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On one hand, getting out of debt is straightforward:

  1. Spend less
  2. Make more
  3. Put the difference towards debt repayment

While these steps work, the journey to becoming debt free is not a straight line.

Getting out of debt takes work. Not only must you make changes to your habits and actions, you must also change your mindset. This is much easier said than done.

But the rewards are worth it. 

To help you reach your goal, I’ve put together a 6-phase process (with 27 total ideas) for eliminating debt as fast as possible.

Phase # 1: Get Organized

In order to know where to go, you first must know where you are. Finding out who you owe, making a budget, creating a net worth statement and listing your debts allows you to make better decisions today and in the future.

# 1 – Find out who you owe

The list of people you think you owe vs. the list of people you actually owe may not be the same. That’s why step # 1 is to look at your credit report to see exactly who you owe.

The fastest way to do this is to use a free site called Credit Sesame. When you sign up for Credit Sesame, you’ll get a list of who you owe money to according to your TransUnion credit report.

Credit Sesame will then organize your debts by:

  • Account type (home, auto, credit card, etc…)
  • Account balance
  • Minimum payment due
  • Interest rate or APR

This is vital information you’ll need to develop your plan.

Learn more about Credit Sesame.

# 2 – Make a budget

You must have a plan for your money. You can’t wait until the end of the month to see what’s left over.

In other words, you need a budget.

But let’s make it easy. After all, it’s 2018.

Here are a few recommendations that make tracking your income and expenses effortless:

# 3 – Prepare a net worth statement

Once you have your budget, it’s important to get a snapshot of your current financial picture. A net worth statement is simply a listing of the assets you own and the debts you owe.

You can use a free template, such as this one from Microsoft.

Or, Personal Capital and Tiller both track your net worth automatically.

# 4 – List your debts

Debt comes in different shapes and sizes. Interest rates, fees, penalties, and minimum payments are just a few of the things you must learn about your debt.

Take the information you gathered when signed up for Credit Sesame and insert into the attached spreadsheet.

ResourceDebt Reduction Spreadsheet

 

Phase # 2: Mindset

The journey to paying off debt can be a long one. It’s important to get some help along the way. Use these tools and resources below to sustain your motivation.

# 5 – Communicate

One of the hardest aspects of getting out of debt is getting on the same page as your spouse, friends, and family. If you’re in a relationship and one partner doesn’t want to change–it makes it that much harder. If your friends just want to go out and spend money–it can become quite frustrating. It’s important to deal with these situations head-on.

Resource: 6 TED Talks Couples Can Watch To Spark Meaningful Conversations About Money

# 6 – Read Success Stories

Since only 20% of American’s are out of debt, it’s unlikely you’re going to come across success stories in everyday conversation. So, you’re going to have to seek these stories out.

Resource11 Student Loan Success Stories To Motivate You Right Now

# 7 – Read a book

Books (from the library or borrowed from friends) can help you build the motivation and make better decisions. The book often cited as the inspiration to getting out of debt is Dave Ramsey’s Total Money Makeover.

ResourceThe Total Money Makeover

# 8 – Listen to Podcasts

Beyond books, podcasts can also help sustain the motivation to pay off debt. A good starting point is The Dave Ramsey podcast. On every episode Dave has a guest on who completed their debt free journey perform a “debt free scream.” It can be highly motivating imagining yourself in that situation.

Resource: Dave Ramsey Podcast

 

Step # 3 – Prioritize Your Debt

You’ve gotten to know your finances, you have the motivation to get started–now it’s time to start paying off your debt.

Here’s a good place to start:

#  9 – Decide which debt to attack first

Use the debt snowball method to start paying off your smallest debt first.

Resource: The Debt Snowball Method Explained: A Quick-Start Guide

# 10 – Calculate how much extra to pay off that debt.

You made a budget, right? Here’s where your budget comes in handy. With the gap between your income and expenses, put ALL of it toward your highest priority debt.

Resource: Allocated Spending Plan: Free Guide + Worksheets

 

Phase # 4 – Decrease Your Expenses

Now it’s time to cut expenses even more. The larger the gap between your income and expenses, the faster you’ll pay off debt.

# 11 – Shop Your Insurance

Rates from one insurance company to another can sometimes vary up to 50%. That’s why it’s smart to check your rates at least once a year.

The easiest type of insurance to shop is your auto.

Use a site like Esurance, which takes only a few minutes to get a quote, to see if you can save.

All it takes is a few minutes. So, with ease you know whether to continue shopping around or if you’re already paying the best price.

# 12 – Stop Paying Fees

Get a bank that doesn’t charge excessive overdraft fees and has a nationwide network of free ATMs.

Resource: CIT Bank

# 13 – Don’t Hoard Cash

Since you’re in debt, any cash that’s sitting around is costing you money.

A good rule of thumb is to keep $1,000 around for emergencies. Then, put anything over and above into debt payoff.

ResourceHow To Save $1,000 When You’Re Living Paycheck To Paycheck

# 14 – Trim your Subscriptions

Monthly subscriptions add up.

Fortunately, there’s a free money-saving tool call Trim that analyzes your accounts to find recurring subscriptions and determine where you can save more money.

By using Trim, you can:

  • Find out how much you’re paying for each subscription
  • Cancel each subscription with a simple text message to Trim

For subscriptions you don’t want to cancel, such as Internet, Trim negotiates your monthly rate so you can save money.

Learn more about Trim.

# 15 – Lower Your Utility Bills

Here are a few ways to start lowering your utilities:

  1. Winterize Your Windows
  2. Get LED lights.
  3. Minimize temperature change of house compared to outside. In the winter, set the temperature lower. In the summer, higher.
  4. Use a low-flow shower head
  5. Weatherstrip all doors
  6. Lower the temperature of your water heater
  7. Add insulation
  8. Take quicker showers
  9. Use smart power strips
  10. Use time delays. Energy rates rise when usages are highest. So, if your dishwasher or washer machine offers a time delay, set them to run in the middle of the night.

ResourceHow To Save Energy At Home: 15 Easy Ways To Lower Your Utilities

# 16 – Use Coupons

Never used coupons before? I didn’t either until I got the iBotta app. The Ibotta app is a great way to get a few dollars back every time you shop.

Ibotta offers cash back on a huge list of items you’re probably already buying like eggs, milk, bread, yogurt, etc… This can be from anyone of your favorite brands. Plus, there are bigger cashback offers on brand name items. Stores include Walmart, Target, Costco, and most nationwide grocery stores.

Ibotta offers a generous signup bonus and a very easy way to earn your first $20, which is deposited into your PayPal or Venmo account.

Resource: Sign Up Here + Free Bonus

# 17 – Lower Your Grocery Bill

Food is one of your largest expenses. Without sacrificing your health, you want to spend the least amount possible.

Resource:  The Busy Parent’s Guide To Healthy, Budget Friendly Meal Planning

# 18 – Get More Cash Back Online

If you shop at all online, you need to check out Swagbucks.

Swagbucks allows you to get up to an EXTRA 20% cash back from thousands online stores like Amazon, Walmart, Target, and more.

You also get a $5 bonus just for signing up, when you use this link.

# 19 – Use Free & Cheap Entertainment

You can still have fun without spending money.

Resource100 Ways To Relax and De-Stress For Under $10 (Without Screens)

# 20 – Get Money Back on Past Purchases

Did you know you can get a refund if something you bought online has dropped in price?

Say you bought something last month for $200 and the price dropped 10% due to a recent sale. You can make a quick $20 by claiming a refund.

What makes this process effortless is that there’s a 100% free tool called Paribus which does the heavy-lifting for you.

After signing up for Paribus, it tracks your recent purchases (through emailed receipts). Paribus looks for price drops and helps you get a refund when it finds one.

Unlike other similar sites, Paribus allows you to keep 100% of the refund. That’s right, there are no hidden fees.

Learn more about Paribus

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Phase # 5 – Start Making Money

It’s important to work both sides of the debt equation; expenses and income.

Here’s a few simple ideas for getting started making money.

# 21 – Share Your Opinion

Surveys are one of the easiest ways to make money online.

And considering you can complete surveys on your phone watching TV or listening to podcasts, it’s a real no-brainer.

To start making money, all you have to do is sign up with a reputable site. You’ll then be notified when a qualifying survey becomes available.

For example, here’s a survey opportunity recently emailed to me.

Not all offers are this good but every once in a while you’ll get one like this.

Readers of The Ways to Wealth have tried a lot of survey sites and by far their favorite is SurveyJunkie.

Click here to start making money with Survey Junkie.

# 22 – Get Money Back

I enjoy finding a great deal online on things I need. One thing I’ve done to save more has been to use eBates. eBates gives you free money for the shopping you’re already doing.

Essentially, what eBates allows you to do is share a referral fee for making a purchase through their link. You get a few extra percent off of your purchase from stores like Amazon, Target, eBay, Nordstrom, and more.

Resource: eBates with $10 Bonus

# 23 – Consider A Side Hustle

There are hundreds of ways to side hustle, the most important thing is to pick an idea and run with it.

# 24 – Sell

Any asset you own is actually accruing interest–even if it’s fully paid off. Sell everything and everything you can on sites like Craigslist or host a garage sale.

Resource: How to Sell Stuff on Craigslist Successfully – 5 Craigslist Selling Tips

 

Phase # 6 – Improve Your Credit

Now that you started to pay off debt, decrease expenses and increase your income–your credit score can naturally improve.

Here’s what to do next:

# 25 – Get Your Free Credit Report

Get a copy of your annual credit report and check for inaccuracies. This is free to do with AnnualCreditReport.com.

Resource: Annual Credit Report

# 26 – Increase Your Credit Score

Once your credit report is error free, it’s time to start improving your credit score. Use a free credit score evaluation tool like Credit Sesame.

# 27 – Don’t Give More Money to Banks Than Required

Whether it’s a mortgage, student loans, credit cards, auto loans, or other personal debt — you can save a lot of money by refinancing.

However, as interest rates are trending up, time may be running out to save.

So, take a few minutes now to make sure you’re not giving more money to a bank than required.

Here’s how to get started:

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