A Simple 6 Step Process to Eliminate Your Debt



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This is a guest post by Trea Branch.  She blogs regular at her site Trea’s Two Cents. Her goal is to help as many people as possible to achieve financial independence.


Getting out of debt is far from easy. If it’s massive (relative to your income) it gets harder, and if you have multiple debts, it’s even more difficult. The cruel irony of it all is that debt is so easy to get into. Companies are just begging for us to dive deeper and deeper into it, making it so easy that half of the time we don’t even realize what we’re getting into! But I’m here to tell you two things:

  • Getting out of massive, complicated debt is possible
  • A little process and a lot of focus can make it a little easier

So below is my 6-step process for getting out of debt (spoken from personal experience!).

Step 1: Shift that Mindset

Every major feat starts in the mind because it’s your most powerful tool. In fact, a lot of my posts are all about how you think about money and what it’s supposed to do for you. Your money mindset can be the difference between accepting debt as something you will pay on for the rest of your life and having a “do whatever it takes” attitude to free yourself of it.

The first step to getting out of debt is not being okay with it, realizing how it’s stopping you from doing more with your money. This isn’t so you get down on yourself. It’s to motivate you to take action, no matter the size of the debt, and to be encouraged to keep pushing through and adjusting to the different hurdles that are bound to pop up along the way. You know how athletes sit in the locker room before a big game, listening to that song that just gets them ready to go? This is your pre-game. You have to prepare your mind for your debt-free journey!

Step 2: Know the Full Damage

Now that you’re amped up, it’s time to know what you’re dealing with. How much do you owe in total? It can be eye-opening, maybe a little intimidating, but don’t let it be discouraging. We’ve already told ourselves that we’re all in and ready to go. We won’t get afraid, even with the major balances.

As of January 2014, I owed $180,000 in student loans (now closer to $100,000). Since starting my journey, I’ve met those who paid off a lot less and I met those who paid off a lot more. Don’t get overwhelmed with your balance (where you start is not where you finish!), but do know it, so that you can set a full strategy. Once you know all that you owe, you can go to step 3.

Step 3: Select the Chosen One

For those of us with more than one debt, simplifying your efforts by focusing on one at a time is critical. This can happen on two levels:
• Fight the urge to spread the love. You can have 3 credit cards, 2 student loans, and 1 car payment. Choose one to attack aggressively (paying above and beyond the minimum monthly payment) and continue paying the minimum payment on the others.

As a side note, to make it even easier on yourself, I highly recommend the Dave Ramsey’s Debt Snowball Method. This is where you start with your lower-balance loan to get a quick win and build momentum.

• Set aside your other financial goals. You’ll spread yourself too thin trying to build an emergency fund, invest, and get out of debt. To simplify and see progress more quickly, prioritize! For example, consider building that emergency fund before you aggressively pay down your debt.

Step 4: Hustle!

Once you are focused on a debt, it’s time to take action. We all know the only way to get out of debt and win the war on interest is to pay above the minimum monthly payment. So you need to find this extra money. It’s easier said than done, but you can either cut your spending, grow your income, or do it big and do both!

Again, easier said than done, so this is where that mindset shift from step 1 can really work to encourage you and push you through those times when you’re giving up what you love or working double shifts to earn extra money.

Step 5: Commit

With a payment plan in place you are good to go, but you’ll want to “lock it in” by giving yourself a deadline. There are several debt calculators showing how long it will take to pay off a loan based on a set monthly payment. Your deadline can be one, five, ten years from now (or however long you need). The goal becomes real when you have an end in sight. I also encourage you to set a few milestones that you can celebrate along the way. We’re doing big things here!

Step 6: Get a Little Nimble

Now you are focused, and your plan is strong. But every plan should be adjustable to a certain extent. When emergencies arise we can’t give up on our debt-free strategy out of frustration. No, we have to adjust, show our strength, so that we can keep moving forward. Adjusting may mean tightening your spending even more, missing an “aggressive payment”, or extending your deadline a bit. However you adjust, it is important to strike that balance between being determined and being flexible.

These 6 steps will make a tough experience a little easier by giving direction, focus, and a little encouragement!

Journey on!


If you are interested in learning more about how Trea is eliminating her debt make sure you check out her blog Trea’s Two Cents where she helps you stop living paycheck to paycheck.  If you want her to help you reduce your debt check out her coaching.


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