The 7 Essential Steps to Leaving Debt Behind

Dec 22, 2021
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Getting out of debt is one of the most common goals people set at the start of a new year. Since it's one of the top financial goals at the beginning of every year, it seems that many people set this goal but don’t achieve it.

What if this were the year you actually did get out of debt, and what if you did so in a way that helps you avoid debt forever?

I once had $20,000 of credit card debt, so I know what it feels like to be buried in bills. I also know the satisfaction of getting and staying out of debt. Here is a tried-and-true seven-step process for ditching your debt once and for all.

  1. Figure Out Where You Are
    When pursuing any goal, it helps to define it clearly. In this case, that means totaling up exactly how much debt you have. Go to the Accelerated Debt Payoff Calculator and list your debts from the lowest balance to the highest — credit cards, car loans, college loans, home equity loans, personal loans, and any others. (You don’t have to include your mortgage, but you can if you want to make that part of your deleveraging plan as well.)

  2. Stop Adding to Your Debt
    You can’t get out of debt if you keep going further into debt, so make a commitment to take on no more debt. If your credit cards tempt you to spend more than you can pay off each month, get rid of them for now. Take them out of your wallet or purse. If necessary, cut them up.

  3. Tell Someone
    This is an uncomfortable step, but it may be the most helpful. There’s something powerful about telling another person how much debt you have and that you’re committed to getting out from under it. Invite them to ask you about your progress from time to time and ask them to pray for you.

    While this request for accountability will be helpful to you, it might be helpful for the other person as well. Many people have debt but are reluctant to talk about it. Your willingness to open up about your debt might create the space necessary for them to talk about theirs, and then you can be each other’s accountability and encouragement partners.

  4. “Fix” and Roll Your Payments
    As we’ve explained before, the main point here is to keep paying at least this month’s minimum required payment amount every month. Assuming you take on no more debt and make your required payment each month, that required payment amount will decrease a little bit each month.

    That isn’t kindness on the part of the credit card company, it’s math. Your minimum payment is based on your balance. So, if your balance declines a little each month, so will your required minimum payment. Unfortunately, making this declining minimum payment will keep you in debt for a long, long time. So, at the very least, keep paying the amount you owe this month each and every month. That’s a simple way to speed up the process of getting out of debt.

    Once a debt is paid off, take the full amount you were paying on that one and roll it into the payment for your next lowest-balance debt.

  5. Accelerate Your Payments
    Paying more than the fixed minimum each month will really speed up the process of getting out of debt. Run the numbers to see how much faster you’d get out of debt if you put an extra $10 per month toward your debts. What about an extra $25 or even $100 per month? You can run these what-if scenarios using the calculator mentioned earlier. Enter these extra amounts in the box where it says, “Enter a monthly dollar amount you can add to your debt payoff plan.”

    Seeing the difference may motivate you to cut back your entertainment or clothing spending to free up money to pay off debt faster. You might decide to sell some things or even pick up an extra part-time job to raise cash.

    If you have multiple debts, target your lowest-balance debt first. Completely paying off some of your smaller debts will be motivating

  6. Stay Out of Debt
    The two most practical steps you can take to avoid debt in the future are to a) use a budget and b) build an emergency fund. A budget will help prevent overspending, and an emergency fund will enable you to cover many of life’s unexpected expenses without going back into debt.

  7. Look at the Big Picture
    It took me four-and-a-half years to pay off my $20,000 of credit-card debt. There were times when the process felt like it would go on forever. A turning point came when I read about the “thorn” in the apostle Paul’s side (2 Corinthians 12:7-9). God’s response to Paul’s plea for relief — “My grace is sufficient for you, for my power is made perfect in weakness” — helped me see a greater purpose for my long journey out of debt. I realized God was molding my heart. He was teaching me how to follow and trust Him. He was helping me become more patient, and He was showing me that my value does not depend on how much money I have or what I own.

    When I saw that God was using this difficult time in my life for a greater purpose, that was very encouraging. During that season, I started volunteering with a stewardship ministry, helping others apply God’s principles to their financial situations. Eventually, writing and speaking about biblical money management became my life’s work. That helps me look back on my debt experience with gratitude.

If you follow the seven steps outlined above, you will eventually get out of debt. But along the way, look for what else God has for you in this journey. It’s likely that He has a purpose in mind that goes well beyond your finances.

Written by

Matt Bell

Matt Bell

Matt Bell is Sound Mind Investing's Managing Editor. He is the author of five biblical money management books and the teacher or co-teacher on three video-based small group resources. His latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, was published by Focus on the Family in 2023. Matt has spoken at churches, universities, and conferences throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

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