How to Get Out of Debt in 6 Steps | Stash Learn
How to Get Out of Debt in 6 steps
By: Tara Blaine• Reviewed by: Heather Comella
Published: Jan 11, 2024
• Updated: Jun 09, 2026
In this article:
If you’re wondering how to get out of debt, you’re not alone. Around 64 million Americans have some form of debt. And it’s not just credit card debt keeping people up at night. According to the credit-reporting agency Experian, Americans’ consumer debt added up to more than $17.1 trillion in 2023.
While each individual’s circumstances vary, trends show that, on average, Gen Zers hold the least amount of non-mortgage debt, while Gen Xers shoulder the highest burden of non-mortgage debt. Within non-mortgage debt, Gen X along with Millennials carry the majority of student loans.
| Avg. Boomer Non-Mortgage Debt | Avg. Gen X Non-Mortgage Debt | Avg. Millennial Non-Mortgage Debt | Avg. Gen Z Non-Mortgage Debt |
|---|---|---|---|
| $19,203 | $32,190 | $29,702 | $15,105 |
Debt’s effect on your life
You may have heard references to “good debt” and “bad debt.” Generally speaking, things that may have a long-term positive impact on your financial health are considered “good debt.” That includes student loans, which may increase your long-term earning potential, and mortgages, which can add to your net worth if your home rises in value over time. When people refer to “bad debt,” they often mean things like money you owe on credit cards or an auto loan: purchases that depreciate in value.
There’s no shame in being in debt, whether it’s the “good” or “bad” type. The difficulty is that carrying debt over time can have a negative effect on your life in a number of ways, such as:
Cash flow: Monthly debt payments can eat into the money you have available to spend each month. If your minimum payments are particularly high, it can even be difficult to budget for necessities.
Credit score : Having a lot of debt or late payments can lower your credit score, making it more difficult to be approved for a loan or line of credit if you need one. Some employers even look at applicants’ credit scores as part of their hiring process.
Saving for the future: Every dollar you spend on debt payments and interest is money you can’t put into savings and investments that could help you work toward your long-term goals or save for retirement.
Risk of falling behind: Even if you have only “good debt,” it can turn bad if you fall behind on payments. Late payments can lower your credit score and result in fees and increased interest rates; it can also be difficult to catch up later.
Stress: Worrying about debt and finances can take a toll on your mental health as well as your financial well-being. The American Psychological Association reports that 65% of Americans cite money and personal finance concerns as a significant source of stress.
But the good news is that you can counter the negative effects by learning how to get out of debt, making a plan that works for you, and taking steps now to start your journey toward debt-free living.
How to pay off your debts faster
Paying off debt takes planning and discipline, but there are techniques you can use to succeed. Depending on the amount you owe and your current financial position, it may take you a longer or shorter amount of time to pay off your debt than another borrower. But regardless of your situation, the sooner you start figuring out how to get out of debt, the sooner you’ll be able to put the money you spend on interest back in your own pocket.
These six tips can help you make a plan and start taking action now:
Stop borrowing money
List all your debts
Make a budget
Negotiate your interest rates
Use a debt repayment method
Put extra money toward monthly payments
1. Stop borrowing money
Don’t continue to accumulate debt. It may sound obvious, but your spending habits can allow additional debt to creep into your life, sometimes unwittingly.
You may wish to take a look at how you use credit cards first. Remember that a line of credit is really a type of loan, and you’re paying interest on the money you borrow each time you whip out your card to make a purchase. By using your debit card instead of your credit card, you’ll only be able to spend the money you have in the bank. This may entail reducing spending on non-essential items in your budget, like entertainment.
2. Gather your debts
To plan how to get out of debt, you’ll need a clear picture of exactly how much you owe. Make a list of all of your debts, including student or auto loans, credit card debt, your mortgage, and any purchases you’ve made on installment plans. Track the amount you owe, the interest rate, and your minimum monthly payment for each debt. Having the complete picture will help you better understand how much you’re actually paying toward your debt each month, and whether you’re able to contribute more toward debt that carries a higher interest rate.
3. Adopt a budget that you can stick to
Creating a budget and regularly tracking your spending is a cornerstone of planning how to get out of debt and managing your money to put that plan into action. When you have a budget, you can see exactly how much money you’re bringing in, plan how to spend it, and track where it’s going. You decide what’s essential and what’s optional, giving you the power to make decisions that help you reach your debt-free goals.
The 50/30/20 model is a popular approach because it provides clear guidelines for allocating your money. With this method, you divide your spending into needs, wants, and savings/debt, then allocate your after-tax earnings to each category.
- 50% to needs: Things you need for survival, like groceries, utilities, minimum loan payments, insurance, and health care
- 30% to wants: Things you want to make life more enjoyable, such as dining out, vacations, entertainment, and just-for-fun purchases
- 20% savings/debt: Savings, investing, and/or making additional payments on your credit card debt and other loans
4. Negotiate and reduce your interest rates
There may be options to reduce your interest rates for some of your debts. The more you’re paying in interest, the longer it’s likely to take to wipe out your debt, so it might be worthwhile to investigate your options.
5. Tackle your debts with the snowball method
When you have multiple debts, it may feel overwhelming. One approach that can have a big impact is to start small and work your way up: that’s the debt snowball method in a nutshell. Many people find this strategy effective and encouraging when they start their get-out-of-debt journey.
6. Pay more than your required minimum payment
The consequences of making only the minimum payment on your debts each month can add up quickly. Putting extra money toward your monthly payment will help you get rid of debt faster, and you’ll pay less in interest as well.
Your debt-free future
If credit card and loan payments are straining your budget, the tips above can help ease the burden, no matter how small you start. Even if you have relatively little debt now, making a plan for how to get out of debt may be a smart move so that you don’t wind up further in the hole.
Debt payment FAQ
What is the easiest way to get out of debt?
It depends on your circumstances and personal preferences for managing money. Both the snowball method and the avalanche method can be helpful strategies. Creating and sticking to a budget can help you put more money toward paying off debt and avoid going into more debt in the future.
What can I do if I can’t pay my debt?
When what you owe is more than you afford to pay back, you can look for ways to reduce your payments by contacting lenders.