Practical Steps for Getting Out of Debt

Matt Bell

People often think of a budget as a ball & chain.  In truth, it’s the exact opposite – a tool that leads to great financial freedom.  But there is such a thing as a financial ball & chain.  It’s called debt.

Debt is a drag.  It creates stress, keeps us from achieving our financial goals, and messes with our happiness.

In this post, which goes deeper on the sixth of my 11 principles for simple, meaningful success, Ruthlessly Avoid Debt, we’re going to get very practical in ditching debt.

Make a Commitment

No matter how much debt you have, it’s possible to get out of debt and to stay out.

But it’ll need to be more than a good idea or something you’d like to do someday one day.  You’ll need to be committed.

Even if you have no idea how you’ll ever get out of debt, even if it seems impossible, make a commitment that from this day forward you will do what it takes to get out and stay out of debt.

If you need a little inspiration for facing up to tough circumstances, read and watch the story of Team Hoyt.

Go Public With Your Commitment

As with anything challenging, it’ll be much easier to achieve your ditch-the-debt goal if you’re not in it alone.

Think of a relative or good friend you’d be willing to talk to about your debts. Contact them today.  As nerve-wracking as the conversation may be, let them know that today you decided to be done with debt and you’d like their support.

Ask them to pray for you and encourage you.  Invite them to ask you about your progress from time to time.

Face the Truth

Contrary to the sentiments expressed in a memorable scene from “A Few Good Men,” you can handle the truth.  And it’ll serve you well to know the truth about your debts.

Gather up your latest statements and make a list of all of your debts.  Who do you owe?  How much do you owe to each creditor?  How much is the minimum monthly payment?  And what’s the interest rate?

If you’re a homeowner and have a reasonable mortgage, you can leave that off the list.  Of course, it’s fine to pay off your mortgage as well, but I’m mostly concerned about all other types of debt. 

Stop the Bleeding

When I used to play a lot of golf, whenever things started going badly I would tell myself I needed to “stop the bleeding.”  In essence, before I could allow myself to dream of pars and birdies again, I needed to stop making bogeys, double bogeys, and worse.

Before I could go forward, I needed to stop going backwards.  The same is true with debt.

Take your credit cards out of your wallet or purse.  Cut them up if you have to.  Freeze them into a block of ice.  Just do whatever it takes to make it as difficult as possible to go any further into debt.

Fix Your Payments

If you go no further into debt and you make the minimum required payments each month, then each month those minimum required amounts will decrease a little bit.

That may seem incredibly generous of your credit card company, but it has nothing to do with kindness.  It has everything to do with math.

Your minimum payment is based on a percentage of your current balance – usually somewhere between two and four percent.  If your balance is declining a little bit each month, so will your minimum required payment.

If you make this declining minimum payment, you will stay in debt for approximately forever.  But if you fix your payments on the amount that’s due this month, even when your credit card company lowers your required minimum payment, you’ll get out of debt much faster.

For example, let’s say you have a $2,000 balance on a card charging 18 percent interest and requiring a minimum payment of two percent of that balance.  If you make the declining minimum payment each month, it’ll take you a whopping 289 months (24 years!) to get out of debt and you’ll pay nearly $4,400 in interest.  But if you fix your payment on this month’s minimum of $40, you’ll be out of debt in 94 months and you’ll pay about $1,700 in interest.

So, take note of this month’s minimum and make sure you pay at least that much each month.

Accelerate Your Payments

Of course, you’ll get out of debt even faster if you pay more than the fixed minimum each month.  In our $2,000 balance example, if you pay $60 each month, it’ll take you 47 months to get out of debt and you’ll pay about $800 in interest.

Use the Accelerated Debt Payoff Calculatorto see how much faster you’ll be out of debt by paying various extra amounts each month.  That should motivate you to do what you can to free up money from other spending categories to put toward your debts.

Stay the Course

We live in a quick-fix culture, but getting out of debt usually takes some time.  When I was slogging my way through the four and a half years it took to pay off $20,000 of debt, it helped when I began to see the bigger picture.

Part of that bigger picture had to do with my faith.  I saw that the discouragement I sometimes felt drew me closer to God.

Another part had to do with helping others.  Very early in my journey out of debt, I began doing volunteer work with a financial ministry called Good $ense.  I found it deeply satisfying to come alongside others who had debt to encourage them and show them some practical steps they could take to get out of debt.

Rest assured, there’s a bigger purpose for your debt.  As you discover that bigger purpose, it’ll help you stay motivated to do what it takes to get out of debt.

Other posts in this series on the 11 principles that lead to simple, meaningful success:

Matt Bell is the author of three personal finance books published by NavPress, leads workshops at churches and universities around the country, and serves as Associate Editor at Sound Mind Investing, America’s best-selling investment newsletter written from a biblical perspective. To learn more and for a free subscription to the Sound Mind Investing blog, go to

Publication date: June 20, 2012