How To Escape Debt With A DIY Debt Management Plan


How to escape debt for good

Sometimes life can really suck.

You lost your job. Your kid is rebelling.  Your marriage is in a rut.

You’re going through a world health crisis.

Maybe it’s all of those at the same time.

And if you’re struggling with debt, that only adds to the stress.

Especially if you’re paying off debt while saving for retirement.

It’s hard not to want to tune out for the sake of your emotional health.  I totally get it.

This is why it’s so important to have a plan.  A way to stay focused, keep track of progress, and not lose sight of the goal.

It’s not easy to stay motivated, make sacrifices, and keep moving forward on the path to financial freedom.  But having a roadmap sure can help when you’re feeling a little lost and just need to be reminded that the destination is worth the journey.

That’s why I’ve outlined a debt management plan you can use to escape debt for good.

I’ve come up with six steps to help lead you out of debt and closer to financial freedom:

  1. Plan
  2. Prepare
  3. Potential
  4. Prioritize
  5. Payoff
  6. Persist

If you’re currently stuck in debt and don’t have a plan for debt payoff, these personal debt management strategies can help you take control of your financial future and create the retirement you really want.  Consider it the ultimate roadmap to get out of debt!

I’ll go through each step in more detail, but first, let’s talk about some guidelines.

Debt reduction strategy guidelines

Getting out of debt is a fairly simple concept.

You try to reduce expenses, increase income, and use the difference to pay it off.  There are different methods you can try, but it all boils down to maximizing the gap between income and expenses so you can reduce debt as quickly as possible.

Though it’s simple, it’s not easy.

Few things in life are linear.  There are bumps in the road, setbacks, surprises, and detours.  Some days you’re 100% committed.  Other days, not so much.

To create your best plan for getting out of debt, you’ll need to keep things in perspective and be prepared for life’s unexpected circumstances.  To help you, I’ve come up with four roadmap guidelines to follow as you begin your debt payoff journey.

» Make sure you are committed to an abundance mindset

This is key.

When you don’t believe you have the capacity to do what it takes to be debt-free, then it’s likely you’ll never achieve financial freedom.

And, if you want to be successful in applying these smart ways to get out of debt, you must operate in the confidence of knowing you are capable of changing your situation.  This means generating more income, cutting expenses, learning from mistakes, applying new knowledge, and adjusting your lifestyle.

When you do these things, you are actively participating in creating the desired outcome (being debt-free) because you know that there are enough resources and opportunities available to help you.  All you have to do is step out and claim them.

You’ve got this. It all starts with what you believe.

» Be realistic

Going from a scarcity mindset to an abundant one may at first feel like you’re out of touch with reality, especially if you haven’t made much progress.

Maybe you’ve been in debt for so long and it’s tough to believe you’ll ever get out of it.  Perhaps you believe that staying stuck in debt is your destiny.

Let me offer some encouraging words.

You may not be able to control the circumstances you’re under right now, but you can control how you respond to them!  Your actions begin with your thoughts, so don’t give up!

However, when it comes to your financial situation, you may need a cold, hard reality check.

Unless you’ve already written down all of your expenses, bills, and debts, you may have a skewed perception of your situation.  It’s easy to fool ourselves if an accurate financial picture is not staring us in the face.

Make sure you create a budget using sensible amounts.  Gather receipts and bills from the last 6-8 months and come up with realistic numbers that you can stick to.  Know for certain what you’re working with so your plan of attack doesn’t come up short.

» Plan for surprises and setbacks

You will inevitably come up against some roadblocks on your path to being debt-free.  It helps to expect them and know, in advance, how you’ll deal with them as they arise.

Determine how you’ll handle situations like an unexpected expense, a temporary loss of income, or even a decline in motivation. 

Make a list of “if … then” statements that address every unplanned circumstance you can think of – even favorable ones like suddenly receiving a windfall of money, or getting a substantial raise.

These predetermined actions that you choose before surprises happen will eliminate emotional decision making.

» Keep a tracking system.

The last guideline for following the roadmap is to track your progress.  There are several ways to do this so find one that fits with your personality.  Pick one you’ll commit to updating and that’s also motivational to look at.

Some examples are:

It doesn’t matter what you use, as long as you use it.  It’s important to have something to remind you of how far you’ve come and how much closer you are to your goal.

Okay, it’s time for the first stop on your journey to crushing debt:  making a plan.


I am married to a man who has no interest in budgeting and getting out of debt. His idea of budgeting is making sure there’s enough money in the bank to pay for his hobbies.

This is actually pretty common in marriages, where one is a saver and the other a spender.  That’s why it’s super important to have financial planning meetings periodically to make sure you’re on the same page.

I, admittedly, have been horrible about this.  I am an introvert, so I like to work alone and take care of things myself.  I can tell you right now this does not work well when trying to get out of debt.

For the sake of your finances and the health of your marriage – be purposeful about communicating with each other about your money issues.

Make a date to discuss your goals as a couple. Come up with answers to questions like these:

  • What type of budget do we want to stick to?
  • What expenses can we reduce or eliminate?
  • What do we value, and how can we implement value-based spending?
  • Can we increase our income?
  • What will our savings ratio be while we get out of debt?
  • How will we continue to build an emergency fund?
  • What sacrifices are we willing to make?
  • How can we hold each other accountable?
  • What tracking system should we use?
  • How will we stay organized?
  • What are our long-term financial goals?
  • When would we like to be out of debt?
  • How will we celebrate when we’re debt-free?

These are all important questions that can position you as a unified front.  Write your answers down and add both of your signatures.

Put this agreement somewhere you can both see it every day.  When one of you feels like the commitment is being compromised, go back to the list and review it together.

Try not to bring emotion into it.  I know, that’s hard!  But if you come to an agreement about these issues before you run into bumps in the road, then you can let your answers speak for themselves.


Hopefully, after you’ve gotten through the first step, you’ll feel like partners on a mission.  Now it’s time to strap on your boots because the road is about to get a little challenging.

You’re going to need to confront the debt.

» Find your statements

This means gathering current statements for every single debt balance you have except your primary mortgage.  And don’t just pull them up on the computer – print them off.  Have a hard copy in your hands so you can feel it, write on it and keep it in your debt payoff folder. 

This includes:

  • Credit cards
  • Student loans
  • Payday loans
  • Home equity loans
  • Auto loans
  • Medical bills
  • Personal loans
  • Any other debt you have

» Record the facts

You can either create a spreadsheet on the computer or just use pencil and paper to keep a record of the following for each debt:

  • Balance
  • Interest rate
  • Minimum monthly payment
  • Payment due date
  • Payoff date if applicable
  • Login credentials
  • Can the rate change?
  • Is there an early payment penalty?
  • Anything else you want to keep track of

Add up the balances to get the grand total.  This number should represent every penny of debt you currently have (except your primary mortgage).

Of course, you’ll be paying more than this because of interest, but at least you have an accurate picture of where you’re at today.

» Set up the system

Now that you have all pertinent information in front of you, it’s time to implement the system you agreed upon in step one to track your progress and hold yourselves accountable.

As I mentioned in the guidelines, you could create a spreadsheet or a graph, keep a running ledger in a notebook, or sign up for an online account with Personal Capital or Mint.

However, unless you are tech savvy and very disciplined, I don’t recommend starting with an online tool.  They are very convenient because they do all the calculating for you, but this can lead to a passive interest on your part.

Choose a system that you must actively update so you are consistently being reminded of your efforts, setbacks, and progress.

Make sure your system is one that you can both access conveniently.  If you’re using a notebook, dedicate a specific location for it and always keep it there.  If you like to use spreadsheets, consider making one in Google Sheets so both of you can access it from any device.

» Do a little research

Magnifying glass on paper

Look into possibilities for minimizing your debt balance.  This will take some extra time but worth the effort.  Some ideas could be:

  • Finding a 0% introduction rate to consolidate your credit cards
  • Looking up your credit score, which, if it’s high enough, may give you some leverage to lower rates
  • Seeing if you can qualify for a low-rate home equity loan to consolidate debt
  • Negotiating your medical bills – you may be able to reduce these considerably if you can pay an agreed upon percentage all at once, instead of making payments over several months or years
  • Consolidating student loans so you only have one payment and a lower rate

» Eliminate temptation

The last task in this step is making some proactive choices to set yourself up for success.  Think of situations where you are tempted to charge a purchase or spend money you could be putting towards your debt.

Maybe you are tempted to use your credit card if it’s in your wallet, so put it somewhere that’s not easily accessible.  Or better yet, cut it up.

If it’s tough not to stop at your favorite store on the way home because that cash is burning a hole in your wallet, take a different route.

When you know you’ll be too tired to make dinner and Applebee’s is calling your name, make sure you have some meals in the freezer.

Whatever roadblocks you anticipate getting in your way of reaching a debt-free life, plan your detour ahead of time so you’re not thrown off track.


This step is all about finding your potential to reach a debt-free life.

In other words …

  1. How much money can you currently pay towards your debt?
  2. How can you increase that amount to minimize payments and increase savings?
  3. What can you do to pay off your debt in the shortest timeline?

» Find money in the budget

You need to know how much is coming in and going out and what is left over.  Also, determine which expenses you can reduce or eliminate, at least temporarily.  This is where a budget comes in.

If you do not currently have a budget, there are many resources that will help you create one.  I learned how to create one from Dave Ramsey.  Check out this link from his website for a simple tutorial on how to set up a budget, or you can read my post about how to create a zero-sum budget.

Basically, you add up all your income, and then all your expenses, and then subtract.  What’s left over is considered discretionary income and what you’ll use to knock out most of your debt.

Normally after you crunch the numbers, you’ll discover areas in your budget that can be reduced or even eliminated, such as your grocery bill, dining out & entertainment, and even some utilities.

» Determine the timeline

Once you know the amount of total debt you have and the amount of income you can apply to it every month, you have a couple of choices to determine your debt payoff timeline.

The first option is taking your debt balance and dividing it by the amount you can pay towards it every month.  The number you get is the approximate number of months it will take to pay off all your debt (without considering the interest that’s added).

For example, if you have $5000 in debt and can pay $500 a month, it will take you approximately 10 months to pay it off, depending on the interest rate.

The second choice is deciding how long you want your debt payoff timeline to be, then divide your debt balance by that many months.  This will tell you much you’ll need to come up with every month to meet your debt payoff date.

If you have $5000 in debt and you want to be out of debt in 6 months, you’ll need to come up with approximately $833 a month to reach that goal.  Again, this is a rough estimate because this isn’t considering interest added.  If you only have $500 to pay towards debt according to your budget, you’ll need to generate another $333.

» The timeline determines the mindset

Calendar and clock

If you are okay with the first choice then you’ll just need to be very diligent with your budget and make sure you are applying the required amount every month so you meet your deadline.  However, you are relying on your limited income to determine how long it will take to get out of debt, and you may not want to be in debt that long.

This also may mean some penny pinching and living frugally for a while, which is not such a bad thing.  Many people have great success with reaching financial freedom this way.

However, when you limit yourself to your current circumstances, you are also limiting your potential to pay off debt.  This is primarily using a fixed mindset.

Some examples of cutting expenses could include:

  • Make your coffee at home instead of getting it at Starbucks
  • Have a meal plan in place to cut down on going to restaurants
  • Take your lunch to work instead of eating out
  • Check your second-hand clothing stores before you go to the mall
  • Get rid of cable and just stream with Amazon, Netflix or Hulu
  • Carpool with coworkers to save on gas
  • Switch to a carrier like Ting for a lower cell phone bill

For the second choice, you would need to pursue additional opportunities to generate income to meet your deadline.

You wouldn’t see yourself as limited to a “fixed” situation but instead, you would decide how much time you want to take to get out of debt and let that parameter determine how much income you’ll generate to meet your goal.

It’s the belief that you are capable of increasing your income that engages a growth, or abundance, mindset.

Some examples of increasing income could be:

  • Sell stuff you don’t want on Craigslist or eBay
  • Drive for Uber or Lyft a couple nights a week
  • Have a garage sale
  • Get a part-time job on the weekends
  • Ask for a raise
  • Apply for a promotion
  • Turn a hobby into a side gig
  • Learn a new skill then offer it as a paid service
  • Rent out a room
  • Sell your car and take public transportation for a while

These examples are just the beginning of what you can do to cut expenses and increase income.

If you can refinance for a better rate or consolidate to a 0% credit card you’ll increase your potential for paying off debt even more.  Brainstorm with your partner to come up with more ideas, and decide which ones would be the best fit for you.

You have more potential than you probably realize to get out of debt sooner than you think!  And it goes without saying that if you can reduce expenses and increase income than you’ll be crushing your financial goals and out of debt in no time!


You have goals in place, you know how much debt you’re in, and you’ve analyzed your potential for paying it off.  Now is a good time to prioritize.  This means deciding which debts you will focus on paying off first.

By making minimum payments to all your debts except your one target debt (which you’ll pay as much as you can towards), your debt pile will get smaller while your potential to pay them off gets bigger!

I’ll mention a few different approaches to prioritizing debts in order to decide which one will be the current target.

» Avalanche vs Snowball

These are two popular ways to prioritizing your debts.  In my opinion, one is not better than the other, it just depends on what you think will offer the highest motivation for you to reach your financial goals.

If you are really discouraged about how many bills you have and it just feels overwhelming, you may just need some small wins to feel more hopeful and motivated.  In this case, you might want to use the snowball method.

Using the snowball method means you pay the largest amount towards your smallest balances. 

This is the fastest way to reduce the number of bills you have, and you’ll have a sense of accomplishment each time one is paid off.

Your load will feel lighter and you’ll quickly have extra funds to put towards bigger debts once the small ones are eliminated.  You’ll see progress quickly and start to believe that getting out of debt is within your reach.

If you only have a few large debts, or it kills you to pay all that interest, you’ll want to go with the avalanche method.

Paying off your debt with the avalanche method means prioritizing from highest interest rate to lowest. 

Regardless of the balances, you’ll put as much as you can toward the debts that carry the highest rate.

Ultimately, when you use this method, you will be paying off the least amount of debt in the shortest time – especially if you have some high-interest rate balances!  It makes the most practical sense and saves you the most money.

Then why would you choose the snowball method over the avalanche?

Because paying off debt isn’t just practical, it’s also an emotional experience.  If paying off the smaller debts first makes you feel more empowered, then do it!

Use the method that you think will offer the highest motivation to keep going because in the end, it’s really only about follow through.

Video: Debt Snowball vs. Debt Avalanche

» Stick to your values

One last option for prioritizing your debts that may apply is simply doing what you feel is the right thing to do.

If you’re experiencing guilt or shame over a long-standing debt, do whatever you can to get it paid off first so you can move forward with a clear conscience.

Even if it’s money you owe a family member that doesn’t have interest on it – the knowledge that you are cleared of that debt and no longer have to carry around the emotional burden associated with it is worth its weight in gold.


This is where the rubber meets the road.

You have some goals, a plan, a timeline, and priorities.  Now you need to follow through.

Whether you pay off small debts, high-interest debts, or guilt-ridden debts first, you are moving closer to a debt-free life with every payment you make.

And as you crush each debt by getting to a zero balance, you’ll then have more income freed up to apply to the rest of your debt pile!

For example, let’s say you were paying $100 towards your target debt, and minimum payments of $25 to the rest.  Once that target debt gets to a zero balance, you can apply that $100 to your next target debt, making that payment $125.

Continue this cycle of reaching zero balances and focusing on the next target debt until your final debt balance is wiped out!

Just a tip to stay on track: 

If you use online banking, put all your minimum payments on autopay so you don’t have to think about it. 

For your target debt, make the payment manually because that amount will likely change from month to month, depending on how much “extra” you can apply towards it.

Entering the payment each time will also keep you focused on your target debt and more aware of how close you are to paying it off.


Hopefully, once your debt gets smaller, your confidence will grow and you’ll feel highly motivated to do whatever it takes to stay on track!

But, life is life, right?

Inevitably you will come across roadblocks, detours, and setbacks.

When (not if) you start to feel discouraged or less motivated, it’s a good time to go back through the steps you’ve taken and review the choices you’ve made so far.

  • What were the goals you made when you were Planning your debt payoff?
  • What progress do you see in the recording system you chose when Preparing?
  • How far along are you in the timeline you determined in the Potential step?
  • How many debts have been eliminated so far from your Prioritized list?
  • How much debt have you Paid Off so far?

All of these answers should remind you of the progress you’ve made!

Maybe it’s not going as quickly as you’d like, but it’s important to remember that you’re in less debt than you were when you started – hopefully!

If life threw you a curveball and you’ve somehow acquired more debt, don’t give up!  Just keep moving forward with the steps and adjusting your target debt if necessary.  The only thing more debt will do is possibly extend your timeline – so keep choosing to move forward!

Other actions you can take that will help you persist are:

  • Cut up your credit cards
  • Stick to your budget
  • Keep cutting expenses where you can
  • Continue to add to your savings
  • Periodically check to see if your credit score is improving

It’s also important to not deprive yourself of things that you value, whether it’s material or experiential.  If life becomes unenjoyable it will be harder to stick to your plan.  Spend money on what you value, and cut out the rest.

Don’t let roadblocks derail your goal to be debt-free!

How to escape debt (in a nutshell)

Whew! We’ve covered a lot and I hope you feel like you have a better idea of how you will crush your debt!

Just to summarize, here are the six steps on your roadmap to getting out of debt:

Step #1:  Plan – Have a meeting with your spouse or partner and answer some questions together about important decisions, financial goals, and what you value.  If you’re single, do this on your own.  Don’t skip it!

Step #2:  Prepare – Confront your debt by gathering hard copy statements and adding up the balances. Set up a system for recording debt details and tracking progress.

Step #3:  Potential – Determine what financial resources you currently have to put towards your debt and options for cutting expenses and increasing income.

Step #4:  Prioritize – Decide how you will prioritize your debts and which method you will use to determine your current target debt.

Step #5:  Payoff – Automate payments to all debts except your targeted one. As a debt balance reaches zero, apply that payment to your next target debt.

Step #6:  Persist – Frequently review your written goals and values, and the progress recorded in your tracking system.  Have a plan set up beforehand for unexpected roadblocks and detours.  Don’t give up!  Keep your goals in front of you and find ways to motivate yourself every day.

Even if you’re in your 50s and struggling to build savings for your future, you can learn how to get out of debt before retirement.

If you’re prepared with a solid plan, have set your priorities and know your potential, you CAN pay off your debt completely as you persist towards financial freedom! 

Take action TODAY!

I’d love to know what step you’re on as you move towards your financial goals.  What has helped you?  What hasn’t?  Do you have some inspiring words for those who are struggling with their journey?

Leave your comments below!

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Roadmap to get out of debt

How To Escape Debt With A DIY Debt Management Plan


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