The Ultimate Guide to Paying Off Debt
⬆️ THIS is how good you’re going to feel after you read this ultimate guide.
Because guess what? The biggest battle is actually creating a plan to pay off your debt, before even making a single payment.
If you’re reading this, there’s a good chance you’re feeling the pressure of debt… and you’re ready to do something about it. Maybe you’ve been avoiding your credit card statements. Maybe you’ve tried budgeting before, but something always derails your plan. Maybe you’ve got a little voice in your head whispering, "You’ll never get out of this.”
Let me say this loud and clear:
You absolutely can become debt-free.
No matter how much debt you’re carrying right now, no matter how long you’ve been in the hole, no matter how many times you’ve tried and failed before - you can create a plan that actually works this time.
Your Path to Complete Debt Freedom Starts RIGHT NOW!
In this guide, I’m walking you step-by-step through everything you need to know about paying off debt. By the end, you’ll go from “I don’t know where to start” to “I have a plan and I feel ready to take action.”
Before we dig in, you’ll want to grab:
A piece of paper or journal + a pencil or pen
Open up a blank Google sheet or Excel spreadsheet to write down your numbers
Don’t want to start from scratch? Click below to grab a copy of our simple Debt Tracker and Budget Sheet for just $10.
The rest of this guide is interactive, meaning that you’ll be asked to TAKE ACTION during each step to create a debt payoff plan. You’ll be tempted to just read and not do the work - I encourage you to push through and actually do the activities in each section!
If you do, your will literally create a complete debt payoff plan in under an hour - and experience an immense weight off your shoulders.
Ready to get started? Let’s dig in.
Step 1: Know Exactly What You Owe
Before you can fix your debt situation, you have to face it.
This part can be scary, but it’s also the most empowering thing you can do. The first thing you’re going to do is make a full list of your debts.
Open that spreadsheet, or grab that piece of paper, and start writing it all down:
Type of debt (e.g., credit card, student loan, personal loan, car loan, medical debt, mortgage, personal loan - write down ALL of it!)
Debt Company Name (e.g., Nelnet, Chase Bank, Shellpoint Mortgage)
Current balance owed
Minimum monthly payment
Interest rate
Due date each month
Notes (anything else you need to know about this debt)
This step will give you a clear snapshot of all of your debts in one place.
Quick Tip: Highlights your debts in different colors based on which ones are the highest amounts or highest interest rates (red = must be paid the soonest, green = lowest priority).
Step 2: Know Your “Why” for Paying Off Debt
Debt isn’t just a numbers problem; it’s emotional. It weighs on you. It affects your sleep, your relationships, your self-confidence. And sometimes, when we’re deep in it, we lose sight of what life could look like without it.
You just wrote down all of your debts, and you’re probably having an emotional reaction to this experience. This is the moment for you to reflect on what you’re feeling, and lean into how JOYFUL you will feel as you start to pay off these debts.
Grab that journal or pen & paper and write down the first things that pop into your mind:
What would being debt-free allow me to do or feel?
What is this debt currently taking from me?
What will my life look like in 1, 5, or 10 years if I stay in debt vs. if I pay it off?
Write it down. You’re going to keep coming back to these reflections. This is the emotional fuel you’ll need when it gets hard (and it will get hard, but you’re ready for that).
Now, you don’t just know the numbers, but you’re also feeling emotionally inspired to pay off the debt. You’re ready for the next step.
Step 3: Choose a Payoff Strategy That Works for You
There’s no one “right” way to pay off debt, but there is a method that will feel more motivating to you. Let’s break down two of the most popular strategies.
✅ The Snowball Method (Best for Motivation)
Pay off your smallest debt first.
Keep paying minimums on all other debts.
Once the smallest debt is gone, roll that payment into the next smallest debt.
Why it works: It creates quick wins that keep you motivated.
✅ The Avalanche Method (Best for Saving Money)
Pay off your highest-interest debt first.
Keep paying minimums on all others.
Once that debt is gone, apply that payment to the next-highest interest debt.
Why it works: You save more money in interest over time.
You can also combine the two: Start with a small debt (snowball), then switch to avalanche mode once you’re in the habit.
*Right Now: Pick the method that you want to use to start paying off your debts. Write it down in your journal next to your reflections.
Step 4: Make Sure You’re Paying the Lowest Amount Possible
Did you know that you can negotiate or lower your debt payments? There are a few ways you can do this. Work through each of the steps below that apply to your situation:
✳️ Call the Company Directly to Negotiate
Find the contact information of the company that owns your debt
Ask if you can negotiate any of these factors: Your current minimum payment, your interest rate, a temporary payment pause, or a reduction in the total amount owed
You might be surprised at what companies are willing to offer you!
Always get agreements in writing. Before you agree to anything, make sure you understand how any changes (especially debt settlements) may affect your credit score.
✳️ Transfer Your Credit Card Balance(s) to a New Card
Find another credit card that offers 0% interest for a limited time (often the first 12–18 months)
Make sure the credit card allows balance transfers from another credit card
Apply for the credit card and get approved
Transfer your balance over (watch for high transfer fees) + benefit from the 0% interest for a limited time
Use that 0% timeframe to pay off other debts that have 1%-30%+ interest rates
Plan to pay off this debt preferably before the 0% timeframe runs out so that you owe NO interest on this debt!
✳️ Debt Consolidation Loan
Explore debt consolidation loans online (this is the process of combining all of your separate debts into one, single-payment loan)
Check to see if the debt consolidation loan interest rate is lower than your current rates. If not, it’s not worth combining your debts.
Have you worked through all of the options above to get the BEST rates and payment plans for your debts? Amazing! Let’s move into the next step.
*P.S. Don’t forget to update your Google Sheet or Excel sheet with your newest debt payment amounts and interest rates if they have changed.
Step 5: Create a Budgeting Plan that You can Follow Monthly
Now you know exactly how much you need to pay monthly to get rid of your debt. The next step is to incorporate your debt payments into an overall monthly budgeting plan.
If you didn’t grab our Debt Tracking and Budgeting Sheet above, you can get it here, which includes a tab for creating a monthly budget.
Fill in the tab called My Monthly Budget with:
Your income sources
Your monthly expenses
Your debt payments
Your ‘sinking funds’ (the expenses that pop up across the year, like Christmas presents or your car registration renewal)
Once you have all of your income and expenses outlined, you’ll see your monthly cashflow number: that’s how much you’ll have left (or how much you’re overspending) each month.
✅If you’re underspending, congrats! You’ll have extra money to add to your savings each month.
❌If you’re overspending (aka you have a negative number in the cashflow area), it’s time to think about either 1) Cutting expenses, or 2) Adding income streams.
Step 6: Create Breathing Room in Your Budget
If you realized in the step above that you need to either cut costs or bring in more income, then the next step is to do just that!
How to Cut Costs (Without Deprivation)
Look through your spending and ask:
Can I pause or cancel any subscriptions?
Can I negotiate bills (phone, internet, insurance)?
Can I cook at home more or switch grocery stores?
Can I reduce impulse purchases by using cash or a debit-only system?
Every $50 saved is $50 closer to being debt-free.
How to Boost Income
This part is powerful, because your income has way more upward potential than your expenses do.
You could:
Ask for a raise at work
Pick up a side hustle (VA work, freelance gigs, surveys, tutoring)
Sell things you no longer need (Facebook Marketplace is your friend)
Offer a skill locally (dog walking, babysitting, resume editing, etc.)
Even an extra $200/month can transform your payoff plan.
Step 7: Automate Your Progress
Once you’ve chosen your payoff plan, make it automatic:
Set up auto-pay for all minimum debt payments to avoid late fees.
Schedule a monthly or bi-weekly transfer of extra money toward your target debt.
Use your tracker to stay motivated! Update the total balances as you start paying them off.
The more you automate, the fewer chances you’ll have to second-guess or “accidentally” spend that money.
Step 8: Watch Out for These Common Mistakes
❌ Trying to Do Too Much Too Fast
Yes, you want to be debt-free. But burning yourself out won’t help. Keep making those monthly payments, and don’t worry too much about your month-to-month balance as long as you’re moving forward.
❌ Forgetting to Adjust Over Time
Your budget might change over time: New job, one debt paid off, expense drops off. Be sure to revisit your budget once every few months to make adjustments.
Step 10: Track Your Wins and Celebrate Progress
One of the most overlooked parts of paying off debt? Celebrating! Not just at the finish line, but all along the way.
Here’s how you can celebrate:
Update your debt tracker every month with your lower balance
Create mini-milestones ($500 paid off, 25% paid off, etc.)
Treat yourself with low-cost wins (a hike, favorite latte, a library book binge)
Joy fuels progress. So let yourself feel proud.
BONUS Step 11: Stepping into Debt Freedom
Picture this: No more minimum payments. No more late fees. No more interest racking up while you sleep.
You’ve freed up hundreds, maybe thousands of dollars in your budget. You get to decide where that money goes:
Saving for a home
Investing for retirement
Starting your business
Traveling the world
Building generational wealth
Becoming debt-free isn’t just about math. It’s about freedom. Confidence. Peace of mind. And the best part? You’re already on your way.
Remember This: Debt doesn’t define you. It doesn’t mean you’re bad with money. It doesn’t mean you’ve failed. It just means you’re human.
What defines you is what you do next. What you do TODAY.
So let today be the day you say, “I’m done carrying this alone. I’m ready to take control.”
Start where you are. Use what you have. Build your plan one step at a time.
Because your debt-free life? It’s waiting for you… and it’s going to feel so damn good when you get there.
