5 Ways To Get Out Of Debt!


The average American household carries $137,063 in debt, according to the Federal Reserve’s latest numbers.

Yet the U.S. Census Bureau reports that the median household income was just $59,039 last year, suggesting that many Americans are living beyond their means. Here are 5 ways you can quickly get out of debt.

Step 1: Find out how much debt you have

You wouldn’t believe how many people don’t take this step and continue blindly paying off any bills that come in with no strategic plan.

This boils down to the fact that people feel guilty about their debt. They’d rather bury their heads in the sand than look at the reality of the situation and do something about it.

Step 2: Decide what to pay first

Once you know exactly how much you owe, you’re ready to strategically attack your debt.

To do this, you need to prioritize which of your debts you’re going to pay off first — whether it be your credit card, student loans, whatever — based on the interest rate.

You’re going to want to pay off the loan with the highest interest rate first.

For example, let’s say Credit Card A has a balance of $1,000 and a 12% interest rate, and Credit Card B has $1,500 at 6% interest. You put down $150 total every month, paying the minimum payment (3%) on one and whatever’s left on the other. You’re going to save more money by eliminating Credit Card A first ($147 in total interest) vs Card B ($188).

Once you’ve decided what you should prioritize, it’s time to come up with a plan of attack.

Step 3: Eliminate temptation

If you ever expect to pay down your debt, you can’t add more to it.

That’s why you need to do the following things:

  1. Take out your wallet.
  2. Dump out all your credit cards.
  3. Mail them all to Antarctica.

Well, maybe you don’t have to be that extreme … but the point is to remove all temptation of ever using your credit cards again until you’re out of debt.

Here’s my favorite tip: plunge your cards into a bowl of water and shove it all into your freezer.


Once you literally freeze your credit, you’ll have to chip away at a massive block of ice in order to get it back — giving you time to think about whether or not you want to go through with whatever purchase you were going to make.

Alternatively, you can lock them in a safe or have a friend/parent/sibling/whoever-you-trust hold on to them for you. As long as you’re not adding more to your credit card debt, any method is good.

Step 4: Negotiate a lower interest rate to save thousands

Not many people realize this, but you can actually save over $1,000 in interest with a single five-minute phone call.

Through simple negotiations, you can lower the APR on your credit card and put thousands of dollars back into your pocket.

I LOVE negotiating interest rates.

It can be crazy simple too — in fact, here’s a word-for-word script that many of my readers have used already to lower their interest rates:

YOU: “Hi, I’m going to be paying off my credit card debt more aggressively beginning next week, and I’d like to lower my credit card’s interest rate.”

CC REP: “Uh, why?”

YOU: “I’ve decided to be more aggressive about paying off my debt, and that’s why I’d like to lower the interest rate I’m paying. Other cards are offering me rates at half what you’re offering. Can you lower my rate by 50% or only 40%?”

CC REP: “Hmmm…After reviewing your account, I’m afraid we can’t offer you a lower interest rate.”

YOU: “As I mentioned before, other credit cards are offering me zero percent introductory rates for 12 months, as well as APRs that are half what you’re offering. I’ve been a customer for XX years and I’d prefer not to switch my balance over to a lower-interest card. Can you match the other credit card rates, or can you at least go any lower?”

CC REP: “I see … Hmm, let me pull something up here. Fortunately, the system is suddenly letting me offer you a reduced APR. That is effective immediately.”

It’s really that simple to save money in five minutes.

Make the call, and if you’re successful, do two things:

  1. Celebrate your accomplishment (this is a big deal).
  2. Make sure to adjust your debt chart from step one. You get to chop that big ugly interest rate down and lower your monthly payments.

Repeat this process for any other cards you can, and then move on to my favorite step.

Step 5: Eliminate Student Loan Debts

If you find that no matter how you run the number you’re not going to be able to pay your student loans off in any reasonable amount of time, it’s time to call your lender.

Look at the phone number on that monthly bill staring you down. Call them up and ask for their advice.

Seriously, I can’t emphasize this enough. Your lenders have heard it ALL, from “I can’t pay this month” to “I have five different loans and want to consolidate them.”

For your purposes, ask the following:

  • “What would happen if I paid $100 more per month?” (Substitute any number that’s right for you.)
  • “What would happen if I changed the timeline of the loan from five years to 15 years?”
  • If you’re looking for a job, you might ask, “What if I’m looking for a job and can’t afford to pay for the next three months?”

Your lender has answers to all these questions — and chances are they can help you find a better way to structure your payment. Typically, they’ll help you by changing the monthly payment or the timeline. Just think: With that one call you could save thousands of dollars.