your interest rate. It can be as easy as calling your credit card companies and asking!

4. Earn More

Reducing spending can be a good way to free up some money, but it will only take you so far. Unfortunately, life costs a certain amount and seems to cost more every day.

Luckily, that’s only one side of the equation. One of the most effective ways to pay down debt faster is to make more money.

If you can, explore selling things you don’t need, or starting a side hustle based on something you enjoy. The more you make, the more you’ll have to put towards debt – and the faster you’ll become debt free.

5. Focus on one debt at a time

A very common, and effective strategy, for paying off debt is where you pay the minimum payments on all of your debts but one. Then send as much money as you can to the one focus debt. Then once that debt is paid off, switch your focus to the next debt.

As you make progress, you can take the money you previously budgeted for the newly paid-off debt and allocate it to the debt you want to pay off.

What order you pay the debts off in has different names. The debt snowball is where you focus on the debt with the lowest balance first. The debt avalanche is where you focus on the debt with the highest interest rate first.

Which method you pick doesn’t really matter. Just pick a debt and start paying it off.

To do this effectively, you’ll need to get clear on your current situation. Create a spreadsheet of all your outstanding debt and document:

  • How much debt is outstanding, by lender
  • What the interest rates are
  • The type of interest rate (fixed or variable)
  • Payment frequency
  • Payment due dates
  • Minimum payment amounts
  • Any prepayment fees/limits

Don’t leave any kind of debt out, including any buy now, pay later obligations (this is still debt). That list will act as the foundation for driving where you need to focus, will keep you committed, and will help you celebrate quick wins as you refresh your balances.

Be sure to note anything that is surprising on the list as it may uncover spending habits that need to be curtailed.

6. Get Professional Help

Sometimes the debt feels overwhelming and you need some help. That’s when it’s time to enlist the assistance of a professional debt counselor. Debt counselors teach money management and debt reduction skills so that individuals can make future financial decisions on budgeting, credit, and debt management.

Debt counseling agencies are usually non-profit organizations and offer free or low-cost advice. Introductory counseling can be free but may involve an enrollment fee or a monthly fee afterward depending on the help being sought. Most agencies create free debt education materials; however, other services like debt management and repayment plans must be paid for.

Working with a counselor individually won’t have an impact on your credit score but what you do after working with a counselor may.

While debt counseling can carry a negative association, you don’t need to be in bad financial shape to enlist one. They can be a helpful resource for proactively managing your financial health.

Some popular government-approved debt counseling services include:

Note that if you’re filing for bankruptcy in the U.S, you must by law work with a credit counselor.

7. Explore Debt Consolidation

Debt consolidation involves taking out a new loan to pay off multiple loans. It’s commonly done via an unsecured personal loan. Exploring this option can help you reduce monthly payments and extend when you need to pay off your debt.

This strategy can work for some, but personal loans often have higher interest rates than loans secured by some sort of asset, and many types of personal loans should be avoided, like payday loans or other short-term, high-cost loans.

Only do this if you really can’t make even the minimum payments on your current debt. Also, if you are still regularly taking on new debt you may want to consider some lifestyle choices as well. You can’t get out of debt if you are still getting into debt.

8. Negotiate Debt Settlement with Creditors

Debt settlement is a type of debt relief that involves working with your creditors (those who you owe money to), to reduce the total amount owed. The goal is to come to an agreement on what will ultimately be paid. Some payment is better than none, after all.

While debt settlement can help to reduce the total debt owed, avoid bankruptcy, and pay off debt sooner, it can materially impact your credit score, make it harder to get future credit and cost thousands of dollars. Plus, any debt that’s discharged may be taxed in the upcoming tax season.

Choosing debt settlement should be done based on your own financial situation but it is often seen as a type of last resort. A debt counselor can often help mediate discussions with creditors.

Again, if you are still taking on debt that issue will need to be addressed. You will not become debt free if you are still taking on new debt.

Putting It All Together

Paying off debt isn’t a one-size-fits-all undertaking but if you go into it with the right mindset, goals, persistence, and consistency, it can be done.

By knowing why you got into debt and the type of debt you have, you’ll be well-equipped to start building out a repayment strategy that works for you.

Just keep remembering why you started on your debt reduction journey and the end game. Future you will thank you.