At a Glance

If you’re deep in debt, you may wake up each day with the thought, “I’m in debt and I don’t know where to start.” It can be overwhelming, and you may begin to think you’ll be in debt forever. But even though you may feel like you’re absolutely drowning in the money you owe to others, know that there is always a path forward.

Here’s how you can change your financial situation and get on the right track to paying down debt quickly and completely.

Drowning in debt may seem overwhelming, stressful, and even scary. It may cause anxiety or worry that you’ll never be able to pay it back, your credit score will be too damaged to repair, and that the debt will loom over you forever. However, there are many things you can do to try to get yourself out of debt:

1. Stop accruing more debt

If you acknowledge that you’re drowning and you’re ready to pull yourself out of debt, Step 1 is to stop taking on more debt. Immediately press pause on all spending that’s not considered essential.

The essentials are areas you can’t give up, like food, rent, utilities, insurance, etc. Consider cutting back on non-essentials like travel, entertainment, dining out, and shopping until you get a handle on debt. This also means you’ll want to put a hold on any upcoming large purchases, like buying a home or new car.

2. Assess your debt situation

Once you’ve stopped the bleeding, so to speak, it’s time to figure out where you stand. That means you’ll need to take an honest look at your debt, where it came from, and how much it’s actually costing you. The simplest way to calculate your debt burden is to assess your debt-to-income ratio or DTI ratio.

To calculate your DTI ratio:

  1. Make a list of all debts: Jot down how much you pay each month toward your debt for loans and credit cards and add upt the total. For example, if you have student loans at $200, a car payment at $150, a mortgage at $700, and a personal loan at $300, your total monthly debt payment is $1,350.
  2. Figure out your gross monthly income: This number is your pre-tax, pre-deduction income. So if you make $50,000/year, your gross monthly income will be $50,000/12 = $4,166.
  3. Divide monthly debt payments by monthly income: Your result will be a decimal which you should convert to a percentage. Using our numbers above, the DTI ratio is $1,350/$4,166 = .324 = 32%.

As a rule of thumb, a DTI ratio below 36% is considered “affordable,” while over 50% is deemed high risk. If your DTI ratio is over 50%, you may struggle to find lenders who will allow you to take on more debt in the future. Regardless of your number, if you feel that you’re drowning in debt, it’s time to assess the fastest ways to get out of debt.

3. Use debt payoff methods

Once you have information on all of your debts, it’s time to make a plan. Of course, you’ll want your plan to be realistic and achievable based on your current income. And two of the most popular strategies you may want to consider are the debt snowball and the debt avalanche methods.

The snowball method starts with paying down the smallest debt balance first, while the avalanche attacks the loan with the highest interest rate to start. Each of these approaches can work depending on whether you’re motivated by seeing progress (snowball) or saving money on interest (avalanche).

Related: Snowball vs. Avalanche Repayment Methods

Once you choose a strategy, commit to sticking with it for a period of months or years, depending on how much debt you have. And that means throwing all excess cash toward your debt to dig you out as quickly as possible.

4. Create a budget

A budget can help you avoid spending too much and adding to your debt, but also give you a plan of action for spending. It can also help you track your spending habits. You can use a pen and paper, Excel document, downloadable template, or even a mobile app, but this is an important step not to miss.

  • First, gather up all of your financial paperwork such as bank statements, credit card bills, receipts from the past three months, mortgage and other debt statements, paycheck stubs, etc.
  • Next, calculate your average income each month. Include all sources of income, such as child support, Social Security, income from a side hustle, etc.
  • Third, write down a list of expenses you have each month and their average cost. This should include your rent or mortgage, insurance, groceries, utilities, eating out, gas/transportation, shopping, debt payments, etc. Be sure to mark which are essential (those you must pay for) and nonessential (those you can give up for the time being).
  • Once you know your average monthly income and your average essential monthly expenses, you can see where you’re spending too much money and cut back. In your budget, account for all essential spending, but make adjustments to non essential spending and put all of that extra money toward paying off your debt.

Tracking and analyzing your budget on a monthly basis can help you understand your spending patterns, and avoid overspending.

5. Consolidate as needed

For those managing multiple debts, the process of making all the payments each month can be a burden. If you’re regularly missing payments because of the confusion of managing multiple debts, consider debt consolidation. You’ll use a new loan, like a debt consolidation loan or home equity loan, to pay off other debts and leave you with one single monthly payment.

You could also look at consolidating credit card debt with a balance transfer credit card. Certain cards may offer a special introductory annual percentage rate (APR), like 0% for 12 months. So if you can pay off a significant amount of debt in that period and avoid accruing debt in the process, it can be a sensible move. Sometimes consolidating into one reasonable monthly payment at a lower interest rate is enough to increase your motivation to pay off debt and help you get out of debt fast.

6. Earn extra income

If you’ve taken steps outlined above and are still struggling to repay your debt, you may need to consider ways to earn extra income. Everyone’s situations are different, including how much extra time they may have to work or flexibility with their jobs. However, there are a variety of ways to earn extra income that may work for you, and all extra earned funds should be put directly toward paying off debt:

  • Pick up extra shifts at your job.
  • Talk to your boss to learn if you’re eligible for a promotion or raise.
  • Start a side hustle. This is a job you do on the side to earn extra income and the opportunities are virtually endless. Perhaps you have a hobby you can turn into an income-generator (like being crafty), or you’re knowledgeable about a certain topic and can become a consultant or freelancer.
  • Similar to a side hustle, you may want to consider picking up a second source of income that can be flexible with your lifestyle. For example, you can drive for Lyft or Uber, deliver food or groceries, or drive for Amazon or other delivery companies.
  • Sell clothing or other items you may not need anymore on sites like Facebook Marketplace, Etsy, eBay, or Poshmark.

7. Build an emergency fund

While your focus should be on paying off your debt as quickly as possible, it’s important to also make a plan for the future. Having a plan, which includes building an emergency fund, can help you avoid going into debt again down the road.

Experts recommend having at least six months’ worth of expenses set aside in a fund that’s only accessed in an emergency, though you may want to save 9-12 months’ worth to be safe. Because you can’t plan for the unexpected, having funds easily accessible in the emergency fund can help you avoid going into debt during that time.


How much does the average person owe in debt?

The average American has $104,000 in debt, according to 2024 data. This includes credit cards, personal loans, mortgages, student debt, and other types of debt. The highest consumer debt amount is within mortgages, followed by HELOC, student loans, auto loans, personal loans, and credit card debt.

How much money is too much debt?

Experts suggest your debt should not exceed 36% of your monthly income, or debt-to-income ratio. If your debt is between 36-42% of your DTI, your focus should be paying down your debt as quickly as possible with payoff methods. If it’s between 43-50%, consider consulting a credit counseling agency or taking more drastic debt relief measures, like consolidating. However, if your debt is 50% or more, you’re at very high risk.

Related: How Much Debt Is Too Much Debt?

How can you avoid getting into too much debt?

To avoid getting into too much debt, start a regular monthly review of your finances, including income, expenses, and debt-to-income ratio. Keeping these numbers at the top of mind can help you course-correct if you’re toeing the line of getting into a risky amount of debt.

What happens if I get into too much debt?

Getting into too much debt may mean you won’t be able to pay it off without help. That could put you in a position of needing to borrow more money to pay off your debt. If you feel that you’ve taken on more debt than you can handle, it makes sense to talk to a credit counseling service or financial planner who can help with a plan to get out of debt.

How do I get out of debt with no money?

Even if you have no extra funds or savings and feel like you’re just getting by, you can still get out of debt. The first step is to create a budget and spending plan – decrease spending in certain areas and shift those funds toward paying off debt. The next step is to increase your income, either at your current job or by picking up a second one. Finally, consider debt relief services such as credit counseling, debt management plans, or debt consolidation.

Can debt ruin your life?

Too much debt can feel like it’s ruining your life. It can be mentally taxing, causing anxiety and depression, which can also affect you physically by causing headaches, insomnia, illness, and other negative side-effects. It can seriously affect your ability to be happy and stress-free. If you never get out of debt and continue accumulating, you may have to file for bankruptcy which can affect your credit score for several years and have other impacts. However, there is almost always a light at the end of the tunnel as long as you work toward paying it off.