What Is the Best Way to Get out of Debt?
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What Is the Best Way to Get out of Debt?

According to the University of Illinois’ Consumer and Family Economics educator Pat Hildebrand, paying the minimum payment for $2,500 of credit card debt with 21 percent interest will cost you nearly $15,000 and take 63 years to pay off. However, with so many debt consolidation loans and debt repair services out there, it can be a real challenge to figure out what the best way to get out of debt may be. This snowball method offers fast results and works on the same principles the debt repair services use, minus the big start-up fees.

Step 1

Call all creditors you will be repaying to close your accounts and renegotiate your interest rates. This prevents more debt from being accrued and reduces that amount you will need to pay. The Federal Trade Commission reports that interest rates are frequently raised due to late payments and can be reduced back to the original APR with a simple phone call.

Step 2

Save a set amount of money each month to put toward your debt, and pay all late payments and overdraft fees as soon as possible. If you feel like any of these fees were charged in error, many companies will dismiss the charges once you make a request or explain your hardship.

Step 3

Prioritize which debts you would like to pay off first. Create an ordered list of all debts for future reference.

Step 4

Pay the highest priority debt’s minimum payment plus the saved amount of money from step 2. Continue to pay only the minimum payment on all other debts. Do this each month until the first debt is paid in full.

Step 5

Place the amount you were paying for the first, now paid off debt, toward the second debt. Continue paying the minimum payment of all other debts. Carry on in this manner until the second debt is paid off.

Step 6

Continue paying each debt in this stair-stepped manner. The idea is that you will continue to pay the same amount of money that you are used to paying on minimum payments alone. However, you will be paying off debt quickly rather than staving off late payments. This is the best way to get out of debt.


  • Before paying off any loan, ensure there are no early payoff fees.
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