Getting out of or reducing debt is a big goal for many people. A LendingTree survey found that 44% of Americans said their top priority for 2025 is reducing debt, and 84% said reducing their debt would make their lives less stressful. While getting out of debt can be difficult or confusing, there are some basic strategies you can follow to set yourself on the right path.
Know what you owe
Make a list of any debts you have, including credit cards, student loans, auto loans, mortgages, etc. Your list should include the total amount you owe, your monthly payment amounts, interest rates and due dates. This will allow you to calculate the amount you must pay each month to stay current on your debt. It’s also important information to have when considering your debt repayment plan. Making payments on time to avoid late fees, looking for lower interest rates and making more than the minimum payment all help to reduce credit card debt.
Adjust your budget
A budget should include all your expenses and income after taxes and compare how much you’re making to how much you’re spending. Consider things like eating out, getting a new phone, streaming services and other forms of entertainment when you look at ways to bring down your expenses.
To keep your budget simple, use the 50-30-20 rule where 50% of your budget is spent on needs, 30% on wants and 20% on saving. It’s important not to neglect needs or saving to fulfill your wants! Freeing up some money from the wants section increases what you have available for paying off debt.
Determine your debt repayment strategy
There are two main systems people use to pay down debt: the debt snowball method and the debt avalanche method. The debt snowball method means prioritizing your balances. Using this method, you pay off the smallest debt first, then move to the next. This method is often motivating because the impact of the payments can be seen faster.
The debt avalanche method prioritizes interest rates. Using this method, you focus on the highest interest rate debt first, then move to the next one. People often use this method because it saves money on interest in the long run. You can choose the method that best suits your personality or use an online debt calculator to determine what is best for your situation.
Look for additional income
If your debt is more than can be managed with your current income, you may consider a part-time job, freelance work, selling things you no longer need or want, or asking for a raise. Income tax refunds or one-time work bonuses can be good for temporarily increasing income to help with debt relief.
Set realistic goals
Debt can take time to accumulate, and it takes time to pay off. Setting realistic goals and being patient with the process is critical to your long-term financial success.
Consider credit counseling if you are unsure of the next step or find your debt overwhelming. Credit counselors can help you determine the best repayment plan and can even negotiate with creditors to reduce interest rates or monthly payments.
Getting out of debt can be challenging and stressful, but using these steps can help you better manage your debt, and there are always professionals who can help you if you can’t do it alone.
Lesley Sears, WVU Extension Agent— Summers County
Financial Literacy Education Team