The First Step To Getting Out of Debt (2024)

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I’m sure most of you have seen the movie “Confessions of a Shopaholic”? In the film, the lead character describes how she feel when she shops. She states, “When I shop, the world gets better, and the world is better, but then it’s not, and I need to do it again.”

It brought me back to my old shopaholic days when I would feel that same emptiness and sadness that would spur me to break out the credit card and purchase a new pair of shoes, new makeup or maybe that new designer bag I had been eyeing for a few weeks.

In the movie, the main character, whose name escapes me, attends a type of AA meeting for shopaholics and through a series of events comes to realize her addiction.

The First Step To Getting Out of Debt (1)

The First Step To Become Debt Free

That’s usually how it works. You don’t just wake up and come to the conclusion you have a problem. Instead over a period of time, you realize what a mess your financial situation has become and that fixing it is a life and death situation. In essence, you hit “rock bottom”.

In reality, rock bottom is the best thing that could happen to you. It’s that slap in the face, that wake up call, that realization that you are in big trouble. But, it’s also the light at the end of the tunnel, the beginning down the yellow brick road back home to financial sanity.

If you are someone who is faced with credit card debt, you’re not alone.

Read: We Quit Credit Cards {How Brian from Debt Discipline Paid Off 109K of Debt in 50 Months}

Millions of people are wracked with unmanageable debt. Many have used credit cards to keep them afloat in an uncertain economy. Others just spent more than they should have. No matter what your reason, credit card debt sucks.

You can change your financial situation. Many have, including me. I was once plagued with over 50K in credit card debt and paid it off! I’m now debt free.

The Wake Up Moment

I remember that first year I had to tell my daughter I couldn’t afford to buy her any Christmas gifts. And, just as vivid is that Christmas morning opening up the most beautiful coat she had purchased for me and the feeling of unworthiness I felt at her generous offering.

I knew at that moment that I needed to face my crappy ways with money head on or it would be the end of my financial security.

And that’s what I did.

Although I didn’t want to look at all the ways I sabotaged myself with money, how messed up my belief systems were around money, and how poorly I handled money, I was willing.

Being willing to look at these issues was quite liberating. Because in that moment of saying, “yes, I am willing to look at this and figure it out” I became completely energized, motivated, and powerful. I was a woman standing in my power, and I hadn’t done that in a long time.

What I came to realize was the more I was willing to go deeper and deeper, to peel back the layers of my story, the greater my transformation.

Read: My Debt Free Journey {We Quit Credit Cards}

So, here’s the question. Are you willing to look at your relationship with money? Are you ready to peel back the layers to see what motivates you to spend like crazy? Are you willing to do something right now, so you’re not flooded with guilt and shame because your debt is cranked up to a ridiculous level?

The answer is either yes or no — not maybe, not probably, not possibly, not let me think about it. You must decide if you are willing or not.

Will you stand in your power or not? “Yes” will give you that power.

[tweetthis]Saying ‘yes’ is the first step to becoming debt free. [/tweetthis]

Saying yes is a beautiful thing, and it’s well within your reach. Just dig down and take hold of it. It will help you transform your relationship with money and stand firmly in your power.

Remember, even if the world is a cold and lonely place, buying an expensive pair of shoes you don’t need isn’t going to make it a sweeter, kinder place. In the long run, how you see the world will remain unchanged, and you’ll be reminded of the cruelty, even more, when you open that credit card statement.

The First Step To Getting Out of Debt (2)

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The First Step To Getting Out of Debt (2024)

FAQs

The First Step To Getting Out of Debt? ›

Put extra money toward the debt with the highest interest rate. Called the debt avalanche strategy, this method will save the most money on interest in the long run. Make the minimum payments on all of your debts, and then funnel any extra money you have toward paying off your highest-interest debt.

What is the first step in getting out of debt? ›

5 Steps to Getting Rid of Debt
  • Set a goal. All successful projects start with a clear goal. ...
  • Make a list of your current debts. In order to get rid of your debt, you need an accurate and complete list of the debt you have. ...
  • Gather additional information on debt repayment. ...
  • Make a plan. ...
  • Stick with your plan.

What is the first step of digging out of debt? ›

Put extra money toward the debt with the highest interest rate. Called the debt avalanche strategy, this method will save the most money on interest in the long run. Make the minimum payments on all of your debts, and then funnel any extra money you have toward paying off your highest-interest debt.

What is the first step in reducing debt? ›

7 steps to more effectively manage and reduce your debt
  • Take account of your accounts. ...
  • Check your credit report. ...
  • Look for opportunities to consolidate. ...
  • Be honest about your spending. ...
  • Determine how much you have to pay. ...
  • Figure out how much extra you can budget. ...
  • Determine your debt-reduction strategy.

What are the 5 steps of staying out of debt? ›

Tips for staying out of debt
  • Stop paying high interest rates. Apply for a card with a lower rate, but make sure you understand the credit card agreement before signing it.
  • Consolidate credit card debt. ...
  • Stop using credit cards if possible. ...
  • If you have savings, consider using some of it to pay off debt.

How do I get out of debt step by step? ›

  1. Understand Your Debt.
  2. Plan a Repayment Strategy.
  3. Understand Your Credit History.
  4. Make Adjustments to Debt.
  5. Increase Payments.
  6. Reduce Expenses.
  7. Consult a Professional Financial Advisor.
  8. Negotiate with Lenders.

What is the fast way to pay off debt? ›

Pay off your debt and save on interest by paying more than the minimum every month. The key is to make extra payments consistently so you can pay off your loan more quickly. Some lenders allow you to make an extra payment each month specifying that each extra payment goes toward the principal.

How to get out of a deep financial hole? ›

16 Things to Do When You're Deep in Debt
  1. Analyze your situation.
  2. Consider bankruptcy.
  3. Consider going to a credit counseling service.
  4. Prioritize the debt you need to pay.
  5. Talk to your credit card issuers.
  6. Pay off the debt with the higher interest first.
  7. Or – pay off smaller debts first.
  8. Transfer your credit card balance.
Mar 13, 2023

What is the credit card forgiveness program? ›

Credit card debt forgiveness is when some or all of a borrower's credit card debt is considered canceled and is no longer required to be paid. Credit card debt forgiveness is uncommon, but other solutions exist for managing debt. Debt relief and debt consolidation loans are other options to reduce your debts.

What is the first three steps to start paying off your debt? ›

Start Paying Off Debt with this Three-step Plan
  1. Understand your spending habits. The first step on the road to getting out of debt is to get a clear picture of your finances. ...
  2. Decide if your debt is manageable. ...
  3. Get help with your debt.
Sep 20, 2023

What should you pay off first? ›

Prioritizing debt by interest rate.

This repayment strategy, sometimes called the avalanche method, prioritizes your debts from the highest interest rate to the lowest. First, you'll pay off your balance with the highest interest rate, followed by your next-highest interest rate and so on.

Is national debt relief legit? ›

National Debt Relief is a legitimate company providing debt relief services. The company was founded in 2009 and is a member of the American Association for Debt Resolution (AADR). It's certified by the International Association of Professional Debt Arbitrators (IAPDA), and is accredited by the BBB.

What's the smartest way to get out of debt? ›

How to get out of debt
  • List out your debt details.
  • Adjust your budget.
  • Try the debt snowball or avalanche method.
  • Submit more than the minimum payment.
  • Cut down interest by making biweekly payments.
  • Attempt to negotiate and settle for less than you owe.
  • Consider consolidating and refinancing your debt.
Mar 18, 2024

What are the 5 C's of debt? ›

This review process is based on a review of five key factors that predict the probability of a borrower defaulting on his debt. Called the five Cs of credit, they include capacity, capital, conditions, character, and collateral.

How to pay off $20k in debt fast? ›

Use a debt consolidation loan

With a debt consolidation loan, you borrow money from a lender and roll all of those debts into one loan with a single interest rate. This allows you to make one monthly payment rather than paying multiple creditors.

How to pay $30,000 debt in one year? ›

The 6-step method that helped this 34-year-old pay off $30,000 of credit card debt in 1 year
  1. Step 1: Survey the land. ...
  2. Step 2: Limit and leverage. ...
  3. Step 3: Automate your minimum payments. ...
  4. Step 4: Yes, you must pay extra and often. ...
  5. Step 5: Evaluate the plan often. ...
  6. Step 6: Ramp-up when you 're ready.

What is the 50 20 30 budget rule? ›

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

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