What Is the Easiest Way to Get Out of Debt?

Let’s be honest. The easiest way to get out of debt is to win the lottery or marry an Arab Sheik.

If that’s not in the cards, getting out of debt takes work – sometimes hard work – but there are several ways to go about it, and some are indeed easier than others.

The average consumer debt going into 2025 was $105,056, according to Experian. Whether you owe $1,000 or $105,000 to credit card companies and the like, getting out of debt does not have to be a dream. You just need to find the right strategy and stick with it.

Do that, and your odds of success are much better than winning the lottery.

Understanding Your Debt Situation

Legendary Chinese military strategist Sun Tzu said: “He will win who prepared himself.” That was about 2,500 years before humanity created credit cards with inhuman 25% interest rates. That’s the enemy modern-day consumers face. And like any battle, winning depends largely on being prepared.

In the battle against debt, that means understanding how much debt you have and how much income you can generate to attack it.

Start off by listing all your debts – mortgage, auto loans, student loans, credit cards, personal loans, etc.

Next to each debt, list how much you owe, the interest rate and the minimum monthly payment that each requires. Pay extra attention to the interest rates, since that will help you prioritize which debts you want to attack first.

6 Easy Ways to Get Out of Debt

Again, “easy” can be misleading. But the following strategies make it less difficult to get out of debt.

1. Create a Realistic Budget

Creating a budget is really Part 2 of being prepared. After listing your ongoing debts, list your other monthly expenses. Food, clothing, electricity, gas, cell phones, and rent should be on the list. Utility bills fluctuate, so add up what you paid in the past year and divide it by 12 to get a monthly average.

Those are all “non-discretionary” expenses, which is another word for things that are essential things you must have for daily living. But also add your “discretionary” expenses, like Netflix, happy hours, dog pedicures and $7 Pistachio Frappuccinos.

After you tally your expenses, add up your monthly net income. Net means what you actually put in the bank after taxes and other deductions are taken out of your pay.

Subtract your monthly expenses from your net income. That’s how much money you could theoretically apply toward your debt each month.

All those monthly numbers can be daunting, so you might want to use a budgeting app. That will help you keep track of expenses and income and keep focused on the battle at hand.

If you’re spending more than you’re taking in, it’s time to do some belt-tightening. Cut your dog’s hair. Make your own coffee instead of driving through Starbucks on your way to work. Go see a high school game or theatre production instead of a professional one.

Sure, it could be agonizing. But nobody said this would be pain-free. Every penny you devote to eliminating debt brings you closer to financial freedom.

2. Pay More Than the Minimum Payment

The minimum payment is the least amount you can pay to keep your credit card. It’s usually a set amount each month or around 2% of the balance.

Sounds pretty painless, but it’s actually agonizingly slow financial suicide.

Say you’ve racked up $5,000 on a credit card with a modest 17% interest rate. You pay a 2% minimum every month. It would take 30 years to pay it all off, and you’d pay $10,000 in interest.

Ouch!

If you paid just 6% of that total every month, the balance would be paid off in six years and you’d pay $1,500 in interest.

You don’t have to be Warren Buffett to realize that the more you can pay, the quicker you’ll escape the interest-rate prison. If you are Warren Buffett, you don’t need to be told that you should prioritize paying off high-interest debt like credit cards over lower-interest debt like auto or personal loans.

3. Consider Debt Consolidation

Debt consolidation is when you pay off multiple debts with one new payment method. It could be a debt consolidation loan, a debt management program or a low-interest credit card.

A debt consolidation loan – or “personal loan” as it is sometimes called – involves finding a lender (typically a bank, credit union or online lender) willing to make a loan that pays off credit card debt. The loan would come with a significantly lower interest rate than card companies offer, making repayment faster and less costly.

With a debt management program, a nonprofit agency will have an agreement with your creditors that combines your various debts into a single payment at a lower interest rate. The single payment will be lower and more affordable than what you were paying on all those separate bills.

The credit card approach involves obtaining a new credit card with an ultra-low introductory interest rate and paying down debt with it. The new card usually has a 0% introductory rate for 12 or 18 months.

But be aware that the low interest rate is like a ticking bomb. If you don’t pay off the balance before the rate expires, your monthly payment is going to explode into the 25%-30% interest stratosphere.

4. Decide on a Debt Payoff Method

There are two basic philosophies when it comes to paying off debt. One attacks it from top down, the other from the bottom up.

The top-down approach is commonly referred to as the “Debt Avalanche.” Rank your debts by their interest rates and prioritize paying off the one with the highest rate, while making minimum payments on the rest.

When that’s done, move on to the next highest-rated debt. Then the next one, working your way down until you’ve run out of debt.

With the “Debt Snowball” method, you rank debts the same way but prioritize paying off the one with the lowest interest and balance, while making minimum payments on the rest. When you pay off the first card, work your way up until all you have left is the debt with the highest interest or balance.

Which approach is better?

That depends on your temperament. You will pay less, sometimes much less, in interest charges with the avalanche.

But it’s quicker to pay off a low-interest debt first. Some people need to put a trophy on the mantle early to get motivated and build momentum, so this strategy would appeal to them.

Both methods have legions of followers who’ll swear by them. Whichever you choose, remember one thing. It will only work if you stay with it.

5. Boost Your Income to Pay Off Debt Faster

You can tighten your belt until you can’t inhale, but sometimes that doesn’t free up enough money to make a difference. You might simply need to make more money to pay off your debts.

There are countless ways to do that. Get a part-time job or some sort of side gig. Ask for a raise. Rob a bank. Sell stuff online.

We’re just kidding about robbing a bank. Your goal here is to escape debt prison, not be thrown into a real one. The other choices will make sense if you dedicate the extra income to paying off debt.

6. Avoid Common Debt Traps

Unless you marry that rich widow or widower, there aren’t many shortcuts to escaping debt. But some people would like you to think there are.

We’re talking about debt traps like high-risk loans. Borrowers usually have bad credit, so lenders charge exorbitant interest rates or require collateral to make a loan.

Payday loans are a good example. The businesses are usually storefront operations that offer smaller sums (usually $500 or less) that are due on your next payday.

The interest rates make Visa look like a noble charity. Lenders typically charge $10 to $30 on every $100 borrowed, so you might pay $650 for a $500 loan. That works out to be a 400% interest rate.

Double Ouch.

Another debt trap is a car title loan. As with payday loans, you borrow a relatively small amount of money for a short time and use your car as collateral.

The interest rate is usually around 25%, which is much less than payday loans, but the lender gets to hold onto your car title.

If you don’t repay the loan (usually in 15 or 30 days), the lender will repossess your car. It will usually be sold to pay off the loan, and the lender won’t have to pay you the difference between the sales price and what you owed on the loan.

Payday loans are illegal in 21 states. Credit cards are not, but they still qualify as debt traps if you don’t pay them off in a timely manner.

Staying Motivated and On Track

Getting out of debt takes effort and requires dedication.

To help keep you motivated, don’t just list expenses and income when you make a budget. Also, list some benchmarks you want to meet.

They could be saving $1,000. Paying off a credit card in four months. Giving up a costly habit like smoking.

Budgeting apps will keep you focused, and visual aids can energize. You could make a chart to track your progress. Put sticky notes on your refrigerator door to remind you of your goals.

When you reach one, throw a little celebration. Nothing crazy, but you could treat yourself to that $7 Frappuccino or go to a movie and dive into a $12 tub of popcorn.

If you need a friendly watchdog, check out Facebook groups made up of other people trying to get out of debt. Find a friend or family member who’ll act as your accountability buddy. Sun Tzu would tell you that every battle is easier when you have allies.

Why Getting Out of Debt Is Important

Debt is bad for a lot of reasons, starting with your credit score. The amount you owe makes up 30% of your score. It’s the credit utilization rate, which is the percentage of total available credit you are using.

When you charge more than 30% of your credit limit, your score starts to suffer. A lower score means you’ll pay higher interest rates on loans and might not even qualify for some loans.

It’s hard to overstate how much interest rates matter. They can make everything more expensive. Instead of investing money for your future, you’re spending it on missteps from your past.

But put numbers aside. The worst part of debt is the impact it can have on your health. Countless studies show that being in debt is a major source of stress. Anxiety, headaches, depression and high blood pressure can be worse than 25% interest rates. One way to relieve that is to have an emergency fund that will take care of your bills for at least three months.

Sounds nice, but almost 50% of Americans say they must live paycheck to paycheck, according to a Bank of America study. That makes it exceedingly difficult to plan a better future.

Additional Resources for Getting Out of Debt

Fear not, there is help out there. Here are some options:

• Relief agencies. If you’re struggling to just get by, there are numerous private and public organizations that might help. Start with Uncle Sam. Go to https://www.usa.gov/financial-hardship and see if you qualify for food, housing or medical assistance. That might help stabilize your financial situation and allow you to formulate a long-term plan to get out of debt.
• Debt settlement. Instead of trying to pay the full amount you owe, you (or a for-profit company) negotiate to pay less than what you owe, sometimes significantly less. That could make your finances more manageable, but it comes with a price. You’ll have to pay the settlement company a fee, usually 15%-25% of the total amount you get out from under. And debt settlement could knock up to 100 points off your credit score.
• Debt consolidation. This is somewhat like debt settlement without the high costs and negative side effects. Nonprofit organizations like InCharge Debt Solutions have credit counselors look over your financial situation. They will recommend ways to address it, one of the most popular being a debt management plan. In a DMP, your unsecured debts, like credit cards, are lumped together. The nonprofit agencies have an agreement with creditors to reduce the interest rate on each card. This simplifies your situation, saves you money, and gives you a plan and timetable to reach your goal. That time frame is usually 3-5 years, which illustrates how getting out of debt is not a snap.

Some methods make more sense than others, but none are truly easy. The key is to find the right approach for you and accept that even though it might not be easy, the result is going to be well worth it.