How Do I Begin Getting Out of Debt?

Man sitting in front of pile of bills

Most people know when they’re struggling financially. Especially when you pay for everything with cash or debit. When the money runs out, you have no choice but to stop spending even if there are bills still to pay.

Credit card debt is different though. It can distort your vision of your financial situation because you’re not paying for things outright. Add to that the fact that you’ll most likely only need to make a monthly payment smaller than the amount you spent.

Here are some warning signs that you have a debt problem or will have one soon:

  1. You only make the minimum payment because that’s all you can afford.
  2. Your minimum monthly payment is large. If you add up all the minimum monthly payments of your credit cards and it accounts for 20 percent of your monthly income or more, you’re not leaving enough money for necessities like food and shelter.
  3. You have started receiving calls from debt collectors. You have to miss more than just one payment to start receiving these calls.
  4. Paying one debt with another. If you’re transferring balances or putting basic necessities like utility payments on your credit card because that’s the only way they can get paid, that’s a problem.
  5. You take a cash advance on your credit card. This is not only a sign that you’re not managing your money well, it will also put you in deeper debt. Most cards charge a fee of at least $50 for this service plus you’ll be paying your credit card’s interest rate on it.
  6. You have no savings. If you don’t even have a few hundred dollars in an emergency fund, you will find yourself in financial trouble as soon as your next big emergency hits like your car breaking down.
  7. You don’t know your financial situation or have a budget. If you don’t budget your money and don’t even know the total amount of debt you are carrying, you’re bound to be in financial trouble soon.

If you recognize yourself in any of these warning signs, it’s time to take action. There are a few things you can do to get ahead of your impending debt crisis to put yourself in a better place financially.

How to begin getting out of debt:

1. Figure out your financial situation.

Before you can act, you need to know the big picture of your financial situation. Sit down and create a list or spreadsheet of every single debt you have, how much you owe each month, and your total balance. Include your monthly payments like rent/mortgage, utilities, and food so you know what need to go out each month. Then create a budget to figure out how much you can afford to pay down on each account. Find ways to cut other expenses if necessary.

2. Contact your creditors and try to work out a payment plan on your own.

Explain your situation and see if they are willing to work with you to lower your interest rate, catch up on past due amounts, and negotiate a payoff amount.

3. Contact a credit counselor if you feel you need help negotiating your debt.

A credit counselor can also provide educational resources to help you avoid this situation in the future.

4. Don’t ignore the problem.

Ignoring debt collectors and court summons will only make the problem worse and you’ll end up owing more in the long run. Face the problem head-on.

5. Take on an extra job or start a part-time business to bring in extra income.

This will help you resolve your financial situation sooner and get you back on your feet.

The sooner you face your debt situation, the easier it will be to recover and get back on your feet without too much damage to your credit score. Be proactive, create a plan, and seek professional help if necessary.

Tagged in Debt strategies, Goal setting

Emilie writes about overcoming debt, while balancing trying to eat healthy, stay fit, and have a little fun along the way. You can find more of her work at

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.