Today is the day you have decided once and for all to get out of debt.  You have finally had it. All the worrying about your payments going through at the end of the month, the heavy weight of your debt burden feels like it’s crushing you and you know there has to be a better way to live.

You may be scared, embarrassed, angry, exhausted or all of the above.  Being in debt and struggling with your money, completely sucks. So you decide you want to be different.  What you are doing isn’t working so you are ready for a different get out of debt plan.

So, you’ve decided to be debt-free….Now what?

This is a super common question.  You are tired of being broke and stressed out so you decide, “No. More.”  Now all of this energy and motivation you have needs to be used to get a plan in place for changing how you handle your money.

Getting motivated is probably the hardest part.

Now that you are here, follow these 5 simple steps to get on the right track and get out of debt!

1.  Assess the damage.

This part can be really scary and intimidating, but you have to do this.  Just think of it like ripping off a band-aid. Just get it done to move forward.

If you want to get out of debt, you have to know what kind and how much debt you currently have.  This first step is all about writing down your debts and getting everything organized.

When you write down your debts you should know

• what the debt is,
• the interest rate,
• the total debt payoff amount,
• the monthly payment and
• the due date.

This is going to be needed when you get your debt snowball set up a little bit later.

Pro-tip:  I was absolutely terrified to actually write down how much debt I had.  I knew it was bad, but I had no idea how bad. I knew I wouldn’t be able to get a plan in place or start paying off my debt until I knew what I actually had.  

This part sucks, but you got yourself into this mess, so you have to get yourself out.  Take a breath and just do it. Face the truth.

I recommend using our Debt “Truth” Worksheet to help you record all this information in one place.  

Our Debt Truth Worksheet is FREE for you when you when you sign up below!  Gain instant access to all of our other helpful resources as you work to become debt-free!

Once you have written down all of your debts, it is time to get the rest of your finances organized.  You will need to follow the directions found here. This organization hack will get you set up so you only have to do this once and you are good to go!

Do not skip this step!  Having your financial information organized will make your budget set up so much easier, all of your financial information will be in one place and you can easily keep track of your debts.  There is also just something about having your money information physically organized that makes you mentally feel organized too.

This part will take about 2 hours of your time, but it is well worth it!

Was it that bad?  Once you have actually faced your debts head-on, they aren’t so scary anymore.  The unknown is what is frightening. Now you know and you get to make a plan of attack.  The awesome thing is, with your financial organization system in place, all these next steps are going to be that much easier!

2.  Set your debt free goals.

When you are just deciding to get out of debt, everything is shiny and new.  Your motivation is strong and you feel like nothing could stop you or keep you from becoming debt free.

This is great in the beginning, but once you hit a few setbacks like emergencies, car trouble, job instability, etc., you may find yourself falling off the plan.  Sometimes, even when your plan is going perfectly, you still get tired of living frugally and just want to take a break from debt payoff for just a month, then that turns into 2-4 months.  Then that turns into not paying off debt at all.

This is where you have to budget set up.  What is the reason you want to get out of debt?  What is your true motivation for this?

Your reason for getting out of debt has to be bigger than any excuse you can come up with the derail your debt payoff efforts.  Life is going to hit you with everything its got. You need to be ready to stay the course when things get tough.

Whether you are trying to get ready to have children, you want to quit your job, you want to be able to help others in a big way, you want a secure retirement, you want to take vacations guilt-free, whatever your why is, you need to write it down and keep it somewhere to remind you why you are doing what you are doing.

Things will get tough, and you will need to come back to this for motivation.

Pro-tip:  Use our Debt-Free Goal Setting Worksheet to help you identify your why and what your goals are for the upcoming year.  

Our Debt-Free Goal Setting Worksheet is a FREE download you can access immediately when you sign up below!

If you are married, you will want to make sure your husband is on board for this too.  If both of you aren’t on the same page, this very likely is not going to work. Check out my tips for How to Get Your Husband On Board to Budget if you need help talking to him about money.

Once you are both on the same page, talk about what your “why” is and set some goals together.  This will bring you closer together and allow you to become each other’s cheerleader throughout the process.  This is the beauty of marriage!

3.  Build a budget.

You knew this was coming!  This part is actually pretty easy if you have taken the time to organize your finances.  I strongly recommend doing a zero-based budget. This type of budget makes you account of every single dollar in your account every month.  There is no “extra” money left over at the end of the month.

If you don’t have a plan for your money every month, it will just disappear and you don’t know where it all went.  When you actually tell your money what it is going to be doing for you every single month, you will suddenly start to make progress on your goals.  You will see exactly where your money is going and you will be in control. What a great feeling!

If you are totally new to the concept of a zero-based budget, check this out.

Follow my step-by-step instructions for setting up a zero-based budget here.

You can get our FREE Basic Budget Setup Forms to easily build your first budget.  Sign up below to gain instant access to these forms, as well as all of our other awesome resources!

Once your budget is set up, take a minute to appreciate how far you have come!  You are on your way to becoming debt free!! This is awesome!

The next step is actually developing a plan of attack to pay off your debt.

4.  Create your debt snowball plan.

The concept of the debt snowball method is very simple.  You pay off all of your debts from smallest amount to largest amount.  The reason this method works is because you focus all of your efforts on one debt at a time, instead of trying to pay off everything at once.

Instead of feeling like you are spinning your wheels, you will make minimum payments on all of your debts except for the smallest amount.  You will be focusing all of your efforts on the smallest debt until it is paid off.

Once it is paid off, you take the minimum payment you were making on that debt and roll it into the next debt.  Each debt you pay off, you will roll that payment into the next (Get it? Like a snowball rolling down a hill and picking up more snow as it goes).

The reason this method is so successful is it has you put your blinders up and be hyperfocused on one debt at a time.  These small loan payoffs are like positive reinforcement, telling your brain you are on the right track and to keep going.  It becomes super motivating when you are seeing progress quickly.

Pro-tip:  To know what your plan will be, you should use our Debt Snowball Calculation Sheet to write your debts from smallest to largest and see how quickly you can be out of debt.

Get the Debt Calculation Sheet for FREE by signing up below!

5.  Just Start.

You have done the work.  You have everything set up.  You have your plan in place. All that is left is to start.

This is when the real fun begins!  You are on the cusp of something amazing.  This is the time when your life will change.  You are now going to get out of debt.

Whether you realize you need more money to put towards your debt (because you have no wiggle room in your budget), or you know you want more money to pay off your debt even faster, there are two paths to get you there.

Increase your income and/or decrease your spending.  I recommend a combination of both!

The obvious solution is always to increase your income.  Need more money? Make more money!

• Take on a second or third job (either traditional or online)
• Sell your possessions (this can be life changing and I highly recommend it!)
• Use your talents to make a product to sell
• Start your own business (make sure it is very low-cost to start.  Do not take on more debt to try to get out of debt…that doesn’t work).

One of the toughest things to sustain over time, but also one of the best ways to find more money is to decrease your spending.

• Check out 15 simple ways to cut your everyday costs here.  These methods are effortless and will save you tons of money!!
• Food can be a total budget killer and difficult to change if you are used to eating out a lot or going to the store often.  Meal planning is THE best way to cut your grocery costs in a big way.

Related Post:  Food can be a total budget killer

Related Post:  What’s for Dinner?  How to Easily Plan a Month of Meals

Nobody said getting out of debt would be easy, but if you take action on the five steps we just talked about, you are going to get out of debt.  There is no magic bullet for this and you are going to have to put in the work. BUT, you will get there.

Use the fresh motivation you have right now to assess the damage and figure out how much debt you actually have.  Then set up some goals that will be there to keep you on track when you are feeling weak. Your budget will become your money plan to help you attack your debt snowball and pay off all of that stupid debt.  Then you just need to get to work implementing your debt payoff plan and never look back!

Today is the day.  No excuses. Start now!

Are you still stuck in debt?  What’s holding you back?

Pin for later!