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How to Get Out of Debt Years Earlier than Your Creditors Want You to

How to get out of debt, and how to do it in the quickest way possible – do these questions fill your mind? I'm going to show you the strategies you need to get out of debt before you ever thought possible.

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So, you're in debt payoff mode.

How to get out of debt is likely on your mind, if not from sun-up 'til sundown, then at least during your commutes.

And while you may not think the “Get-Out-Of-Debt” (isn't it funny how the acronym for that is GOOD?) part of your financial journey is not particularly glamorous, stopping here to work through your debt is gearing you up towards an exciting and fanTABulous future.

I would know, as it’s where we started.

If I were to use a word to describe how I felt about money from my youth through to my early twenties, it would be fearful.

As a child, I witnessed firsthand the havoc that debt and failing to maximize {or downright plunder} a bare-bones paycheck can wreak on a family and the people in it.

Stressful errands driving to the offices of each creditor in order to pay a bill on its due date, anxiously juggling from account to account, losing precious family time to work night shifts and then feeding that extra money into a sinking ship – only to lose it all at the end through bankruptcy.

It's not the life I wanted for me, and I'll bet it's not the life you want for you.

I made it my mission to learn how to master money instead of having it master me. Frugality is the tool that got me there, and the tool that keeps me in reign.

Yet on the way to this fabulous debt-free lifestyle – a life that you can have – I accumulated some of my own debt. My husband accumulated some debt before we dated. Then we combined our finances which left us with two incomes (hurrah!) and two sets of past obligations (doh!).

September 1, 2010, is the day when we declared ourselves debt-free (except for our 15-year mortgage). It marks the date when we collectively paid off the remaining $25,000 of debt (at one point our individual debts – comprised of student loans, a car note, and an engagement ring – had totaled an astounding $59,496).

But before declaring our debt freedom, purchasing a home, traveling across the world, building a net worth, and quitting my day job to pursue my writing full-time *taking a blessed, grateful breath as I type that out*, I was right there with you.

That's why I'm dedicating this little corner of the internet to talk about how to get out of debt.

How to Get Out of Debt Quickly

I'm going to share with you my strategies for how to get out of debt quickly, and definitely faster than your creditors want you to.

Warning: use these tricks, and you could shave YEARS off of your debt payment!

Psst: you'll definitely want to check out my article on how to pay off debt in a year.

Trick #1: Watch those Automatic Payments

Here's a sneaky, sneaky trick that creditors use to keep you in debt longer: your minimum payment on your credit card and other loans is calculated based on the balance left on your credit card. Meaning, that the minimum payment amount changes.

SO, as you pay down your debt and your balance goes down…your minimum payments decrease.

Psst: should I automate or manually pay my debt off?

If you just automatically pay your credit card or other debt each month, then you're actually going to take longer to pay off the card because your minimum payment will get lower and lower!


I recommend you periodically check your minimum payment to see how it's changed, but more so than that, actually just send in an amount YOU set, automatically, that is above the minimum amount (or at least AT the minimum you started at).

Trick #2: Use Debt Payoff Visuals

It is SO important to stay motivated, especially if you'll be in debt payoff mode for a few years. So, you need to use debt payoff visual charts to help. Plus, it helps get the rest of your family on board, which will only get you there faster!

Trick #3: Move Your Debts Around

A third strategy for paying off debt that I will mention here (there are many strategies out there) is to consolidate your debts to a lower-interest vehicle.

For example, if you currently have a debt of $4,000 on a credit card with an interest rate of 14% and you are paying the minimum only, it will take you a little over 20 years to pay off, at an extra interest charge of $4,166.56!

Transfer this balance to a new credit card with 0% interest on balance transfers for 12 months.

Then increase your monthly payments to approximately $333 per month so that you can pay the $4,000 credit card debt off by the end of those 12 months. This would potentially save you $4,166.56 in interest and 19 years of payments! Play around with this debt calculator to determine what best works for you.

Trick #4: Consider Making a Radical Move

I say this with the caveat that you should really read my article on the best debt payoff strategies that might cause you more harm than good (plus how to cover your assets if you decide to do something like I'm about to talk about).

We took a radical move to finish off our debt payoff journey. I'll just share with you something I wrote just before we did it so that you can really get a feel for how we were feeling at the time (p.s. it worked for us!):

“It is tempting for us to not pay down the student loan debt quickly and to keep it around as if it were a ‘pet’ (as Dave Ramsey likes to say; sometimes I feel like Sallie Mae is my 5-year old daughter). Most financial experts would tell us to use our money for better things because the interest rate is only 1.25%. However, the $7,600 is still debt that we will owe Sallie Mae (or the government, who has purchased a significant portion of Sallie Mae’s student loans) one day or another, so we would rather pay it off now that we are capable and can do so instead of saving it for a future date when God – literally – only knows where and what we will be doing. After going back to the excel spreadsheet and checking into our accounts, we came to the conclusion that our savings account and the amount owed on my student loans will intersect sometime in August. And it is at this intersection that we will write Sallie Mae one final check, and clear my name of all student loans. Hurrah!

One of our concerns with doing this, of course, was the depletion of our emergency savings fund. In fact, it’s not even completely built back up from having to purchase another car. But I recently sold the stock I had invested in US Steel when the stock market was down, and made a profit of $1500. That money, plus the principal, is waiting on the sidelines in a money market fund, and I will keep it there until we have our emergency savings back up to at least three quarters of the way full. On top of this, our other security to fall back on is our Roth IRAs, which we can tap the principal amount of money we’ve invested without any penalty if there is an absolute emergency. We will, of course, use this only if there is an utter emergency because we cannot make catch-up contributions once we are ready to pay back our IRAs. In other words, if I were to take out $3,000 for an emergency, this year I can still only contribute $5,000, not $8,000. But having this as a back-up makes us feel all the more confident that we are doing the right thing. As a third option, if we get into trouble, we can take a cash advance out of our credit cards, then transfer that balance to a zero percent transfer offer on another credit card and pay it off before the interest rate begins. This is not a desirable option, as we are trying to get out of debt, not back into debt, but it is a financial safety net for us.”

Trick #5: Consider Partnering Up Your Debts

When my then-boyfriend and I moved in together and got engaged, our debt payoff journey really took off.

Why is that?

We were engaged and decided we didn't want to start our marriage off in debt. Because we were living together and decided to combine our finances (including debts – not physically, but mentally we were working towards paying our entire pot of debt off, not just individually doing it), we suddenly had two paychecks and half the living costs.

That catapulted the amount of money we could send to creditors, based on our debt plan (see below).

Of course, you only want to use this strategy at your discretion. Combining households + finances is a BIG decision!

Trick #6: Get SUPER Clear on Your Motivation

While in our debt payoff journey, I wrote the following:

“Paper walls, sushi on revolving tables, delicate décor inspired by nature, purposeful placement of stones, crowded metro trains stacking people tightly like sardines in a can; I am watching HGTV’s The Outdoor Room, and the hosts are working on redesigning the back of someone’s corner-yard into a tea room garden inspired by Kyoto, Japan. For those of you who do not know, Japan holds a special place in my heart. It is where Paul and I met, and where we both aspire to return to because of the connection we felt there with the people and the culture.

Watching shows like this just fuels our fire to debt free living. Freeing up our paychecks to spend on things other than what we’ve already purchased in the past is like opening up a bottle of perfume to allow it to breathe, diffuse, and live.

You have GOT to get clear on why you want to be debt-free. Then you've got to hold that vision in your head, for as long as it takes. It will help fuel you forward and do things you never thought you'd be able to.

Dreams become more tangible when given the financial space to develop.

How to Get Out of Debt on a Low-Income

So, you've got a low income and you still desperately want out of debt.

First of all – congratulations on deciding that getting out of debt is the right move for you. It is, by the way. Because it will open up cash flow that you can use for other purposes each month (which is really needed if you have a low income to begin with).

Here are my strategies for how to pay off your debt with a low income:

  • See Trick #5 above: you've got to halve your living costs and double your debt payments. Or any variation of that you can pull off. Of course, this doesn't mean you need to get a romantic partner and rush into anything; you can just get roommates and split costs as well.
  • Consider Alternate Payment Forgiveness Programs: This works particularly well for student loans. Here are 5 ways to get part of your student loans paid off for you.
  • Read my strategies below for people trying to get out of debt with no money at all.

How to Get Out of Debt with No Money

So, you've got no money. And you've got debt.

How are you supposed to get out of debt with no money?

Here are some strategies to help you get to the debt-free lifestyle:

  • Go on an Income-Driven Repayment Plan: If you have no money, then you've got to get your student loan payments wayyyyy down. This plan could help with that.
  • Get Free Money to Pay Off  Your Sallie Mae Loans: Upromise allows you to save up for someone's college education by companies contributing a percentage of your transaction money into an account. But did you also know that you can create a Upromise account and make YOUR Sallie Mae loans the beneficiary to free money earned? It's through the UPromise Loan Link program. Just create a UPromise account, then link it to your Sallie Mae Loan account. Any money will help!

Get Out of Debt Plan

Debts seem more manageable when they're kept as individuals, and not added up into one pot.

You have creditor A here, creditor B there, yada, yada, yada.

But, I recommend you actually sit down and add everything up into one big pot.

It will:

  • Sober you up when you see the amount you're in debt.
  • Put you in a position to think strategically about paying it all off, and not just paying creditors one-off.

There are multiple get-out-of-debt plans available for you to use. I'll highlight them below, as well as the one we personally used (which was a hybrid of two different strategies).

Plan #1: Suze Orman's Avalanche Plan (aka, “Interest Payment Minimizer Plan”)

With this strategy, you pay minimums on every debt owed, then throw any extra money you have toward the debt with the highest interest rate. You get rid of that debt, then take all the extra money you've been sending into it + the minimum payment you were paying on it, and roll it into the payment of the next highest-interest debt (thus creating an avalanche of money as you travel down your debt payoff list).

By doing this, you will get rid of your most expensive debt first, giving less of your hard-earned money to creditors in the form of interest.

Plan #2: Dave Ramsey's Snowball Plan (aka, “Quick Wins Plan”)

Basically, you pay the minimum on all of your debts, and then any extra money you can find you throw towards the smallest debt that you have. Once that debt is paid off, then you throw all of the money that you were using to pay that debt off (its minimum payment, as well as the extra money you found to pay it down), and pay this onto your second smallest debt. Each time a debt is paid off, the amount of money you then use to pay the next in line grows, thus increasing the speed of paying off your debts. By doing this approach, your progress in the beginning is quick, and you stay motivated to continue the hard work ahead.

Psst: you might want to check out my article on Suze Orman vs. Dave Ramsey to understand more differences between the two.

Plan #3: Adam Baker’s Tsunami, (aka “Offload Emotional Baggage First Plan”)

Pay minimums on every debt owed. Then figure out which of your debts you need to get rid of to relieve you of the most emotional pain (could be a debt from an ended relationship or marriage, from a family member lording it over you, a business line of credit on a business idea that sunk, paying on a car that was wrecked, from a big mistake, etc.).

After you list the debts that have caused you pain and there are no others that bother you, list the remaining debts in order from the highest interest rate to the lowest interest rate. Pay the minimum on each of the debts, and then throw any extra money you have towards paying off the debt that is most emotionally charged (first on your list).

Once that debt is paid off, take any extra payments you were making + minimum payments on it and roll it into the next debt on your list. In essence, you are making a “repayment tsunami” that keeps getting larger and larger after each debt payoff to ram into the next debt owed.

Plan #4: The Get Out of Debt Plan We Used – a Hybrid Approach

I remember sitting in my exit interview with the financial aid people at college and looking at my debt folder for the first time. If I paid the minimum amounts each month, then I would also pay an extra $15,000+ in interest and have to make payments for over 15 years! I knew at that moment that I was not going to allow that to happen.

I began by consolidating all of the Stafford Loans in the summer of 2005 when the interest rates dropped. By doing so, I was able to have one loan of $17,125 with a fixed interest rate of 2.625%.

I was fortunate enough to have my federal loans subsidized by the government while in college and during the six-month grace period you get after graduating, so my interest payments were kept up and did not have the chance to compound while I was still studying and learning what an interest rate was.

I made four different payments at once when I started my first job which totaled approximately $447 per month. Since I was living very cheaply and with no car payment (I had paid for my used car in cash), these payments were not a problem.

Each year I was sent an interest statement from each of these lenders that I could deduct from my income tax returns.

After two years, and seeing the $1,000+ I had paid in interest, I decided to pay off the higher-interest loans. I took money out of my savings and paid off the rest of the private student loan at 9% interest, and the Perkins loan. Next, I focused on paying down the loan from my grandfather.

With all of these other payments gone, I began to concentrate more on my consolidated Stafford loans. Instead of paying the minimum $117 per month, I doubled the payments to $250 per month, which was still a saving for me from the original $447 per month I was paying before.

After 36 months or three years, of consecutive payments, my interest rate dropped by an entire percent!

I call my payoff strategy a hybrid because not only did I start with the smallest debts first, but it turned out that my smallest debts (a $6,000 private loan, and a $4200 Perkins loan) had the highest interest rates.

When using this strategy, you continue to pay the minimum amount due on all of your debts, but then line up your debts from the highest interest rate to the lowest, and attack from the top down.

This potentially will save you money in interest over the amount of time that it takes you to pay off your debts.

We officially paid off the last of our debt (except for our mortgage) on September 1, 2010. Here's more of our story on how I got out of debt.

Psst: no matter which debt payoff method you use, you'll definitely want to start one of these free debt payoff challenges. It'll keep your motivation high!

How Can I Save Money and Get Out of Debt?

First of all – I commend you for wanting to save money while getting out of debt!

It's hard to figure the balance of this one out. On the one hand, you've got debt that's costing you interest to keep, and on the other hand, you're earning interest on money you put aside in a savings account.

Chances are very good that the interest you're paying on your debt is far more than the interest you're earning by keeping money in a savings account.

BUT, you need some sort of savings (and I've written an entire article here about how a certain debt repayment strategy that has you get extreme gazelle intense can actually cause you to go into more debt because of a lack of savings).

I've written an entire article about how to save money while paying off debt, but I'll sum up a few points here:

  • You need to cover your assets (ha!) when you're paying off debt. So, I suggest having more than just $1,000 in the bank for an emergency fund.
  • You should know that it makes the most financial sense – purely by the numbers – to pay down debt if it's costing you more in interest than what you're earning in a savings account (for example, if you're paying out 9% in interest on a student loan, and you're only earning 1.14% on your savings, then financially speaking, it makes sense to put all your money towards paying off that debt).
  • Consider the other assets you have that you can use as financial backups when figuring out your own balance of how much to keep in the bank and how much to send towards your debt. This could include insurance policies, the ability to work overtime on-demand if something creeps up, etc.

Here's to your debt-free future!