Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

Try These Tips to Get Out of Debt Now

July 19, 2018
how to get out of debt

Make a budget, organize your loans, and put your money to work to knock out your debt.

3 min read

Getting into debt is easy. Trying to get out of debt is the hard part.

Total household debt in the U.S. is more than $13 trillion, a record according to a recent report from the Federal Reserve. That comes out to about $137,000 per household. While the majority of that debt is for mortgages, households have also racked up a staggering $17,000 in credit card debt, on average, and $37,000 in student loan debt.

Even if you don’t have credit card student loan debt, it’s possible you have other types of debt, such as auto loans, or medical bills.

So, how can you dig yourself out of the hole and get out of debt? Here are some common strategies:

Create a budget

Creating a budget should be your number one step for helping you get a handle on all of your financial questions. A budget will give you insight into how much money you have coming in each month, and how much you’re spending. By knowing these two things, you can make adjustments to pay off more of your debt.

“The other great thing about having a budget, is you get to tell your money what to do instead of wondering where it went,” says Christian Stewart, a financial coach, and owner of Do Better Financial.

The debt avalanche technique

The debt avalanche means organizing all of your debts, from highest interest rate to lowest. While you continue making payments on all of your loans, the goal is to target the debts with the highest interest rates first, by throwing more money at these loans than the others.

“You’re always eliminating the accounts with higher interest rates, which add up over time,” says Jacob Lunduski, an analyst for Credit Card Insider.

The debt snowball technique

The snowball technique is almost the reverse of the avalanche method. Organize your debts by dollar amount, from smallest to largest. Focus on paying off the smallest debts first, and then move on to the bigger loans.

The theory behind this approach is that you’ll gain confidence if you pay off the smaller loans completely. That will then let you tackle the bigger loans, having a sense of fulfillment and psychological momentum about paying off the other loans first.


Consider refinancing your student loans. Federal student loans carry an average interest rate of about 4.5% for undergraduates and 6.3% for graduates, according to recent reports. While federal loans give you plenty of flexibility, including the ability to make deferrals on payments and options for needs-based repayment, some private lenders can offer you lower repayment terms, that could potentially save you hundreds of dollars each year.

Get a side gig

We get it, you work really hard at your current job. And you may not have time for a second one. But if you can, think about jobs you can do in your spare time, such as driving for Uber or Lyft, or even earning some extra income from that unused spare room, via Airbnb. You might even find you have a passion for dog walking on the weekends. All of these things can help you get out of debt faster.

“You can earn extra money in your spare time when it’s convenient for you,” says Kat Tretina, a personal finance expert at Student Loan Hero, an education website on student debt, who adds you can use the extra cash to make additional payments on your student loans.

Lump sum payouts and raises

You may qualify for a tax rebate in April, or find yourself receiving an inheritance from a wealthy uncle or even a work bonus. Take this cash and put it toward your loans, Slater says. Similarly, if you get a raise, use the extra money to pay down your debt, while sticking to your current budget.

Switch to debit cards

If impulse spending is your enemy, and it helped get you into the many thousands of dollars of debt you have now, consider cutting up your credit cards. Some studies have shown that people spend up to 100 times more on credit than with cash.

Switch to debit cards or cash. Debit cards usually deduct cash directly from your checking account. And by spending cash, you’re likely to be more connected to what you’re spending.

These are just a few ideas to get out of debt, but there are many others. Budgeting and saving money are always good ideas.

Not going into debt is another.

Investing, simplified

Start today with as little as $5

Get the App

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

Next for you
What's the Cash Diet? Paying with Cash Can Help You Save Money

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
market news Retirement budgeting social media Careers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit