7 Steps to Get Out of Debt in 2026

1. Take Inventory of Your Debt

Before you decide on a strategy for paying off your debts, it's a good idea to get clear on what exactly you owe. Dig through your statements and bills and create a list of all your balances. For each, be sure to note the:

• Lender name
• Total balance
• Interest rate
• Minimum monthly payment
• Payment due date
• Account status (current on payments, missing payments, in collections)

If any of your balances are past due, it's a good idea to prioritize getting these accounts back in good standing. That can help you avoid further damage to your credit and minimize late fees.

Be sure to list all your debts, including mortgages, student loans, auto loans, credit cards and personal loans. You should even include those debts that aren't among your highest priorities—seeing all your debt together gives you the complete picture.

Learn more: How Can I Find All My Debt?

2. Use a Debt Repayment Strategy

Choosing a debt repayment strategy can help you divide and conquer your debts. Here are the two main methods to choose between.

Debt Avalanche Method

With the debt avalanche method, you pay off your debts in order of highest interest rate to lowest. Continue to make minimum payments on all your other debts, but put extra funds toward your balance with the highest rate. Once that's paid off, focus on the debt with the next highest rate and repeat.

• Who it may work for: The debt avalanche method works best for those with a goal to save the most on interest while getting out of debt.
• Potential downsides: If your highest-interest debt is also your largest balance, it could take a while before you get the satisfaction of seeing the number of paid-off accounts go down.

Debt Snowball Method

With the debt snowball method, you put extra funds toward your smallest balance first while making minimum payments on your other debts. The goal is to clear out the number of account balances more quickly, while continuing to make the minimum payment on all your debts.

• Who it may work for: If you want to see more accounts paid off ASAP, this may be the better strategy. It could also take some pressure off your finances because you'll juggle fewer monthly payments sooner.
• Potential downsides: By the numbers alone, you might save less money with this method than you would with the avalanche strategy.

Learn more: Debt Snowball vs. Debt Avalanche Method

3. Consider Debt Consolidation

By consolidating your debts, you may be able to lower your interest rate and streamline your monthly payments. The idea with consolidation is to use a new form of credit—ideally one with better terms—to pay off your existing debts. Here are a couple ways to consolidate.

Use a Balance Transfer

A balance transfer credit card could be a solid choice if you have good credit and can pay off your debt within a year or so. Balance transfer cards often offer an introductory 0% annual percentage rate (APR) for a certain number of months—often more than a year. You transfer your debts to the balance transfer card, saving you money in interest as you pay off the balance.

Balance transfer cards typically require good to excellent credit scores. Beyond credit requirements, there are a couple other things to consider before you decide to do a balance transfer:

• When interest kicks in: Once the introductory period ends, the interest rate will jump up to the card's standard rate and apply to any remaining balance. If you have a plan to pay off your debt before the intro 0% APR period ends, this could be a good option.
• Balance transfer fees: Balance transfer cards generally require you to pay a balance transfer fee of typically 3% or 5% of the total transfer amount. The fee for transferring a $5,000 balance could cost you $150 to $250, for instance.

Best balance transfer cards of 2026

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Bank of America^® Customized Cash Rewards credit card

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Bank of America^® Unlimited Cash Rewards credit card

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See all our best balance transfer credit cards for 2026.

Use a Debt Consolidation Loan

Debt consolidation loans are a type of personal loan designed specifically for paying off high-interest debt, such as credit cards.

If you have a good credit score, you may be able to use a consolidation loan to streamline your monthly debt repayments so that you only have to make one monthly payment, rather than multiple. In addition, consolidation loans have a fixed APR and a set repayment schedule, which can add structure to your repayment plan.

Here are a couple things to consider before you apply for a debt consolidation loan:

• Interest and fees: Consolidation loans don't offer an introductory 0% APR, so you'll pay interest right away. Many unsecured debt consolidation loans also come with origination fees, which can range from around 1% to upwards of 10% of the loan amount. The fee typically is deducted from the approved loan amount.
• Potential for more debt: Don't use a personal loan to consolidate your credit card debt if you think you may be tempted to rack up new balances on your credit cards. If that happens, you could end up worse off than you were before.

Learn more: Balance Transfer vs. Debt Consolidation Loan: Which Is Best?

4. Adjust Your Budget

If you don't already have one, making a budget can help you get out of debt. A budget helps you pinpoint places where you might be able to cut back and allocate income toward paying your lenders.

Choose a Budget System

Finding a budget plan that works for you can help you stay on track. One option is the 50/30/20 budget rule:

• Earmark 50% of your net income for essentials, including housing, utilities, transportation, basic food and minimum debt payments.
• Set aside 30% of your net income for affording your wants, including streaming subscriptions or eating out.
• Use the remaining 20% to add to your savings and make extra payments toward your debt.

Limit Spending

While leaving room for fun spending is important to avoid burnout, you could try pulling discretionary spending way back while you focus on bringing your debt down.

For example, you might choose to cancel your gym membership and work out for free at home or cut back on the number of streaming services you use, with the understanding that you can add these back in once you've paid down your debt. You could also attempt a no-spend challenge.

Use an App to Help

Consider downloading a budgeting app to help you set goals and track your spending. Many apps automatically import and sort your spending into categories, which simplifies your bookkeeping and can help you recognize spending patterns. While some apps charge fees, there are also apps that you can use for free (such as Goodbudget).

Learn more: Top Resources for Learning to Budget

5. Aim to Boost Your Income

On top of adjusting your spending to prioritize repayment, making extra money can open up opportunities to put more toward your debt. Here are some ways you may be able to increase your income:

• Freelance to make money with the skills you already have.
• Sell things online, such as crafts or old clothes and electronics.
• Try gig work, such as walking dogs, tutoring or driving for a rideshare service.
• Ask for a raise at work when the timing is right.

However you bring in extra cash, funnel the money into paying down debt.

Learn more: Side Hustles That Can Help You Pay Off Debt

6. Look for Motivation

Just like debt can take a long time to build, paying debt down can be a slow process. Here are some ways to keep yourself on track for the long haul:

• Break your goal into pieces. Small, achievable goals can help you stay motivated and on track. For example, you might aim to pay an extra $50 or $100 toward your debt per paycheck. You can also set milestone goals, such as paying off your debt with the smallest balance in three months.
• Treat yourself. Coming up with a reward system can help you stay locked in. For example, if you're paying down a $2,000 personal loan, you could reward yourself with a small treat for every $200 you pay off. Just be sure the rewards you pick are within your budget to avoid derailing your progress.
• Find accountability. There are a lot of ways to find accountability. One idea is to look for an accountability partner, or someone you can share your goals and progress with. If they're working toward their own financial goals, you could offer each other support. There are also accountability apps that can help you find motivation.

7. Consider Credit Counseling

Getting a professional's perspective on how to approach your debt payoff goals can help you feel more confident that you're on the right track. A nonprofit credit counselor can review your finances with you to come up with a realistic plan for navigating your financial situation and paying off debt.

A credit counselor may offer multiple suggestions for paying down your debt. In some cases, they may suggest a debt management plan (DMP). When it's a good fit, a DMP may make payments on your unsecured debts more manageable and potentially lower your rates.

To find a good credit counselor, start with the nonprofit National Foundation for Credit Counseling or the Financial Counseling Association of America, which can refer you to certified counselors.

Learn more: What is a Credit Counselor?

The Bottom Line

Getting out of debt can help you reduce stress, free up funds and improve your financial life overall. While making only minimum payments keeps you in debt longer and can mean paying more in interest, being more aggressive in your payoff strategy could help you reach your goals more quickly. It's often in your interest to pay down high-interest debt—like credit cards, some personal loans and some auto loans—as quickly as possible.

As you make progress in your debt payoff journey, be sure you're keeping an eye on your credit. Sign up for free credit monitoring through Experian for regular updates on changes to your FICO^® Score^Θ.