Digging yourself out of debt is the goal, but can you do it in a year? We are exploring 8 steps to help you drastically alter your financial future.

Debt can be a scary word.

You may have accumulated some debt over the years to pay for things like school, trips, essentials, maybe even a car to get to your first job. As you continue to take on these debts, the total you owe continues to tick up as you try to successfully navigate life. 

Eventually, you cannot ignore the big red number staring you in the face. Although it can be difficult and scary, getting out of debt is not impossible. 

Getting yourself out of debt can drastically alter your financial future for the better. Instead of spending hundreds or thousands of dollars paying down debt each month, you will be able to use that income to build your retirement savings, create a bank account buffer, and spend it on your next bucket list vacation

If you know that you want to pay off your debt quickly but you aren’t sure where to get started, then you are in the right place. We will explain each of the steps you should take on your way to becoming debt-free. 

1. Add up your debt

Finding your way out of debt can seem like a gorilla-sized task because it is incredibly easy for anyone to rack up thousands of dollars worth of debt quickly. In just a few short years, you can easily go from a debt-free 18-year-old to a 20-something with over $50,000 in debt. 

Before you can start paying down your debt, you need to find out exactly where you stand.

Take a close look at each of your debts and tally up a grand total of debt. Do not let this number scare you. It can be overwhelming to see all of your debts in black and white, but it is an important part of the process.

You may find a deeper resolve to pay off your debts once you realize how deep they are. 

Once you have the big red number in one place, it is easier to wrap your mind around. Consider whether or not you physically able to pay off your debts within a year based on your income and current expenses.

If the number seems too big for one year, do not give up! You can still follow the steps to pay off your debt in a slightly longer timeframe. Remember, it is better to start now than putting it off for another year. 

2. Create a budget

If you want to get out of debt, then you’ll need to control your spending. A budget is a great way to do that. 

It might require a minimal budget to seriously tackle your debts. Take a look at your expenses and see how low you can make them. Can you downsize your living situation? Are you spending too much on take out? Find ways to reduce your spending within your new budget guidelines.  

If you are sure how to get started, then check out our step by step guide.

3. Decide which payment method is best for you

There are several methods to pay off debt. Two of the most effective ways are the snowball and avalanche methods

Snowball method

With the snowball method, you pay off your debt from the smallest balance to the largest balance and do not pay attention to interest rates — just the total balance due.

If you have several smaller debts mixed in with larger loans, then this method may work very well for you. By paying down your smaller debts quickly, you will see progress fast which proves to yourself that you are capable of paying down your debts.

The great feeling will give you the confidence you need to tackle larger debts like your car loan that can be harder to pay off because many lenders won’t accept principal-only payments. Still, there are options like making principal payments to a dedicated savings account so that save enough to pay off the loan completely at some later point.  

Avalanche method

With the debt avalanche method, you prioritize your debts from the highest interest rate to the lowest interest rate. You do not pay attention to your total balances — just the interest rate. The advantage of this method is that you are winning mathematically because you will be saving money on interest

Both are good methods to pay down your debt, so choose the one that feels most motivating to you. The method you pick will be a reflection of your specific situation. 

Remember, there really is no right or wrong way to pay down debt.

As long as you are committed to your decision to eliminate your debt, you can’t go wrong. 

4. Come up with a payment plan

Now that you have a plan for which debts you want to tackle, it is time to create a payment plan. You have a few options that could expedite your path to becoming debt-free. 

Personal loans

Personal loans are one way to consolidate your debt into one payment. These loans will have widely varied terms based on the lender and your financial situation. Luckily, there are several lending partners that will work with you to find the best personal loan option.

FionaGuidetoLenders, and Prosper are all good places to start looking for your personal loan.

Balance transfer cards

If you have a larger outstanding credit card balance, then you should consider a balance transfer that allows you to move your balance to a different credit card with a lower interest rate. Typically there are fees associated with a balance transfer, so do the math to ensure that it is worth the effort.

A good option to look into is the Citi® Diamond Preferred® Card.


A final option to consider is refinancing your debt. Big-ticket items such as your mortgage or auto loan are good candidates for refinancing. Although refinancing can be time-consuming, it will save you money on interest rates.

If your original loan came with a high-interest rate attached then you should seriously consider this option, especially if your credit score has significantly improved since you took out the original loan. 

5. Stop adding to your debt

You cannot get out of debt if you continue to make similar choices. A series of choices to finance your needs and wants has led to this amount of debt. In order to escape debt for good, you need to change your mindset. 

Now is the time to stop taking out new loans. For example, you should find a way to avoid grad school debt, avoid any unnecessary new credit card purchases, and forgo upgrading your car until you can afford it. 

6. Cut your current expenses

Every dollar you are able to save is another dollar that can be used to lower your debt. Take a close look at your current expenditures and challenge yourself to start spending less. This is particularly useful if you’re trying to get out of debt on a low income

A few ways to save money quickly include:

  • cutting out unnecessary bills.
  • finding a roommate to drastically cut living expenses.
  • eating at home more often.
  • finding creative ways to have free fun.
  • using up any gift cards you have sitting around collecting dust.
  • canceling your gym membership to exercise at home.

Also, consider switching banks to avoid any fees that could be eating into your hard-earned dollars. Investigate the fees at your current bank and decide if you need to make a switch.

If you are looking to avoid bank fees, then Chime® is a great place to start.* The online financial app offers many cost-saving features such as no monthly fees and multiple deposit options.2 Plus if you prefer, you can get real-time alerts and notifications which includes both daily balance notifications and on-the-spot transactions that you make.

* Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.
2 There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account.

How to Get out Debt in a Year

If you prefer a more traditional bank, then Discover is another budget-friendly bank. It offers savings accounts with no minimum balance or monthly fee to help trim down your banking expenses. Plus Discover is known to have excellent customer service which is always a bonus in the banking world.

7. Increase your income

The more you earn the more you can spend on debt repayment. Yes, it might be easier said than done, but everyone has the ability to earn more. It might not be pretty but earning more could get you closer to your debt-free goals quickly. 

You could ask for a raise, volunteer for overtime, pick up a second job, start a blog, babysit, walk dogs, freelance, or find a side hustle that gets you excited.

Another way to add to your income is by selling your stuff. Take anything that you do not need and sell it. Put the money directly towards your debt. Almost everyone has things around the house that they do not really need, make the effort to turn your stuff into cash. 

Earning more will make it much easier to pay off debt. Do not be discouraged if it takes a little while to find the right extra income stream, you will find your groove if you put in the work. 

8. Stick to the plan

As you make lifestyle changes to earn more and spend less, do not fall into your old habits. Make sure to put all of this newfound cash towards repaying your debts. It will not be easy but you can pay off debt sooner than you think. 

A key part of this plan is finding a way to live within your means. You need to get very comfortable living below your means, this is can be difficult but it is extremely important for long term financial success.

It can be a hard switch to go from taking on debt to support spending to restricting your spending to pay down your debt. However, it will be worth the struggle. You can and will conquer your debt quickly if you follow through with these steps.


There are no shortcuts to climbing out of debt, but the steps we’ve outlined will help you get started with an action plan. Red numbers no longer need to be an operative color in your financial future.

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About the author

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Sarah Sharkey is a personal finance writer covering retirement, investing, debt, savings, credit cards, mortgages, and student loans. Additionally, she is the founder of Adventurous Adulting, a personal finance blog dedicated to helping readers tackle their money and take control of the adventure of life. You can connect with her on LinkedIn or Twitter.