Getting in debt is like getting overweight; it’s easy to do and doesn’t happen all at once, but once you realize what’s happened, getting out of debt takes time and a lot of consistent effort! But if you’re dealing with a lot of debt, you can get free of it sooner than you might think.
First, you need to understand the scope of the problem. Start by listing all your debts and their corresponding monthly payments. Decide what to tackle first – the smallest balance to make headway quickly or the card with the highest interest rate to save on interest. (Both will work if you stick to it; Dave Ramsey recommends the former—the debt “snowball,” which I’ve illustrated in the graphic below. I think it’s the most effective for most people, but there may be exceptions.
The snowball works so well because it’s a snowball. If you use Dave’s method, you start with the smallest debt and pay it off as quickly as you can while paying the minimum on all the others. Then, once it’s paid off, you take all the money you were putting on the smallest and add it to the minimum you were paying on the next largest (and add some more to it if possible). Once that one is paid, you roll it over to the next, and so on. Each time you roll, you have more money to apply to the larger debts; you gain momentum as you go, which is why this strategy really works.
Looking at the chart above, let’s say you have $500 to put toward your debt. You allocate $280 to debt one and use the rest to pay the minimums on debts two and three, which have larger balances. Once debt one is paid, you add the $280 to the $60 you were already paying on debt two, for a total of $340. When that one is paid off, you use the entire $500 to pay off debt three. (Of course, if you can add to the $500 during this time, the snowball rolls faster!)
Another way to deal with debt is with “loan consolidation.” Consolidation sometimes makes sense. I have some reluctance here, but it can be done using balance transfers to credit cards. If you do this, you must be aware of the costs (fees, transfer costs, and limited-time interest rates) and be very disciplined in making monthly payments.
Here are some other suggestions to help with getting out of debt faster:
Sell some stuff. Consider selling consumer items or trading in a car if you can’t afford them.
Prioritize your debt payments. Make debt payments each month before you spend on entertainment and other optional expenses.
Cut up your credit cards (a` la Dave Ramsey). Please refrain from using your credit cards until you are completely out of debt, and avoid using them as a general rule, unless it serves a good purpose.
Chart your progress. Display a wall chart in your home that will help you track progress toward debt elimination and remind you of your intention to achieve this goal.
Let’s talk Student Loans (for some, perhaps many, it’s the “debt elephant in the room”). All debt has consequences, and as many of you may know, student loans have future consequences, both personal and more broadly. They are a big economic problem. Student loans have become a significant issue in the U.S., financially draining our resources. Debt has skyrocketed. According to Forbes in 2023,
$1.75 trillion in total student loan debt (including federal and private loans)
$28,950 owed per borrower on average
About 92% of all student debt is federal student loans; the remaining amount is private student loans
55% of students from public four-year institutions had student loans
57% of students from private nonprofit four-year institutions took on education debt
Recent college graduates who are starting out in life and a career in a financial hole are not in a good position (except maybe the banks). Some of you have what I would call a “manageable” amount of debt, while others may be carrying a larger burden. The only way to address this is to start paying them off. I wouldn’t hold on to the hope that the Fed will one day wipe it all away. (That said, there are some loan forgiveness programs you might want to look into, especially if you are a teacher or a lawyer doing non-profit work.)
Consolidating or refinancing student loans may be beneficial, especially if interest rates decrease. This involves consolidating multiple loans into a single one. For private loans, this could lower the interest rate or convert variable rates to fixed ones. Federal loan consolidation simplifies payments into a single monthly installment and can extend the repayment period, resulting in reduced monthly payments. However, elongating the repayment schedule leads to paying more overall.
Consolidating federal loans might void specific borrower benefits. Consider deferment or forbearance if you are struggling with payments. To consolidate federal loans, visit the Department of Education's website and select a new loan servicer from the available options.
Private loan consolidation, known as refinancing, entails applying for a new loan to pay off existing ones. It could lower interest rates based on better credit, timely payments, or other factors. Refinancing may save money by switching from a variable to a fixed rate, resulting in a lower monthly payment. Repayment terms for private loan consolidation are typically shorter, enabling faster debt repayment.
It’s important to note that consolidating federal and private loans together forfeits federal loan benefits. Consider carefully the decision to merge federal and private loans when refinancing private student loans.
Starting July 1, 2026, you can “RAP.” New federal student loan borrowers will be placed into a simplified repayment system called the Repayment Assistance Plan (RAP). Here’s how it works:
Payments are based on 10% of your adjusted gross income (AGI).
Spousal income counts—unless you file separately.
Forgiveness kicks in after 30 years.
Crucially, your loan balance won’t grow while you’re making payments. The government covers any unpaid interest.
For those familiar with current income-driven repayment (IDR) plans, this is a welcome shift. No more exploding loan balances while making “on-time” payments.
If you're familiar with Dave Ramsey’s Baby Steps, you know that he recommends saving up a $1,000 emergency fund before you tackle your debt. There’s a good reason for that: Having an emergency fund can prevent you from taking on additional debt to fund the ‘unexpected.’ I think that’s good advice, but if you want to start your debt snowball while you’re also building your emergency fund, I’d be okay with that too. One approach might be to allocate 80% of your surplus to starting your debt snowball and 20% towards savings. Once you’ve established your emergency fund, you can put 100% toward paying off debt.
For reflection: Getting out of debt isn’t easy. You must become extremely focused, which requires discipline, patience, and a willingness to delay gratification for a better future. Every dollar you free from interest payments is a dollar you can use to spend, save, invest, or give for God’s purposes. It will take time, but it will be worth it. As you shovel your way through a pile of debt, you’re laying the foundation for financial freedom in the future. Are you willing to make that sacrifice? If so, pray and ask God for help, then grab that shovel!
Verse: “The wicked borrows but does not pay back, but the righteous is generous and gives” (Psalm 37:21, ESV).
Resources:
Dave Ramsey Debt Snowball Calculator
More information: