If you’re trying to get out of debt, you’re not alone. Millions of people feel trapped by credit cards, car loans, student loans, and other financial obligations; wondering if financial freedom is even possible. The good news? It is. All it takes is one small win at a time, turning overwhelming debt into achievable goals.
Debt can feel like a heavy weight, pressing down on your chest. But breaking free doesn’t happen all at once. The key is starting with small, manageable steps that build momentum.
Here are 5 Simple Steps to get out of debt and take control of your financial future.
- Know Your Numbers
- Pick a Debt Payoff Strategy
- Stop Adding New Debt
- Build a Starter Emergency Fund
- Celebrate Every Win
Know Your Numbers
Every journey has a beginning, and yours starts with awareness. To successfully get out of debt, you first need to know where you’re starting from.
Create a detailed list of all your debts — credit cards, car loans, personal loans, student loans, medical bills, and even small balances that feel insignificant. If you owe something to someone (including the $100 you borrowed from a friend) add it to your list. Include the total balance and the minimum monthly payment for each.
Seeing all of your debt in one place can be overwhelming at first, but it’s empowering. Awareness is the first step toward action. You are no longer fighting an unknown. It’s all right there, on paper, face to face. Once you know your numbers, you can make informed decisions and start designing your path to debt freedom.
Pick a Debt Payoff Strategy
With your debts clearly outlined, it’s time to choose a payoff strategy. There are two main approaches:
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Debt Avalanche: This is where you list your debts, starting with the highest interest rate first. And you focus on paying off the highest-interest debt first. On paper, this minimizes interest paid over time.
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Debt Snowball: This is where you list your debts, starting with your smallest amount first. Focus on paying off the smallest debt first. This builds motivation through early, and often, wins.
While proponents of the Debt Avalanche say it saves you money in the long run, the Debt Snowball method is the most effective for actually getting out of debt. Which means…you actually save more money using the Debt Snowball Method. Each debt you eliminate is a victory, and those victories build the confidence you need to stay on track. When it comes to managing debt, momentum and belief are more important than math. If it was simply a math problem, we would never be in debt in the first place. So stick with the Debt Snowball method.
Stop Adding New Debt
You’ll never get out of a hole, if you keep digging. The same goes with getting out of debt. Commit to no new borrowing and take back control of your money.
This may require tough choices, like eliminating credit card use or pausing large purchases, but it’s essential for financial freedom. As Proverbs 22:7 reminds us: “The borrower is slave to the lender.” By refusing to take on more debt, you’re reclaiming control and building a foundation for long-term financial stability.
Build a Starter Emergency Fund
Unexpected expenses are one of the main reasons people fall back into debt. That’s why a Starter Emergency Fund is critical.
Save $1,000 in an account separate from your checking (you can even put this in an envelope in your sock drawer). This fund covers small emergencies — flat tires, car repairs, medical bills — without forcing you to rely on credit cards or loans. Think of it as a financial safety net that protects your progress. This won’t catch every single emergency, but it will be sufficient while you are working hard to get out of debt.
Every dollar saved in your emergency fund is a step toward breaking the debt cycle and staying debt-free. Once you are completely debt free (non-mortgage debt), then you will build your Emergency Fund from $1,000 to a fully funded emergency fund of 3-6 months of expenses.
Celebrate Every Win
Every debt you pay off, no matter how small, is a victory. Tracking and celebrating these wins reinforces good financial habits and motivates you to keep going.
Consider using a spreadsheet, app, or journal to mark milestones. Seeing your progress visually can be incredibly motivating. Remember: financial freedom is a journey, and every step forward matters.
Take the First Step Toward Financial Freedom
Breaking free from debt is possible, and it starts with a single decision: to take control of your finances today.
At Bluegrass Financial Solutions, we help people like you create personalized debt payoff plans that turn overwhelming debt into achievable goals. Whether you’re looking for debt reduction tips, budgeting strategies, or guidance on building an emergency fund, we’re here to help you every step of the way.
Ready to get out of debt and take control of your financial future? Schedule your free Debt Freedom Session today and start your journey to financial independence.