Breadcrumb Learn / Debt / Article 4 min read Steps to Get Out of Debt Getting out of debt can feel overwhelming. Take back control with a solid plan to move toward financial freedom. Here are some simple steps to follow when creating your personal get-out-of-debt plan. 1. Know your total debt Before making your game plan to get out of debt, it’s crucial to know the specifics of how much you owe. This includes key details such as the interest rate and minimum payments required by each creditor, as that can impact how you decide to tackle your debt. Our downloadable debt worksheet is a great place to get organized. Get a full picture of what your true financial obligations look like by obtaining your free credit report at annualcreditreport.com. You’ll be able to visualize your total debt and check for any inaccuracies on your credit. 2. Pick your debt strategy There are a few different strategies you can use to start. Take a look, and decide which options best fit your needs. Make power payments (snowball strategy). With this strategy, you’ll focus on paying off one debt at a time. Choose either your debt with the lowest balance or the highest interest rate to go after first. As soon as that debt is paid off, you’ll allocate the funds you were paying to that debt toward your next debt until everything is paid off. Going after the lowest balance first can provide a quick win, and it feels great to knock a debt off the list! Refinance your current loan. If you’ve improved your credit over the life of your loan so far, refinancing could give you a lower interest rate with lower monthly payments. Nice! Refinancing is ideal for mortgage and auto loans, and if you are able to secure a lower monthly payment, that frees up cash flow to pay down other debt. You can talk with your credit union lender to go over the pros and cons of refinancing and see if it makes sense for you. If lowering your interest rate sounds appealing, but credit card debt is your primary challenge, you may want to consider a balance transfer. Consolidate your debt. Consolidating your debt into a single fixed-rate loan can be a great way to stabilize your monthly payments and potentially lower your rate. Plus, having just one monthly payment makes it easier to budget and get a grasp on your debt payments. You can use our loan consolidation calculator to estimate your savings. 3. Level up: Pay toward the principal of your loan If you’re ready to supercharge your debt payoff strategy, this one is for you. The principal of a loan is the balance you owe, excluding any calculated interest. By making an extra “principal-only” payment, you can save on the interest you pay throughout the loan. For example, with a mortgage, making just one extra payment a year can save you thousands over the course of the loan and help pay it down years earlier. 4. Celebrate small wins Paying off debt is often a marathon, not a sprint, so it’s important to celebrate small milestones along the way! Over time, your consistency will pay off. Our debt payoff calculator can help you plan. Each time you pay off a creditor, snowball into another monthly payment, or increase your monthly payment, recognize that this is a big accomplishment. Avoid future unnecessary debt by paying yourself first. How? Treat your savings like a bill. Set a fixed amount aside, either monthly or each pay period, and watch your savings grow over time. Last Updated: March 10, 2025 Debt Related Content View All Debt Content Video 6 min Watch: How to Crush Your Debt Debt Article 4 min How the Power Payment Debt Payoff Strategy Works Debt Calculator Loan Payoff Calculator Debt Calculator Credit Card Payoff Calculator Debt Calculator Debt Payoff Calculator Debt Calculator Loan Consolidation Calculator Debt Article 7 min Supercharge Your Debt Payoff Strategy with Principal-Only Payments Debt