I was dodging collector’s calls like they were charging bulls.

I blocked most of these numbers on my phone, but sometimes a new one would come in. I would immediately recognize from the beginning of the number which account this was about and would roll my eyes.

Of course, I would never actually answer the phone. What could I even say? “Don’t you think I would pay you if I could? I would love to get you off my back.” No, I would only imagine the conversation and decline the call. At the end of the day I would delete all the voicemails that were left so that there wouldn’t be too many tomorrow.

If you related a little too well to this, then this guide is for you.

Believe me, I know how impossible it feels to dig yourself out of this hole you dug. It’s terrifying. If you’re like me you’ve looked up everything you can think of, just looking for a quick fix or any kind of plan that you can still live on. Nothing sounds practical though. It sounds like slow, miserable work. How do you even figure out how to pay off debt when there is too much information out there?

Let’s cut through all of that and make this as simple and headache free as possible.

My Debt Pit

how to pay off debt - drowning
This was me in debt.
Turns out credit cards aren’t very buoyant.

On paper, I thought my finances were OK. I was able to spend what I wanted, whenever I wanted. I paid my bills on time. I paid more than the minimum. My credit score was decent, and I occasionally got credit increases on some of my cards. I wasn’t living a crazy lifestyle. So where had these credit card balances come from?

Oh right, that trip a few months ago. And that concert, I had to go, they aren’t usually in town. And dinner with friends. Might as well get drinks and dessert, I don’t go out much. Also, I got lunch the other day, it was a long day and that lunch was a treat I sorely needed. Oh, I have another vacation coming up? I want to make sure I really enjoy it.

I thought I wasn’t spending much and I should treat myself when I do. Problem was, that I was doing this all the time. I was putting it on credit cards for points I told myself, I would definitely pay off the balance this month. Or… at least the minimum right? It’s just extra cash the moment, I can handle it in the future. That’s a problem for another day.

I had always been responsible with money, but it spiraled out of control so fast. I tried to deal with it while still “living a little” and found myself in a loop of debt that I couldn’t escape from.

How I Ran My Debt Loop

how to pay off debt - money burning
Be careful not to burn yourself while you’re burning through cash.

1. Whenever I got paid, I would pay as much as I could to my credit cards. The minimum payments were pretty hefty, but I would always try to pay a little extra.

2. The payments would hit. The available balances on my credit cards would increase from the payment going through and my checking account would be nearly empty.

3. Without money in my checking account, I would have to rely on credit cards since there was more available to spend there. I would soon max these out again and have spent the amount of the payment I made.

4. Next pay period I would pay as much as I could to my credit cards, which would empty my checking account and force me to rely on credit cards again.

While I could keep this going for a while, this self-imposed Ponzi scheme did catch up with me. Eventually I had spent enough, and my minimum payments added up to more than I could pay.

I started juggling which bills I wanted to pay each month, letting some go past due with the intention of bringing them current each month. Some went to collections, some accounts were closed on me, and yet I still tried to float on any credit cards I still had.

I was getting tired of living like this and dodging calls. It was constantly on the back of my mind and I would feel sick to my stomach when I thought about it. I knew I couldn’t sustain this system.

After researching everything I could get my hands on about debt, I came up with this 8 step guide. You’re already feeling overwhelmed, let’s not make it any more complicated.

If you’re ready to pay off debt, follow this simple guide to start your journey on the right foot.

Keep in Mind:

1. There is no quick fix or magic wand to make it go away.

This will take time and persistence, so be patient. This can take months or even years depending on your amount of debt.

2. Ignoring it won’t make it disappear.

Believe me, avoiding calls and shredding bills doesn’t make it any better. This is something you need to just handle and be done with. You’ll feel better.

3. Reward yourself in moderation

No matter how strict your budget is, try to find something free or cheap that you really enjoy and use it as a treat sometimes. This might take a while so keep your spirits up.

How To Pay Off Debt

how to pay off debt - piggy bank
Don’t be sad piggy bank, you won’t be empty for much longer.

1. Cut Up The Credit Cards

No really, they’re evil. It took me forever to take this step but it’s the only way. You can’t pay off debt while you’re still adding to it, and as long as you are still able to use credit cards you will. You won’t be using them anymore, so you might as well destroy them. You don’t necessarily need to close your accounts though.

2. Get All of Your Account Info

Log on to all of your accounts and get the following info:

  • Balance
  • Minimum Payment
  • Due Date
  • APR

Once you get this data, put it somewhere that you can work with it, like an excel sheet, or a notebook, but you need to know these things. Don’t forget any accounts because you want a complete picture of your finances.

3. Make a Budget

how to pay off debt - calculator
Don’t make your budget too complicated. If you can’t stick to it then what’s the point?

Now that you know the monthly minimums add this into a budget. You can look through previous bank statements and try to estimate how much you spend and when for most expenses. Always pay the mortgage/rent, transportation, utilities and groceries. You need a roof over your head, a way to get to work and food to live on.

If these costs are too high, try to see where you can cut these. Maybe you need a cheaper car or to take public transport, and maybe you can buy food in bulk or cook at home more. Once you figure out your living expenses, factor in the minimum payment on your credit cards into your budget.

4. Contact Your Creditors

how to pay off debt -  man on phone
I hate phone calls. If I can do it, you can do it.

This step isn’t essential, but it can really help! Most creditors are surprisingly willing to work with you when you are trying to pay them. They may lower your interest rate or even be willing to move your due date for you if it helps with cash flow. The key is to let them know that you are going to pay down your debt with them more aggressively and to see if they will assist with this.

Note: If you cannot afford your minimum payments you really need to contact them and let them know. Ideally, they should work out a system with you, and they need to know you are trying.

5. Revisit Your Budget

Since contacting your creditors, were you able to get any reduced payments or interest rates that you need to update in your budget? This is the time to update that. Add everything up and find out how much income you have left after paying for all necessities and the minimums on all bills. This extra amount (no matter how small) is how we are going to tackle that debt.

6. Choose Your Payoff Method

NerdWallet is an excellent resource for all things personal finance, but check out their article Pay Off Debt: Tools and Tips. This will give you even more help about how to pay off debt. Most importantly, here is a debt payoff calculator and resources on the Debt Snowball vs. Debt Avalanche methods.

With the Debt Snowball method, you try to pay off the account with the smallest balance first. The idea is that you will have a mental win to keep your motivation up, and you will free up more money each month to go to the next smallest debt.

The Debt Avalanche method will help you to pay off your debt quicker and to save you money by paying off the account with the highest interest rate first. In the long run you will save more without those interest charges adding up.

Either method is completely up to you and what will work best for you. What’s important is that you choose a plan that you can stick to.

7. Implement Your Plan

Now that you know how much extra you can pay and which method you are using, let’s get started! After paying for necessities start paying off debt. Pay the minimum on all accounts, on time, every month. Let me repeat, pay the minimum on all accounts, on time, every month. This is so important to your credit score. Anything extra you have to pay for debt, put towards your first account which will be either smallest balance or highest APR depending on which method you chose.

8. Stick With It

It is going to take awhile to really see a difference in your finances but that’s OK! You didn’t build your debt overnight and you can’t tear it down overnight. What’s important is that you stick with it because this system WILL work. Even when it gets tough and you want to splurge, don’t do it. You’ll be in great financial shape soon enough and can live a little easier.


Not Enough Money?

See if there’s anyway that you can get a promotion or raise at work, or a part time job. Not feasible? That’s OK, check out these ideas for Side Gigs Online.

Can’t Stick To a Budget?

This is a tough one. While it will take discipline, you may just need to find an app or system that works well for you.

Too Many Bills Due At Once?

This isn’t always something you can fix but try to contact your creditors and see if there is any way to change the due date. If you let them know you are genuinely trying to pay them back but too many bills are due near the same day, they might be able to move the due date for you. If they don’t, see if you can set aside money from one paycheck to help out with the next.

Is The Debt Too Out Of Control To Handle Alone?

If your debt is seriously out of control where you cannot make it work on your own, you may need to explore other options like debt management, debt consolidation or bankruptcy. I am no lawyer and there are a lot of pros and cons for each of these methods, but they may be a viable solution depending on your circumstances.

I know that it sucks right now to tighten your belt and struggle for a few months or years to pay this down, but the time will pass regardless, and you will come out the other side in a much better position.

What’s most important is to learn from this and grow. You really do not want to go through this again. As you pay off your debt use this as an opportunity to learn to live within your means. Over time those “means” will grow and you can afford a little bit more. Just do not go back to the credit cards again. Once you pay off your debt, try to spend only on the things that really matter.

With your repaired credit and freed up income not going to debt, you can now spend your money on things that are better for you. Maybe now you can afford a down payment on that home you were looking at. You can start saving more for retirement. You can start a college fund for your kids. You can save for that next vacation, so you don’t have to rely on debt to live.

I do want to mention that from my research this is what I learned and what worked for me. However, I’m not you! Everyone’s situation is different and you should definitely do what works for you and get professional help with this if needed. Just know that you are not alone, and these tips can make a difference.

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