5 Steps to Take When You’re Deep in Debt


Being in buried in debt can be seriously stressful, but you don’t have to live that way! With student loan debt on the rise and the unemployment rate at an all-time high, finding financial freedom might seem like an impossible challenge given today’s day and age.

But there are steps you can (and should!) take to reclaim control over your money and establish future financial stability. Here are five things you should do to help climb yourself out beneath a mountain of debt sooner rather than later.

  • Create a Budget (and Stick to It)

Maybe an unexpected expense knocked you back, or you made a budgeting mistake, but regardless of whatever led you to the current position you’re in, the first step is the same: identifying all the money coming in and out of your bank account. You should have a very clear idea of your fixed expenses, or the same essential purchases that you make on a monthly basis (like a rent, for example).

Get these all down on a piece of paper, along with every source of income you have including wages, unemployment benefits, and so forth. You’ll be able to determine exactly how much money you have available left over to direct toward debt payments and variable expenses, which leads us to our next point…

  • Stop the Bleeding

You need to stop the bleeding and keep costs to an absolute minimum if you’re serious about committing to being debt-free. Take a cold hard look at your spending and see where there are opportunities to save money.

Do you eat out too frequently? Subscribe to too many streaming services? Overuse the amount of data available in your cell phone plan? This part of the process is never fun, but it’s essential if you ever want to return to the point in time when you were once able to spend freely.

  • Pick Which Debt to Tackle First

The next step is to identify all of your outstanding debts and the interest rate charged on each account balance. Generally speaking, it’s normally best to target high-interest loans first while making minimum payments toward other lenders in order to reduce the total borrowing cost over the lifespan of the loan.

In some cases, it might be smart to apply for a debt consolidation loan that combines your various account balances into one bill. This can help you receive a lower monthly payment, and it also makes it easier to keep up with bills on time to avoid late fees and penalty charges. Be sure to read the fine print, though, to verify whether it makes the most sense for your circumstances. You should also note that while your required minimum payment may be more manageable, you could receive a higher interest rate and/or longer repayment terms. 

  • Seek Out Available Resources

Depending on the type of debt you’re in, you may be able to find help resources that provide assistance for financial relief. For example, tax payers who have fallen behind on their obligation to Uncle Sam might be able to enroll in the IRS Fresh Start program or other credit repair services. The helps people back into the government’s good standing with reasonable installments paid over time.

The federal government offers student loan forgiveness for completing certain public programs, like Teach for America, but private companies also offer student loan refinancing that can help reduce your monthly payment. Another option includes payday loans that can provide quick cash during emergencies.

Or, maybe you’re looking at an expensive past-due medical bill? You might be able to speak to the hospital and negotiate an offer in compromise. Sometimes, they’d prefer to settle for at least a portion of the money that’s owed to them rather than go without collecting anything at all. And that tip applies to many creditors, so it never hurts to ask and see.

  • Chip Away at Payments

To rebuild damaged credit and prevent your score from falling any further, it’s important that you consistently chip away at your debt with timely payments every month—even if it’s just $25. A good idea to help you stay on top of due dates is to link your bank account for automatic bill pay in the minimum amount, then increase your contribution using the money you saved at the end of the month.

Debt doesn’t have to be your destiny. Start taking these steps today to be closer to a future that’s free of financial concern.