Debt can pile up fast—and getting out of it can take years. According to Northwestern Mutual’s Planning and Progress Study, the average American carries about $38,000 in personal debt, not including mortgages.
That number may seem overwhelming, but with the right strategy, it's possible to regain control and move toward financial freedom. Here’s how to start:
Stop the Bleeding
The first step: avoid taking on more debt. That means putting credit cards on hold, saying no to new loans, postponing major purchases and trimming daily expenses wherever possible.
Choose Your Payoff Method: Avalanche or Snowball
There are two main strategies for tackling debt:
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Avalanche Method: Focus on paying off debts with the highest interest rates first. This approach saves the most money in the long run.
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Snowball Method: Start with the smallest balances, paying them off quickly to build momentum. A Harvard Business Review study found this method can be more motivating for many people, as it offers a psychological boost with every debt eliminated.
Cut Back, For Now
Look at your budget and reduce nonessential spending—think subscriptions, memberships or dining out. Use the extra money to chip away at debt faster. Also, shop around for better rates on essentials like insurance or internet service.
Ask For a Lower Interest Rate
Sometimes, all it takes is a phone call. Contact credit card companies to ask for a lower rate. If you're in good standing, they may be willing to work with you. Another option: transfer balances to a card with a 0% introductory APR, but be sure to pay it off before the promotional period ends.
Consolidate or Settle
For those with significant debt, it may help to consolidate balances into a single monthly payment. Debt settlement—where a creditor agrees to accept less than what’s owed in a lump sum—can be another last-resort option. Just be sure to read the fine print and work with a reputable provider.
The Bottom Line
Digging out of debt won’t happen overnight—but with discipline and a clear plan, it can happen. Whether you chip away with the snowball method or negotiate better rates, every step forward counts. Stay consistent, track your progress and don’t be afraid to ask for help. Financial freedom may be closer than you think—and the peace of mind that comes with it is well worth the effort.
