6 Ways to Get Out of Debt in 2025

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Key takeaways

To pay off debt effectively, list all the debts you owe. Then, figure out what you can afford to pay.
Always pay more than the minimum to stop interest from accumulating fast.
Consider consolidating your debt with a new loan or balance transfer card to save on interest.

Debt of any kind can be a significant burden and a source of considerable stress. High-interest debt, like credit card debt, can quickly become unmanageable.

The Motley Fool Money found that the average American household is $105,056 in debt. A portion of this debt is considered good debt, like mortgages, but others need to be paid off as soon as possible.

The most effective way to pay off debt is to have a clear plan. Here’s how to go about navigating the challenge.

1. Make a budget

The first step is to create a realistic spending plan, so you know how much you can afford to pay. List all your sources of income. Include child support, alimony, or government benefits. Then, list all essential expenses, such as rent, utility bills, phone bills, groceries, etc. Now, look at how much you have left.

A portion of this money should go towards savings, more on that later. Some should be fun money to spend however you like. But if you’re serious about getting out of debt, the majority is for paying your creditors.

Financial experts recommend that 20% of your income go toward paying down debt. The more you can afford to pay creditors each month, the sooner you’ll be debt-free.

2. Prioritize debt repayment

Part of understanding how to pay off debt with no money is knowing which debts to prioritize. List all your current debts. Include credit card balances, loans, medical bills, etc. Write down all the balances, interest rates, minimum monthly payments, and due dates. Now that you know how much you owe, you can figure out how to pay it off.

The debt snowball method is popular due to its quick wins. You pay as much as you can towards your smallest debt while making the minimum payments on all the rest. If you want to save money, try the avalanche method, where you prioritize the highest interest rate debt first.

Too much credit card debt to handle?

What would happen if you stopped paying?

3. Pay more than the minimum payments

The minimum payment on a credit card is a debt trap. When you only pay the minimum, most of the money goes towards interest, doing very little to reduce the principal amount.

Credit card interest compounds daily. When you don’t pay off your balance in full, you will owe more each day.

Always pay more than the minimum. Pay your balance in full whenever possible. Paying in full prevents your credit card debt from growing out of control.

4. Call your creditors to reduce debt

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People don’t realize this, but companies are willing to negotiate. Call your credit card company, hospital billing office, or utility provider and explain your situation. Be honest and polite. Clearly express your commitment to paying what you owe and ask for any available options they might offer. They may be able to lower your interest rates, extend your due date, defer payments for a set period, or offer a payment plan. Consumers who are current on payments have high success rates when it comes to negotiating with creditors.

Learning how to negotiate credit card debt can potentially save you thousands in interest. Credit card companies often prefer to work with you rather than risk non-payment. They know that your priority is paying your rent so you’re not evicted, not your credit card bill.

Read before you settle!

National Debt Relief review

5. Explore debt consolidation or refinancing

One effective strategy for paying off debt quickly is to refinance it at a lower interest rate. Debt consolidation or refinancing involves rolling all your debts into one with a more manageable monthly payment. You simplify your finances to pay off debt more effectively. There are two primary approaches to consider: debt consolidation loans and balance transfer cards.

Debt consolidation loans

A debt consolidation loan is when you take out a new loan and use the funds to pay off your old debts. You now have one monthly payment, making it less likely for you to miss due dates. The single payment alone can be a relief, but they’ll often lower your interest rate, too. Consolidation loans can be cost-effective if you have a lot of high-interest debt and are struggling with too many monthly bills.

The catch is that you need a good credit score to secure a loan with a low APR. The new loan may also come with additional fees and a longer repayment term, which could result in higher overall interest payments.

Balance transfer cards

Balance transfer credit cards allow you to transfer existing card balances to a new account with a low or even 0% introductory rate for a specified period. If you pay off your balance during the introductory period, you’ll pay nothing or very little in interest. It’s a great way to save money.

Balance transfer cards are ideal for consumers with good credit who can repay the transferred balance in full during the introductory period. The initial period typically lasts between 12 and 21 months. After it’s over, the APR will shoot up to normal.

Another issue with these cards is that they often come with a balance transfer fee, typically 3% to 5% of the amount transferred. Depending on your situation, it can be well worth paying this fee to stop paying interest on your outstanding balances.

6. Build your emergency fund

Now that you have a repayment plan, it’s time to build an emergency fund. An emergency fund is a financial cushion that protects you against unexpected expenses. It reduces the need to borrow, helping you live a debt-free life.

Most experts recommend having three to six months of living expenses saved up. This amount may be excessive if you’re working to get out of debt. That’s not to say you should ignore building up savings. Only that you should start with a smaller amount, say $1,000. After you’ve saved up $1,000, return your focus on paying off your debts.

Once you have your debts under control, but not fully paid off, start saving money. Even setting aside just $20 a month can build up enough cash for emergencies over time.

Frequently asked questions

1. How do you get out of debt when you are broke?

To get out of debt when you’re on a low income, start by cutting non-essential expenses like subscriptions or buying coffee. Consider side gigs like Lyft or TaskRabbit for additional income. The goal is to free up funds and allocate them towards paying creditors. You should also contact creditors to negotiate lower payments or hardship programs.

2. Is $20,000 a lot of debt?

Whether $20,000 is a lot of debt depends on the type of debt and your income. Having $20,000 in student loans or a mortgage is not bad, but having the same amount in high-interest credit card debt is a problem. Then, you need to learn how to pay off 20k in debt before it grows even more.

3. What are the quickest ways to get out of debt?

If you’re searching for how to get out of credit card debt fast, the first thing you need is a plan. Having a strategy will help you pay your creditors effectively. Consider negotiating lower interest rates to make payments more manageable. Look for extra money through better budgeting or a second job to pay even more each month.

4. How can I be debt-free in 6 months?

To pay off debts in six months, you need to implement an aggressive repayment plan. Try the debt avalanche method, where you pay off high-interest-rate debts first, or consider consolidating your debt with a balance transfer card. You can also negotiate lower interest rates with your creditors. At the same time, you need to reduce your spending and put all the money towards paying off debts. Take on a second job for the next six months and use that money to pay creditors. Six months is a short amount of time to repay debts. You need to be dedicated and find as much money as possible.

Bottom line

Any time is the right time to get out of debt. Put away your credit cards and take a hard look at what you owe. The right repayment strategy depends on how much you owe and how much you can afford to pay each month. Try a strategy or two. Not every method will work for everyone, so be ready to adjust.

Adjusting to living within your means and paying off debt can be hard, but you can do it. The important thing is to consistently pay down your balances without adding to them. Little by little, you’ll chip away at the debt and soon be living a debt-free life.

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18. Baggage Insurance Plan coverage can be in effect for Covered Persons for eligible lost, damaged, or stolen Baggage during their travel on a Common Carrier Vehicle (e.g. plane, train, ship, or bus) when the Entire Fare for a ticket for the trip (one- way or round-trip) is charged to an Eligible Card. Coverage can be provided for up to $2,000 for checked Baggage and up to a combined maximum of $3,000 for checked and carry-on baggage, in excess of coverage provided by the Common Carrier. The coverage is also subject to a $3,000 aggregate limit per Covered Trip. For New York State residents, there is a $2,000 per bag/suitcase limit for each Covered Person with a $10,000 aggregate maximum for all Covered Persons per Covered Trip. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.

19. Car Rental Loss and Damage Insurance can provide coverage up to $75,000 for theft of or damage to most rental vehicles when you use your eligible Card to reserve and pay for the entire eligible vehicle rental and decline the collision damage waiver or similar option offered by the Commercial Car Rental Company. This product provides secondary coverage and does not include liability coverage. Not all vehicle types or rentals are covered. Geographic restrictions apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.

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22. Purchase Protection is an embedded benefit of your Card Membership and requires no enrollment. It can help protect Covered Purchases made on your Eligible Card when they’re accidentally damaged, stolen, or lost, for up to 90 days from the Covered Purchase date. The coverage is limited to up to $10,000 per occurrence, up to $50,000 per Card Member account per calendar year. Coverage Limits Apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.

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41. MyPay is only offered in select states

42. To be eligible for MyPay, you must receive qualifying direct deposits to your Chime Checking Account as set forth in the MyPay Agreement. A qualifying direct deposit is a deposit from an employer, payroll provider, gig economy payer, government benefits payer, or other permitted source of income by Automated Clearing House (“ACH”) or Original Credit Transaction (“OCT”). Your MyPay Credit Limit and Maximum Available Advance may change at any time. MyPay is a line of credit and available limits are based on estimated income and risk-based criteria. Eligible members may be offered a $20 – $500 Credit Limit per pay period. Your Credit Limit and Maximum Available Advance will be displayed to you within the Chime app. MyPay is currently only available to eligible Chime members in certain states. Other restrictions may apply.

43. Not affiliated with Empower Annuity Insurance Company of America (www.empower.com). Not everyone will qualify. Offers range from $10-$300 for first-time customers; $10-$400 for all others. Offers are based on our eligibility requirements and can go up with on-time payments. In Feb 2025, the average offer was $95 for first-time customers; $187 for all others. Instant delivery is optional—see fees in Empower’s Terms. Empower offers a 14-day trial for first-time customers followed by an auto-recurring $8/month subscription fee. Cancel anytime.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor's credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor's degree in journalism and an MBA.

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6 Steps to Get Out of Debt in 2025

Key takeaways

Jump to:

1. Make a budget