How to Get Out of Debt: Create Your Own Debt Payoff Plan
Congratulations on taking the first steps toward learning how to get out of debt!
It sure isn’t easy, but it is so worth it!
The first thing you need to do is create your monthly budget, then, you’ll be able to figure out how much money you have to put toward paying off your bills.
If, after creating your budget, you find that you just don’t have any extra money to put toward your debt, then you’ll need to learn how to save money even when you’re broke.
After you’ve come up with an amount that you can put toward debt, move on to the simple steps below…
Step 1: Compile Your Debt
Gather up all the unopened envelopes that you have lying around the house. You know, the ones piled up on the counter, your desk or on the dresser in your bedroom.
Step 2: Organize
Separate all the envelopes by company. Open each envelope. Keep the most recent bill and set aside all the others.
Step 3: Divide and Conquer
Get out a blank sheet of paper or get a free debt snowball form.
Make 4 columns across the top of your paper.
Create the following titles for each column, as shown below:
Company | Total Debt | Monthly Payment Amount | Paid Off?
Step 4: Create a Pyramid
The pyramids weren’t built in a day and you didn’t build your debt in one day. Unless you win the lottery, you aren’t going to pay it off in one day, either.
It takes time.
Create a pyramid to pay off your debt “one brick at a time”.
Starting with your smallest debt, fill in each column. Fill in the next largest debt and continue until you have written down everything that needs to be paid off.
For example:
Company | Total Debt | Monthly Payment Amount | Paid Off?
Credit Card | $575.00 | $25.00 |
Car Loan | $9,035 | $250.00 |
Mortgage | $128,000 | $890.00 |
Step 5: Start the Snowball
Start the snowball by paying your minimum monthly payment on each debt. Try to completely pay off your smallest bill, if possible.
After you’ve paid off the first bill, throw the snowball at your next debt. (Take the amount you were paying on that bill and put it toward the next bill on your list.)
Keep “throwing the snowball” each month and before you know it, you’ll be debt free!
Here’s a few extra tips…
Don’t use credit cards. If you have them now, cut them up. They make it sooo easy to fall into the trap!
Don’t spend more than you make! If you don’t have enough money at the end of the month, then you need to figure out how to cut more costs.
Don’t fall back on old patterns after you get out of debt. Keep up on your monthly budget, use the cash envelope system and pay attention to where your money is going.
My favorite “How to Get Out of Debt” Book:
More in this series:
Free Printables:
- Cash Envelope System – Strawberry Lemonade
- Cash Envelope – Black & White Dreams
- Monthly Payment Organizer – Black & White Dreams
- Monthly Budget Template
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Have a Spectacular Day!

Vanessa Hamlin is the owner and founder of Food Life Design and VLHamlinDesign. With her passion for frugal living and homesteading, Vanessa loves to write about easy recipes, making money, gardening, home remedies and everything else that a good life entails! When she’s not writing for Food Life Design or creating products for VLHamlinDesign, you’ll find Vanessa reading, drawing, gardening, cooking or spending time with her family.