4 Easy Steps to Getting Out of Debt When You’re Feeling Overwhelmed

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4 Steps to getting out of debt and paying off debt fast. Includes some ideas to make extra moneyGetting out of debt can be hard.

If you're in debt, you know it's stressful (otherwise why would you have clicked on this article?).

And if you don't feel stressed by your debt, you're probably ignoring your debt, which is infinitely worse.

Like many of you, I've been there.

I know how it feels to have debt constantly looming over your head.

I know what the guilt feels like every time you pull out your credit card to pay for groceries because you need to use credit– because you can't afford to buy them in cash.

I know the soul-sucking feeling of seeing your monthly student loan payment barely cover the interest.

At some point, you just need to declare to yourself that enough is enough.

Nobody wants to be in debt their whole life.

But here's the cool thing…

Once you make the decision to get serious about getting out of debt, you illuminate that light at the end of your tunnel. When you make an action plan and put it on autopilot (very important, btw), getting out of debt becomes a foregone conclusion.

A lot of people ask me all the time how much money they should be investing or how much they should be saving, and my response to them is always “how much debt do you have?”

That's because addressing debt and coming up with a way to get out of it is much more important.

I don't really care about much else until you get your debt payoff plan in order.

To me, it doesn't make sense to debate whether to put 2% or 4% in your IRA if you are just making minimum payments on your credit cards that charge you a 23% interest rate.

What You Don't Need to Hear

“Spend less and put your extra saved money towards debt.”

That's what everyone always says about getting out of debt. And while it's true, the problem with this statement is that it's way too vague. Too bland. Too general.

It doesn't really help anyone.

So in this article, I'm going to give you 4 different steps you can take today to start getting out of debt faster. With some concrete direction, conquering your debt isn't as hard as you may think.

In fact, each of these steps are pretty easy 🙂

Step 1: Save Money by Refinancing Your Current Debt

Getting out of debt fast by refinancing

This is something that not nearly enough people take advantage of. That's why I put it first on this list.

If you aren't familiar with refinancing, here's what it is:

Say you have a few different sources of debt…

  • $10k auto loan at 7%
  • $3k credit card debt at 18%
  • $5k on another loan at 11%

So you have $18k in total debt. By refinancing, you are going to borrow $18k from a new lender and pay off your existing debts….but your NEW loan will be at a lower average interest rate than your current debts.

You are essentially replacing your existing loans with one new loan, at a lower interest rate. This means you will pay less interest, and ultimately save more money.

Use the calculator below to estimate how much you could save by refinancing your debt:

If you are able to consolidate your debt fewer loans (or even a single loan) at a lower interest rate, all the sudden it makes getting out of debt feel much more achievable.

You save money, yes, but the psychological boost of having fewer payments to make each month is really wonderful. And paying off debt is more of a mental game than anything else!

Note: One website you may also want to check out for comparing loan prices for refinancing is LendingTree. They let you compare offers from up to 5 lenders at once, which makes shopping around a piece of cake.

 

Learn More

Compare up to 5 lenders at once to get a great rate.     

Step 2: Make Sure All Your Monthly Payments are Automatic

Automate getting out of debt

So, assuming you've consolidated and refinanced your debt (or even if you haven't), the next thing to do is set things up to where your payments happen automatically each month.

It sounds counter intuitive, but I want you to be as uninvolved in paying your bills as possible.

No more trying to keep track of when each payment is due.

No more forgetting a deadline (and getting hit with late fees).

Automation just makes life easy. And that's what we want. Easy.

In fact, many loan providers will even give you a small discount on your interest rate if you set up automatic monthly payments to come from your bank.

For example, my car loan interest rate is 0.25% lower than normal because I set up automatic bill pay. Lenders like knowing they will get their money on time each month, so they incentivize borrowers to make that happen.

Here are some things you can and should set up automatically

  • Credit card payment
  • Car payment
  • Retirement account contributions
  • Savings account contributions
  • Insurance premium payments
  • Mortgage (in most cases)
  • Student loan payments

If you're able to refinance and consolidate some of these items down to just a few, there's even less to keep track of.

And speaking of keeping track, if you are looking for an app that will help you keep an eye on your money as a whole, you may want to check out Personal Capital.

By using the app (it's free), you can do the following:

  • See all of your financial accounts in one place (this is huge)
  • Evaluate your spending and saving habits and set retirement goals in real time.
  • Gain transparency into where your money goes each month, set spending goals and adjust as needed.
  • Track your investment portfolio allocation
  • Spot hidden fees in your mutual funds, investment accounts and retirement accounts.

Over 1.3 million people use Personal Capital to track over $312 billion, so they are definitely a very well respected platform.

 

Use Personal Capital to track and organize your finances.

Learn More

See all of your financial accounts in one place & set your budget.

Step 3: Make Extra Money

Making extra money and getting out of debt

Let's not ignore the elephant in the room…

This whole “getting out of debt” business would be a whole heck of a lot easier if we had more money.

If you can find a way to make extra money, that will go a looooong way towards getting your debt knocked out sooner rather than later.

So, it's on you to find a way to get it done. But don't fret, I've got some solid leads for you:

Ideas to Make More Money to Put Toward Debt:

Get a pay raise at work
If you work full time, every $1 per hour raise you can get means $2,000 more per year. It's definitely worth it to ask for a raise.
Find a side hustle you love outside of your regular job
Have something you're good at or you enjoy doing, that you can make money from? Here's a list of 100 ways to make extra money to get you started.
Consider picking up a work from home job
If you want to increase your income by $1,000 or more each month, consider picking up an extra job from home. You can usually set your own hours, which is great for busy folks.

Even if you start out with something that only makes you a few hundred dollars per month, that's better than nothing!

If you want something you can get started right now, register on survey sites like Swagbucks (free $5 signup bonus) and Survey Junkie. These sites actually pay you to take surveys- knock out a few each day and the money adds up:

earn extra money

Start Now

Earn extra money by taking online surveys.

Check out Survey Junkie to give your opinion on things and get paid for it!

Start Now

 Earn extra money by taking online surveys.

                    


In the spirit of side hustles and making extra money, I wanted to let you know about a new email course I just launched, which shows you how to start a profitable blog and earn money online. You can sign up below:

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Step 4: Change the Way You Look at Your Debt

GETTING OUT OF DEBT MINDSET

A while back, one of our guest writers wrote about how you should look at your monthly payments as inspiration.

Here's what Tim said about his experience:

Your monthly payments can give you the inspiration to keep going.

When I was working on paying off $26,000 in 11 months, I always kept in my mind that I was putting in all this effort to be able to free up $584.48 in monthly payments. It really kept me going!

Again,  what would you do with that extra money? That’s over $7,000 a year!!!!

You could invest that money, or save it for a family vacation, or just rest easy knowing that you have a little bit of a cushion on your monthly payments.

Remember, no debt = Freedom

I really like Tim's thought process on this, and I think it went a long way towards pushing him to pay off $26,000 in under a year.

Look, getting out of debt isn't easy.

It's a lot like losing weight, actually. Running and eating healthy straight up SUCKS, and sometimes your weight loss goal can seem impossible.

It's easy to relapse and order Chinese takeout. Just as it's easy to pull out your credit card and buy a new pair of shoes to make a bad day feel better.

It's hard to say no when the temptation is there.

But when the pounds start slowly dropping away, or your debt balances start to fade (because you actually stuck with your plan), the results become addicting.

When you start seeing progress, you want even more progress.  It drives you to carry onward.

That's what I want most for our readers– to see progress, and to start moving in the right direction.

By following the steps I've outlined in this article, I am convinced that you can start making a serious dent in your debt.

Bottom line- you can do this!! You just have to get started 🙂


Resources at a Glance

One of the biggest mistakes I made with tackling my debt was not being proactive enough. Don't make the same mistakes I did… start on the 4 steps above today! I've listed all the essential resources for you below:

Apply for a personal loan with Lending Club to refinance your debt.

Learn More

Save money by refinancing your debt at a lower interest rate.    

 

Learn More

Compare up to 5 lenders at once to get a great rate.     

 

Use Personal Capital to track and organize your finances.

Learn More

See all of your financial accounts in one place & set your budget.

 

Check out Survey Junkie to give your opinion on things and get paid for it!

Learn More

Earn extra money by taking online surveys.

 

earn extra money

Learn More

Earn extra money by taking online surveys.

This is a pretty juicy post with all sorts of resources for you to come back to– feel free to pin it here 🙂

FREE Download: 5 Money Tools You Can't Live Without

This list just made life a whole lot easier.

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Jeff Proctor
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Jeff Proctor

Jeff began his career at a private wealth management firm before deciding years later that there was a better way for investors to manage their money.He started VTX Capital with the goal to educate and empower regular, everyday people to manage their own investment portfolios and financial lives.
Jeff Proctor
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One comment

  1. What an informative post Jeff. Had never thought of refinancing my debit as an alternative. Every tip complements the others for example after refinancing my debt, l can choose one of the suggested methods to make money. With reduced interest rates and other methods to make money… one day l will be debt free. Thanks for sharing.

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