How would it feel to be out of debt?

Jacob Sensiba
Feb 15, 2018 · 4 min read

Debt sucks and can be avoided in most instances. Yes, sometimes it can be a great tool to improve your financial health.

Charging a few things to a credit card every month and then paying that balance in full is a great way to earn rewards and increase your credit score.

A mortgage does provide an easy way to purchase a house, but in most other cases, debt isn’t necessary.

Debt is a pain in your side. It slows your progress towards financial freedom because it forces you to work on the debt instead of saving for your goals.

Well enough is enough! Time to get rid of that debt!

Here’s how.

Create a budget

Write down your income and your expenses. Make sure to include a line or two for savings. For a more detailed look at how to create a budget, click here.

Cut expenses

After you’ve created your budget, you know how much you are bringing in and how much you should be sending out. Compare that to your actual spending for the last month or two. How does it look?

Does your spending from last month come in below or above the spending you wrote down for your budget? Make adjustments where necessary.

The next step to this is cutting back on unnecessary spending. If you want to get rid of that debt, I suggest adopting a frugal way of living.

Live frugally

Cut out everything that you don’t need.

Stop buying coffee every morning and make your own at home. Stop paying for standard cable TV services, and use Netflix and/or Hulu instead. And please, stop going out to eat all the time; it’s so much less expensive to make your meals at home.

For a deeper dive on how to live a frugal lifestyle, click here.

Earn more money

Make some moves that will help you earn more money.

Ask for a raise, bust your tail to get promoted, get a part-time job, or work on your side hustle.

The more you make, the more you can put towards your debt, and the sooner it will be out of your life.

Make larger payments

This should be a no-brainer, but it’s worth saying. If you want to get rid of your debt, pay more towards it. There are two strategic ways to do this and I will explain them below.

Debt Avalanche — With this method, you prioritize your debt according to the interest rate. You pay the minimum on the rest of your debt and pay as much as you can toward the debt (typically a credit card) with the highest interest rate. Once that debt is paid off, the money you were paying towards it, you redirect to the debt with the next highest rate of interest. This method gets rid of high-interest rate debt, therefore, saving you money on interest payments.

Debt Snowball — With the snowball method, you tackle the debt with the lowest balance first. Like the first method, you pay the minimum towards all of your other debts. You then pay as much as you can toward the debt with the smallest balance. Once that debt is paid off, you redirect that money to the debt with the next smallest balance. This method gets you a win by paying off a credit card or a loan right away.

Use windfalls

A windfall is essentially a sum of money that you didn’t anticipate receiving. For example, a raise at work, a bonus, a tax refund, or an inheritance.

If you receive a raise, pay that extra amount you get per month to your debt. If you receive a bonus or get a tax refund, put it right toward your debt.

Balance transfer

Most credit card companies out there will offer a balance with a 0% introductory interest rate, but some of them offer the rate for as long as 21 months. If you have a high-interest credit card that you would like to get rid of, a balance transfer is a great way to do it.

This could save you tons of money on interest payments.

Personal loan

A personal loan is the standard way of consolidating your debt. If you have a number of credit cards with high interest rates, it could make a lot of sense to consolidate using a personal loan.

You take a loan out for the sum of your credit card balances. The bank sends each credit card company a check to pay off the balance in full. You then make a monthly payment for a set amount of months, 48 months for example, until the loan is paid off.

This method saves you money on interest because the interest on the loan is almost certain to be lower than that of your credit cards. This does not apply to everyone, however, so use this only if the balance is lower than that of our credit cards.

Refinance loans

Refinance your student loans or your mortgage. If you got your mortgage when the interest rate was really high, like in the 1970s or 1980s, it’d be a great idea to refinance and get a lower interest rate. This would save you so much money on your mortgage.

If you obtained student loans with high interest rates or received many loans from different institutions, it would probably be a good idea to refinance. Read my post on Millennial Money Guide about how to refinance your student loans.

Request a lower interest rate

Call the credit card company and ask for a lower interest rate. More often than not, they are able to lower it a little. It won’t seem like much, but this could save you a lot of money on interest payments.


Debt is annoying and can be a real roadblock on our financial journey. If you want to reach and surpass your financial goals, then you have to kick debt to the curb.

Use these tips to get rid of debt and improve your Financial Health.

Read more at Financial Health and Wealth

Jacob Sensiba

Written by

Husband | Father | Finance Nerd | Trying to improve the lives of those around me. Visit for our disclosures — www.crgfinancialservices.com.

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