How to Get Out of Debt: 5 Steps Toward Healthier Money Habits

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How to get out of debt:

Step 1. Pay off all your outstanding bills. The end.

It seems like a pretty easy bit of advice, really. To get out of debt, pay off all your bills. That is great advice for a recent lottery winner, but it just isn’t that easy if you don’t have that recent windfall.

Depending on the amount of your debt, it can be soul-crushing. Making the minimum payments doesn’t seem to get you anywhere—sort of like walking backwards on the people-mover at the airport. The debt seems to follow you everywhere. You can never stop thinking about it. And forget about investing… how are you ever going to get a loan with all those outstanding bills?

The first step to getting out of debt is understanding why you are in debt. Most debt is avoidable. No, not all debt is. Emergency medical bills can be outrageous and difficult to plan for. I had my appendix out 20 years ago. I woke up fine one morning, and by 2:00 a.m. the next day I was in an operating theatre, having major surgery. It cost more than $14,000. Not exactly small change you can just find in the couch.

Related: The Foolproof Monthly Budget: How to Save Up Money to Buy Investment Properties

One good note is that hospitals understand they are ridiculously priced and will typically work with you on a payment plan so your medical charges are more manageable. When I had my second daughter, her hospital bill arrived right around a fairly tight spot in the month for us. I called the hospital’s billing department, hoping to be able to pay 50% of the bill that month and the remainder the next month.

Before I could even ask about specific terms, they offered me the option of paying it over 11 months and said if I needed more time than that, I would have to talk to a supervisor. I happily grabbed those 11 months before she could ask me what I had in mind.

But medical debt isn’t the focus of this article. Yes, it can be difficult to get out from under the pile of medical debt, but as long as you are making regular payments, it won’t be reported to the credit bureaus. Medical debt is some of the least damaging.

No, the focus of this article is your other debt. The damaging debt. The credit card debt. Medical debt can be paid off in much the same way as your other debt, but since it isn’t as detrimental to your credit score, let’s prioritize it to the bottom of the list. Continue making the minimum payments, but try not to get bogged down with the total amount just now.

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How to Get Out of Debt

1. Track Your Spending

If you want to know how to get out of debt, first you need to know how you got into debt. Do you know where your money currently goes? I have found the easiest way to know how you are spending your money is to track every dime. It’s so easy to forget $6.95 for lunch or $5 for an after-work drink by the time the end of the month rolls around. It is pretty difficult to contest if it’s written down in black and white.

I keep track of When, Where, How Much, What I Bought, and a Running Total of how much I have spent that month so far. It’s easy to do—I keep the notebook right on the kitchen island where I enter the house, next to where I put my keys. It’s the first thing I do when I come inside; I write down what I just bought. It only takes a minute. I use a notebook to do this, but if you prefer electronic record-keeping, Mint has a great program to keep track of spending, make a budget, keep tabs on your credit score and pay bills. Best of all, the program is absolutely free.

This simple method showed me that I was going to the grocery store nearly every single day when I first started keeping track. Holy cow! No one needs to go to the store every day. But I was going without a list, and “just running in for a couple of things.”

Related: 6 Tips For Buying Your First Property When You Have Student Debt

The problem with that is you almost never leave the store with just the items you went in for. No, you remember this one other thing, or see that item in the clearance aisle, or your kids ask for a treat and before you know it, one item becomes ten. Multiply that with everyday trip, and, well, you can do the math…

Your spending issues may be different. Perhaps you’re spending more on clothes or shoes. Once you have all your spending tracked, look for trends. Money on non-necessities can and should be cut back until your debt is paid off.


2. Make a Budget

After you know how much you are spending, analyze where your money is going. Every dollar should have a purpose, and your absolutes should come first. Housing, utilities and food should be the first items in your budget, and they should be fairly fixed. Rent or mortgage payments are the same each month. Easy to budget for.

Many utility companies have budget plans that take your past usage and average it out over the year, so you pay a set fee every month. This helps avoid seasonal usage spikes that can wreck a carefully planned budget.

Your food budget is where you can probably cut back the most and feel it the least. Chances are good that you are going out for meals and spending too much on unnecessary food items at the grocery store. If you are truly serious about paying off your debt, cut back on or entirely cut out restaurants. Meal planning is a huge help in cutting out food costs. It also helps you plan your grocery lists, so you make fewer trips to the store for missing ingredients.

Staying connected to friends while trying to pay down debt can seem like a lost cause—they want to go out to movies, restaurants and concerts, but you need to use that money more wisely. Host a potluck dinner, have a game night, check out the free events in your city or go for a hike. If you are creative, you can find a lot of ways to have fun with friends that don’t involve spending lots of money.

3. Dump That Debt

There are two main thoughts on tackling debt. Either do the Dave Ramsey Debt Snowball approach, or start with the most expensive debt and work your way down. Both have their pros and cons.

Smallest to Largest

Dave Ramsey is a financial author, radio host and motivational speaker who answered the question of how to get out of debt with a strategy called the Debt Snowball. You write down all your debts, from the smallest dollar amount to the largest dollar amount, regardless of interest rate. You make the minimum payments on all debt and make as high an extra payment on the smallest debt as you can possibly make. Ideally, you give up all extras and luxuries, and you throw every extra dollar you have at your debt.

When the smallest debt is paid off, you get to cross it off your list and start attacking the next smallest debt using the money you were using for the now paid-off first debt and throwing it at the new debt target.

The theory behind this approach is that if you keep doing what you were doing, you will continue to get the same results. It isn’t very motivational to see piles and piles of debt all the time, seemingly not getting any smaller. But paying off that first debt can be very inspirational—and it will show you that you CAN succeed at getting rid of it once and for all.

Highest Interest Rate First

An argument against the Debt Snowball approach is that you are not necessarily paying off the debt with the highest interest rate first and may end up spending more money on interest. It makes more financial sense to pay off the $10,000 at 18% interest, rather than the $5,000 at 4% interest.

But Dave Ramsey himself said:

“That is a math solution. This isn’t a math problem, this is a behavior problem. You fix a behavior problem with a behavior-based solution.”

I can see both sides. And having a win by erasing an entire debt using the Debt Snowball method can be the impetus to keep you going.

Hybrid Solution

The psychological impact from removing a debt from your list can be what keeps you going, but paying all that extra interest isn’t to your advantage. Perhaps a hybrid solution would work best for you.

Pay off the lowest dollar amount debt first, so you have the success story to think about, then tackle the debt with the highest interest rate next. Switch back to the next lowest debt for another boost to your financial confidence, then jump on top of the next highest interest debt. Flip back and forth to keep yourself motivated by the wins, while working on paying off the highest interest rate debt to pay the lowest amount of interest possible.

Related: 7 Things to Do NOW to Get Your Financial House in Order


4. Reduce the Interest Rate

In the past, it was possible to call up your credit card company and request a lower interest rate. The card companies aren’t so eager to comply with these requests any longer, and they really don’t have to be. That doesn’t mean you shouldn’t ask, especially if you have an exorbitant rate. But don’t be surprised if they refuse to lower it.

If you get turned down, start looking for another card with a lower rate, even if the rate is only introductory. Take into account any balance transfer fees the new card could charge. A typical balance transfer fee is around 3%. That could be a bit steep if you have a large balance to transfer, but if your current balance is 18% interest, it may work to your favor to pay the fee. It is getting harder to find a card that offers a 0% balance transfer fee, but they are still out there.

Don’t forget to cancel the original credit card after you transfer the balance so your available credit doesn’t tip your credit score in the wrong direction. However, if the card that had the original balance was the first major credit card you ever opened, consider keeping it open. It establishes the length of your credit history, and you want as long a credit history as possible. To keep your credit availability down, call the card issuer and ask for a reduction in your credit limit.

5. Add Some Extra Income

OK, so you have committed to getting out of debt, you tracked your spending, put yourself on a budget and removed all the “extras.” There is still more you can do. Look for additional sources of income. The more money you have to throw at that debt, the faster it will be paid off. The blog called BudgetsAreSexy has a Side Hustle Series filled with creative ways to make extra money—and these side jobs are all over the board with various time requirements and necessary skills.

Did you get a raise last year? Continue living off the lower salary and throw all the extra into paying off your debt. Did you receive any bonuses? Same deal applies. Live day to day as though nothing changed, and put the extra cash into paying down your total.

I was fortunate to not have to take out any student loans, but my husband was not so lucky. I still remember the day we wrote the final check to pay off his student loan. It was so liberating to finally be out of debt. I could actually feel the weight lifting off my shoulders.


Keys to Success

You can find many ways to reduce your expenses during your debt repayment. Creativity and commitment are the two keys to your success. Unavoidable expenses may pop up during your debt repayment. It will take time to pay off. But keeping your mind on the freedom that comes from being debt free will make the journey easier.

We’re republishing this article to help out our newer readers.

Have you paid off a large amount of debt? How much did you pay off? How did you do it?

Be sure to leave your questions and comments below!

About Author

Mindy Jensen

Mindy Jensen has been buying and selling homes for almost 20 years. She buys houses, moves in, makes them beautiful, sells them, and starts the process all over again. She is a licensed real estate agent in Colorado, author of How to Sell Your Home, and the community manager for, where she helps new and experienced investors learn the proper ways to invest in real estate to grow their wealth. Mindy is an alumnus of the School of Hard Knocks and will happily share her experiences with anyone who asks. When you can get her to stop talking about real estate, you can find her on her bike or adventuring in the beautiful mountains of Colorado.


  1. David Roberts

    If you don’t want extra stuff bought at the grocery store, let the man go, lol. We don’t really look around for other things. At least, i don’t. I have my list, i go in like a robot and get what i need. I think us dudes will bargain shop but we will spend 10 seconds or less doing it lol. If i forget to put something on my list that i needed, i definitely will not grab it at the store lol.

    • Mindy Jensen

      David, you are totally right. The problem is/was that I was a stay at home mom and he worked. It only made sense for me to do the errands like grocery shopping.

      Once I saw that, I made lists and only allowed myself to go once a week. If I didn’t have an ingredient, I didn’t make that dish or went without.

      I am much better now.

      Thanks for reading!

  2. Ben Leybovich

    Mindy – good effort. A thought:

    The inherent to this line of thinking problem lies in the fact that for some people even $125/month toward debt seems to be an insurmountable difficulty – I give you Scott Trench, who, in order to put $25 toward debt would have to sell his bike…and I don’t mean motorcycle …heheheh

    In all seriousness, though, our capacity to pay anything toward debt is a function of our burn rate. As I’ve written before, a lot of day-to-day expenses are fixed; they are what they are. Therefore, unless someone is able to push the gross, that spread is what it is. In reality, many people’s burn rate is 100% of their gross…if not more!

    This is why while budgeting is crucial, success is a function of one’s ability to push the top-line, otherwise known in the universe as – growth 🙂 Thoughts?

    • Mindy Jensen

      I am the President of the Scott Trench Fan Club – he reminds me a lot of my husband and at his age, is years ahead of the herd.

      Our consumerist society says we need to have it all, and if we can’t afford it then hey, just finance it. Too true that many people’s burn rate is 100%+. There are people who will never think this way – will never be satisfied with what they can afford. “I deserve it, even if I can’t afford it.” Sigh.

      I hope that by the time my girls are in middle or high school, they will be taught about finances in school. I teach them at home, we are working on budgeting, chores, saving up for special things, paying cash, etc. But to be reinforced at school would be fantastic.

      Success can come in many different ways, but it is far more difficult to succeed when you are sitting under an enormous pile of debt. Your options are limited at best.

      Thanks for reading, Ben. I am truly honored that your eyeballs roamed this page.

      • Ben Leybovich

        Hah – I am holding your feet to the fire here, Mindy!

        The “consumerist society” logic is faulty. I am serious. For a family of 4, there is a minimum required in order to cover necessities. Mortgage/rent, auto, food, insurances, medical, food, clothes, etc.

        How much is that minimum for a regular, no frills, every day family – is it $5,000/month? OK – you think that’s too much – let’s say $3,000/month, although you’re nuts…

        What is a burn rate that you deem safe? In other words, how my of their take-home pay can they spend and be safe? It’s not 100% – is it 80%, 70%?

        Let’s say that I deem 35%-40% burn rate to be sustainable in order to grow net worth. You disagree – you say 80%…OK 🙂

        $3,000 is 80% of $3,750/month of take home pay. Now, let’s be honest and say that this family’s effective tax rate 20%, which means that their combined salaries, in order to spend $3,000 and for it to be no more than 80% of their take-home pay is about $4,700/month – that’s $55,000/year+…

        Couple of observations:

        1. Spending 80% of take home pay is not safe – eventually they’ll be in trouble.
        2. $55,000 is now days considered middle middle class – meaning not many people actually earn that; sad but true…
        3. $3,000/month for a family of 4 is ridiculous and will never happen, which means things are even more dire than I described.
        4. If we are starting with $3,000/month of burn – what do you suggest they cut?

        Like I said, once the bottom line has been compressed as much as it reasonably can be, the top line must be pushed. And then there’s this:

        Both the top and the bottom line are much more easily manipulated and controlled in business and entrepreneurship – there’s almost nothing you can do with W2 income or expenses…:)


        • Mindy Jensen

          I know more people in financial trouble than in financial peace. And yet, I see them spending far more money than they need to – certainly more than just the basics to survive.

          You don’t need new cars, new clothes, vacations, large TVs, extensive cable packages, front-loader washing machines, new phones with expensive monthly plans – not one of these things is a necessity. But our consumerist society tells you that you do, in fact need these things in order to have a ‘better’ life.

          I do agree that increasing income is a great way to get ahead, but you still need to pay off your debt and reigning in your lifestyle can help you meet this goal.

          If you are a W2 employee, it may be difficult to keep earning raises, but canceling your expensive phone service or cable package can have an immediate effect on your bottom line.

    • Scott Trench

      As vice president of the Scott Trench Fan Club, I concur with Mindy ;).

      But for realsies, I think that “fixed costs” are a myth. They should be called “expenses that take longer than one week, but usually no more than one month to eliminate if I actually care.”

      Fixed costs in most cases among my peers, and likely among families too (maybe I’m young and naive and don’t know what I’m talking about with families) seem usually to be self-imposed in my observation. It seems like many, or most, of these “fixed” expenses (like expensive one bedroom rents without roommates, car payments, the cable bill, the weekly restaurant/booze budget, etc) could be dramatically reduced or eliminated with a simple phone call shutting off the cable, a weekend spent trading cars, or yes, an actual dedication to a budget.

      Ben, I think you mentioned one time that you’ve never had a job working for someone else. As someone who has never been an employee, you might have trouble understanding how hard it is to work a 60 hour week, go home, then go back to work trying to earn more money when that entails working for minimum wage at the beginning, or sometimes even less (I’ve been there, it sucks really really bad). That money you work for is not even slightly meaningful compared to one’s salary in the first years. Instead, employees (80 million of them…) NEED to focus on frugality to get to a point where their job is no longer an absolute requirement for survival for the next paycheck. Then they can fearlessly pursue the top line, income, for further wealth either through their own endeavors, or by taking a risk to join tiny little startups in the real estate tech world…

      • Ben Leybovich

        Scott – I am all for frugality. All I’m saying is that the tax code is not written for W2 income crowd. It’s impossible to be frugal on W2 income because the cuts this forces you to make are real money. Guys like Josh, Serge, Brandon, and me – we have many, many options, all of which are legal, to lower our exposure to the most expensive item – taxes.

        You’ve been missing the point. Scott – when I talk, you need to read between the lines…

        I used to think as you do, that frugality is a function of minimizing my life-style. I’ve learned that earning more is not a problem. In fact, the more I earn, the more opportunities to be frugal are prescribed for me by the tax code. You’re a numbers guy – open your mind. Being frugal is different from being cheap 🙂

  3. Jerry Kisasonak

    I tend to agree with Ben. You can only cut out so much of your living expenses. What about budgeting? Ok, if you have $100 and you divide it into 4 and you put $25 in each of your pants pocket you still only have $100. Although you may feel like you accomplished something, nothing has changed.

    If you read Cashflow Quadrants you’ll understand more about the types of income and their tax implications. It is very hard to work at wholesale (W2) and live at retail. This is why the poor and middle class struggle. The rich don’t work for money. They work to acquire income producing assets like businesses and real estate.

    The answer is common sense frugality combined with increasing your income – preferably the right kind of income by starting a small business.

    As for Dave Ramsey, keep in mind that Dave helps people get to 0, or broke if you will. “Get out of debt” is his theme. That’s great. But once you’re out of personal consumer debt it’s good advice to switch the channel to the “How to get rich” show, which is an advanced class that Dave doesn’t teach.

    • Mindy Jensen

      Thanks for reading, Jerry.

      Yes, you can only cut out so much, but my experience shows that many people have a lot to cut.

      And I agree with your Dave Ramsey views, but so many people won’t ever take his advice to get to zero, let alone change the channel to the “How to Get Rich” show.

      I see a lot of people in the forums, asking how to invest with no money or with large debt. Fix the underlying problem first. Change your habits, remove the debt, then start building wealth.

      • Ben Leybovich

        Mindy – I must disagree with the blanket statements you’re making that people don’t try to get control of expenses. We all agree that consumerism is horrible and an issue in this country. We also agree that living on a budget is a good thing!

        What we disagree about is how far this line can be pushed. There comes a limit to how much can be cut. The burn rate is a relationship of spending to take-home pay, and at a certain point all that can be done to compress consumer spending has been done. At this stage, ones understanding of expenses and income must transcend Dave Ramsey’s message and yours.

        Ramsey sells books and seminars, and the more he sells the more money he makes. It reasonably follows that he caters his messaging to the widest possible cross-section of population because people can wrap their heads around it.

        What I am here to tell you, however, is that while your conceptual understanding is not wrong, it is incomplete. You are seeing the part of the iceberg that happens to be above water – we all see that, and we all agree. But – tell me what advice you would give someone who already is truly controlling their budget, drives a beater to work, doesn’t eat out, sends their kids to public schools, etc.

        If someone is doing it right and still spends 100% of take-home pay on absolute necessities, because as I say, some expenses are fixed and they can’t cut any more – what do you tell them to do?! That goes for you too, Scott – what do you tell them?

        Personally, I tell them that they’ve done all of the stupid things that everyone agrees should be done, and now it’s time to get smart about finance. And then I explain to them, step by step, how to do it, which entity to form and why, how to book expenses and income within those entities, etc. I’ve done it, and continue to get smarter about it, so now I can explain to someone the real game – the iceberg underneath the water, so to speak.

        Allow me to leave you with a couple of quotes:

        “The only thing worse than being blind is having site but no vision.”
        Helen Keller

        “While knowledge is desirable, the right kind of knowledge is necessary.
        Ben Leybovich

  4. Kristi White

    Wow, what a fantastic thread! Great article Mindy. Ben I love the iceberg analogy. I will tell a quick story.

    My husband and I moved from the Los Angeles area to the Midwest about four years ago. We had our reasons, but a very big one was the inexpensive cost of living. We own a general contracting company; we also own a small portfolio of rental properties. We are very conservative with our money and I would say many of the consumerist type items described above, we pass on.

    At the begging of 2014 we had saved up, worked hard and were ready to buy a house of our own. We were looking to keep the mortgage at around 1/4 of our take home but found the perfect house, and the mortgage ended up at around 1/3 of our then take home. We are very hard workers, and decided within the next year we could push up our take home income to make up for the difference.

    One month after purchasing the house my husband was diagnosed with cancer. He is now in full remission, on his way to being cured of Hodgkin lymphoma.

    In the course of one year, we have accumulated more debt, than either of us has had in our entire lives. In the begging I was in the Mindy camp. I was able to lower the rate on our mortgage, I cut ANY non necessity. We diligently budgeted our monthly expenses. My husband was on board, but was always pushing, saying we need to increase our income, “the top line must be pushed”. Since then we have made changes that enabled us to increase our take-home pay. I agree with Ben on both counts; this would be much harder to do for a W2 wage earner, additionally I do not believe it would be possible for us to budget our way out of this.

    For me the budgeting helped, but it never felt like it made a true significant dent in the debt. It took a lot of creative thinking, patience, and hard work to come up with ways to increase our monthly take home, but we did. I am happy to report the debt is slowly but surely ratcheting down.

    I think that there are others in this same boat, who feel overwhelmed. They have lowered all expenses to the bare bones and are left making payments that do not cover the entire interest rate, let alone the principle.

    Mindy I do agree. I have friends in debt who says there is nothing left to cut. They lease a new car every couple of years, pay a $300 cable bill, have $5 a day coffee habit, and wonder how we were able to offered rental properties. ” Change your habits, remove the debt, then start building wealth.” Will be my new advice for them.

    • Mindy Jensen

      Thanks for sharing your story, Kristi. I do agree that budgeting won’t remedy everything. Your medical bills are a perfect example.

      What I do have in my life are many people who are desperate to get out of debt, yet lease a new car every couple of years, pay a $300 cable bill and have a $5 a day coffee habit and cannot figure out why they can’t get ahead.

  5. Bryan O.

    Great article. I know so many people that claim they don’t make enough, but always have a pack of cigarettes, a glass of wine in the evening, a trip to fast food because they “deserve” it, the Starbucks drink, you name it. The smart-phone is the absolute biggest necessity that gets me.
    One thing I heard in a recent training at my local REI meeting is to NOT cancel any of your credit lines. The credit availability only hurts your score if you are using it. The FICO calculates based on the ratio used:total_available. Please jump in and let me know if what I heard was poppycock. As you mentioned, the other benefit of leaving that line open is having a long-standing history of green flags.

    • Bryan O.

      I wish I could edit the post. This is directly from the FICO site (
      “Don’t close the old cards that you’re not planning to use any longer. I know this may seem counter-intuitive, but there’s a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let’s say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase.”

      • Mindy Jensen

        Bryan, thanks for sharing.
        I have been doing quite a bit of reading about FICO scores and credit reports and it seems like there is a lot of different advice.

        I based my advice on the total amount of available credit, which can sometimes make you look like a riskier prospect if you have too much open.

  6. David Goossens

    Ben, You bring up a valid point – sometimes a family is squeezed so hard that there is nothing left to cut in the budget. The burn rate is 100% or more. The unfortunate reality is that there is no easy solution. For people in such dire situations, the only solution is to create a long term plan to slowly increase both the top and bottom line, which is far beyond the scope of this article. You are just as guilty as Scott for not reading between the lines. Both Mindy and Scott are appealing to the majority of people who have been floating through life financing frivolous purchases because “that’s what everyone else is doing”. This article is meant for the an audience that is finally starting to see the light, and is looking for a way to climb out of debt so that they can pursue REI.

    • Mindy Jensen

      Thank you, David.

      You’re right – there is no one right solution for everyone. And not everyone has the ability to squeeze any more out of their spending – they are living at the very end of their rope. If that is the case, then Ben is correct, the only way out is to increase income.

      But I believe the majority of people who are in debt are there because of poor decisions about frivolous spending. Small tweaks make huge differences.

  7. Tim Gilman

    Mindy – Great article
    I have learned throughout my young adult life to live below my means. I set stringent goals to pay off all of my debt (student loans, credit cards, etc), buy a home, save up a year’s worth of emergency funds and buy a car cash, by the age of 25. It took me until the age of 27 to accomplish all of this with all of life’s hurdles, getting married, and having a child but it did happen. I did this through a combination of tight budgets (if I did not need it I did not buy it) , buying second hand furniture and whatever else I knew would be much cheaper used. There are so many free tools (apps) to track spending, set budgets/goals and stay on top of spending habits which can be very helpful. I am now on my way to buying my second investment property and having the debt-free peace of mind has been wonderful.

  8. Isaac Zimmerman

    Hi Mindy, quick question. Why cancel a credit card account once you’ve transferred the balance off of it, or really any credit card you have open at all? Not only due to credit history issues that you’ve outlined, but also due to overall available credit, which cancelling cards will reduce…..wouldn’t it be better to leave everything open, especially with a zero balance since 35% of a zero balance still doesn’t hurt you? I’d recommend keeping these accounts open, and monitoring them, and if you can’t keep yourself from using those cards simply shred the cards, but keep the accounts open for the sake of your credit history……

    • Mindy Jensen

      Hi Isaac.

      You make a valid point. The credit scoring system is filled with nuances. Having a large balance with a relatively small limit makes for a high debt-to-credit ratio, so it would seem that if you can increase the limit, your ratio automatically goes down.

      But on the flip side, having TOO MUCH open limits can knock you as well. Opening up many cards and keeping them open create multiple accounts with short history’s. This can be seen as a change in your behavior, but not in a good way.

      You should absolutely keep the oldest card you have open forever. The oldest card with NO ANNUAL FEE, that is.

      Managing credit is a delicate balance. Having a few with a $0 balance is great, but having many with $0 balances may not be.

      Thanks for reading.

  9. Great article Mindy! I like the point that was referenced to still live on a lower salary when you may have received an increase in salary. Paying off lowest debts can be encouraging and motivating in tackling debt, as those lower debts are paid off, one can stop and celebrate the victories along the way to tackling those larger debts. Key is to keep moving forward and celebrate your victories!

  10. Nicola Jordan

    Hello all,

    I am going to be controversial here. Why do we care about our credit score? All a good credit score means is that we are making creditors money.

    My husband ran up HUGE debts without me realising. When I did realise, we called all 11 of our creditors and told them that we could no longer make even the minimum payment. Our credit score dropped below the scale. I didn’t care because in reality even if I did get more credit, we couldn’t afford it. We made ‘token’ payments to each creditor and the interest and charges were stopped. In the meantime we realised that we had no buffer and so we saved what we could including most of the minimum payments that we had been paying. Once we had our buffer, we kept saving. As we saved we made offers to our creditors to pay off half the balance as a full and final offer. In doing that however, our other creditors would raise their heads again so we decided not to make offers until we could pay off all creditors.

    There is more to this story but I won’t bore you with the lengthy details. However, yes my credit rating is ruined. No, I cannot get any more credit for some time. But in the process, instead of paying back £86 K plus interest, I will now pay less than £43K. I would say that has got to be worth a damaged credit score.

    Just one way to think about it.


  11. Damon Abbott

    Hi Mindy,

    Thanks for the great article. I recently purchased Scotts book and realize that we need to make some changes regarding debt and spending habits. Question though. Any advice on how to get your spouse on the same page? How have others worked through this?

  12. Amber Porter

    Thanks for the article.

    I have read through comments that criticize those other people who complain about not earning enough, not being able to save, but are spending $5 daily for lattes and carrying iphones. Perhaps the problem is they have nothing to save for. There is a lack of knowledge/imagination of what their lives could be like if they made some different choices. I suspect keeping things the same is good enough compared to what they imagine the alternative to be. Get out of debt? For what?

    So, the item I would add to your list is to define your Vision! What will motivate you to make these painful changes? Otherwise, go enjoy the latte!

  13. John Murray

    This is a simple equation, money in-money out= reinvestment capital. The concept is to increase money in and decrease money out which produces more reinvestment capital. Reinvestment capital builds wealth as long as investments are prudent and profitable. It’s a closed loop or did I miss something?

  14. Timothy Brown

    My wife and I use the Dave Ramsey method, it has worked great for us! We cut the fat off our budget by deciding what we could do without, sold some stuff and with focused intensity started blasting debt. With that focused intensity we paid off a total of $31800 this year so far.

  15. Chris DeMello

    My wife and I used 101 Financial to pay off our debt, and very quickly too! We started with about $35k in consumer debt. Paid off $20k in the first 6 months. We were debt free in 1 yr. Bought our first home in 2015. Bought our 2nd home in 2016. I’m a bartender and my wife was a waitress at the time and we have 4 kids. It’s not like we were making a lot of money. It all comes down to leverage! We all been banking the same way for 100’s of years! 101 taught us how to leverage our money and using the banks tools to our advantage. I think Dave Ramsey has some great advice, but, it’s out dated. I believe the best and fastest way to get out of debt is using debt. We refer to it as a Debt checking account. That along with a credit card has become our two most powerful financial tools! We all face one of the biggest thing thats working against us… TIME!! Yes, you can cut up your credit cards and just use your cash and do the snowball thing. Be extra frugal and spend years paying off your debt. Or you can do it in 1/4 the time. All while building your credit and getting tons of CC miles and rewards for just living your life! No brainer to me…

    My wife left her waitress job in 2014 and has been a full time 101 Financial instructor since. I promise you there is no better way to get out of debt, get organized, and build your savings faster then with 101 Financial! If there is, please share with me and i’ll gladly be open to hearing it!

    Thank you Mindy for a great blog!

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