Unfortunately, paying off debt is no easy feat. If you’re ready to officially declare yourself debt free here are six steps for getting out of debt.Having debt is one of the biggest financial stressors and can quickly spill over into other areas of your life. Getting rid of your debt will increase your financial stability and allow you to work on other financial goals which, let’s admit, are much more fun to focus on.

Unfortunately, paying off debt is no easy feat. If you’re ready to officially declare yourself debt free here are some steps for getting out of debt.

# 1 – Know Where You Stand

Before you can look to your debt free future you first have to look at your past. Start by gathering all of your credit statements and student loan bills and list those debt balances in one place.

An easy way to do this is to create a simple Excel sheet where you can track your debt pay-off progress on a monthly basis.

List every single balance you owe so that you have a clear picture of where you stand.

This step can be one of the hardest if you’ve been living in denial or simply ignoring your financial position. But without knowing the absolute truth you’ll set yourself up for disappointment and failure.

# 2 – Evaluate Your Spending

Once you have your debt balances listed out and tallied up you’ll be ready to do some more digging.

It’s important that when you set out to make a positive change in your life, like becoming debt free, that you look back on past behavior and recognize your spending patterns. If consumer debt (like credit card debt) is what you’re dealing with you need to take a look at exactly what you’ve been purchasing and why.

Aside from looking at the behaviors that brought you to this point (if any) you also need to go back through your past three months’ worth of spending and categorize it. This will give you a quick synopsis of how much you spend on a monthly basis as well as any places that will be easy to cut back on.

# 3 – Set Date Payoff Goals

This third step is a bit more fun than the previous two. Take a look at your spending versus your income and see how much money you have left at the end of the month. From there you can calculate how long it’s going to take you to pay off your debt.

# 4 – Determine What Financial Changes You Need to Make

If the outlook from the previous step is frustrating there are other things you can do to make the process go quicker.

If you want to pay off debt faster you have two options: earn more money or spend less money. (Or do a combination of both.)

Spend Less Money – If you decide to choose the spending less option here are some helpful links showing just how you can lower your budget:

Earn More Money – If you’re spending is as low as it possibly can be, your only option is to earn more money. Here are some helpful links:

# 5 – Determine a Debt Payoff Method

There are two very helpful methods to choose from when paying off debt. The first is the debt snowball, made popular by Dave Ramsey.

With the debt snowball you list your debts from smallest balance to largest balance and pay off the smallest balance first while making minimum payments on the rest of your debt. After the smallest balanced is paid off you turn your attention toward the next smallest until all debts are eliminated.

This method is a great way to celebrate small wins and to keep motivations high.

The second method is the debt avalanche. With this method you list all of your debts from highest interest rate to smallest interest rate. You then focus on the debt with the highest interest rate while making minimum payments on the rest of your debt. Once the highest interest rate debt is paid off you move down the line.

This method is preferred by those who are looking to save the most money on interest.

At the end of the day the choice between the two is very personal. Pick whichever method motivates you the most.

# 6 – Begin Paying Down Your Debt

Once you’ve been through all the steps it’s time to take action! Start working your plan and be persistent. Develop the habit of making extra payments toward your debt each month and with time you’ll hit your goal.

About Alexa Mason

Alexa Mason has written 192 articles on this site..

Alexa Mason is a freelance writer and wanna be internet entrepreneur. She is also a newly single mom to two beautiful little girls. She chronicles her journey as a single mom trying to make it big at www.singlemomsincome.com.

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