Debt can be a major source of financial stress, affecting your peace of mind and long-term goals. Finding a way to get out of debt is one of the most empowering financial moves you can make. It frees up your income, reduces anxiety and sets the stage for a more secure retirement.
The first step is simple but essential: Stop adding new debt. This may mean pressing pause on your credit card use and resisting those “buy now, pay later” offers. Continuing to accumulate debt while trying to pay it off is like trying to bail water from a boat with a hole in it. Breaking the cycle of debt is critical to making meaningful progress.
After that, do a deep dive into your budget to determine the maximum amount you can pay each month toward reducing your balances. Identify where you can trim your spending and what nonessential expenses you can cut so that you can redirect that money to your balances. Once you’ve done that, it’s time to develop a strategy for repayment. Below are three helpful strategies for getting out of debt and reclaiming financial freedom.
The snowball method is perhaps the most popular and motivating way to tackle debt. Start by focusing on paying off your smallest debt first while making the minimum required payments on the others. Once that smallest balance is paid off, roll that payment into the next smallest debt and so on.
As you gradually pay each debt, you create a “snowball” effect, building momentum — and motivation — as each debt disappears. This method is not the most cost-efficient in terms of interest paid since your higher balances are still accumulating interest. Still, it can provide those psychological “wins” you need to keep you energized as you work to get out of debt.
With this approach, you first target paying down the debt with the highest interest rate, while making minimum payments on the others. Once that’s paid off, move to the balance with the next highest rate, working your way down to the lowest.
Focusing on high-interest balances first can save you money by reducing the overall interest you pay — especially if your highest-interest debt also has a large balance. However, you’ll need to stay motivated to keep chipping away, as it may take longer to see those smaller debts disappear.
Debt consolidation involves combining multiple debts into a single loan. In this case, you’re “simplifying” by reducing the number of payments and creditors. There are three common tools for consolidation:
Consolidation only makes sense if you can combine your debts at a lower interest rate with a more manageable and shorter repayment schedule. You should prioritize consolidating the debts with the highest interest rates first. Keep in mind that your credit score will be a factor in the terms available to you.
In more serious situations, two other options may be available.
With a debt management plan, you work with a credit counseling agency that negotiates with creditors on your behalf for reduced interest rates, fees or monthly payments. In turn, you make a single monthly payment to the agency, which then pays your creditors. These plans typically involve a fee, negatively impact your credit score, and require you to close existing credit accounts. If you decide to go this route, carefully evaluate potential counseling agencies and preferably select one that is nonprofit and properly accredited.
Debt settlement involves negotiating with creditors — usually with the help of a debt settlement company — to settle your debt for less than the total amount owed. However, this can be a lengthy process and is not always successful. It can involve a substantial fee to the debt settlement company and severely impact your credit score, which can take years to rebuild.
Each method has its pros and cons. The best approach depends on your financial situation, preferences and goals, and the types of debt involved. Whether you’re motivated by quick wins, long-term savings, or simplicity, the most important thing is to take action — and stay consistent. With the right approach, you can get out of debt and build a stronger financial future.
Looking for more help? Check out our helpful resources and calculators. Also, browse and watch our webinars for tips on money management and good financial stewardship for additional guidance in handling your financial resources wisely.
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• Nov 17, 2025 