How to get out of debt fast

There’s no sugar coating it: debt sucks. Here's a 5-step system to get out of debt fast - the very same system I wrote about in my NYT best-selling book.

Ramit Sethi

There’s no sugar coating it: Debt sucks.

And if you’re one of the 80% of Americans who is in debt, it’s hard for you to even begin to consider investing or saving your money.

Debt is the most common roadblock keeping people from living a Rich Life — preventing them from being able to enjoy themselves and the money they have.

That’s why I don’t allow anyone with debt to take part in any of my flagship courses, costing us millions each year — it just wouldn’t make sense.

And it’s not because I’m all holier-than-thou about people being in debt. In fact, if you’re in debt it might not even be your fault.

After all, we don’t come out of the womb knowing how credit cards work. There’s no “pay off your loans” class in high school. And the card companies aren’t out to help you. In fact, they’re in business to keep you in debt xfor as long as possible so THEY can make money.

Though it may seem hopeless…there is a way out — and I’ll prove it to you.

I’ve created a 5-step system to help you eliminate your debt once and for all.

It’s the same system I wrote about in my New York Times best-selling book, I Will Teach You To Be Rich, which thousands have used to pay off their debt faster than they thought possible:

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WARNING: Getting out of debt isn’t easy. Hell, this might be one of the hardest things you ever do. But it is possible – and I’m here to help you.

So let’s get started.

Step 1: Find out how much debt you have
Step 2: Decide what to pay first
Step 3: Eliminate temptation
Step 4: Negotiate a lower interest rate to save THOUSANDS
Step 5: Decide how you’re going to pay off your debt
Bonus Step: Live a Rich Life

Step 1: Find out how much debt you have

It may sound simple — but finding out how much you owe is incredibly hard for many to do.

This boils down to the fact that people feel guilty about their debt. They’d rather bury their heads in the sand than look at the reality of the situation and do something about it.

Listen to me carefully…GET OVER IT!!!!

This is exactly what credit card/loan companies want — for you to hide from your statement every month and just blindly send them the minimum payment thinking you’re getting out of your debt. They LOVE it when you do that.

The reality is that minimum payments dig your hole even deeper.


I challenge you now to step up and OWN your debt. You can do the hard work now, or the impossible work later.

Go through your account statements, call the companies, do whatever it takes to find out how much you owe on these bills. You can use this tool to track it (it’s the second link on this list). The chart looks like this:

credit card debt chart
It’ll help you find out how much you owe to each company and what your interest rates are. You can also use my free online tool here.

Stop right now and do this.


Congrats! Taking the first step is one of the hardest parts — now you’re well on your way to a Rich Life.

If your total debt number seems high, remember two things:

  1. There is a large group of people with MORE debt than you.
  2. From this day that number is only going to go DOWN. This is the beginning of the end.

Step 2: Decide what to pay first

Once you know exactly how much you owe, you’re ready to strategically attack your debt.

To do this, you need to prioritize which of your debts you’re going to pay off first — whether it be your credit card, student loans, whatever — based on the interest rate.

You’re going to want to pay off the loan with the highest interest rate first and foremost.

For example, if Credit Card A has a balance of $1000 with a 12% interest rate and Credit Card B has $1500 at 6% interest, you’re going to save A LOT more money if you focused on eliminating Credit Card A.

Once you’ve decided what you should prioritize, it’s time to come up with a plan of attack.

When it comes to your student loans, you can actually save thousands of dollars each year — by spending more each month.

Yes, you read that right. You can save money by spending MORE.

Let’s say you have a $10,000 student loan, at a 6.8% interest rate and a 10-year repayment period.

If you go with the standard monthly payment, you’ll pay around $115/month.

But check out how much you can save per year if you paid just $100 more each month:

Like I said before, paying the minimum digs you into a bigger hole. Even $20 more per month can save you huge amounts of money.

I’ve written about this before and linked to two great articles regarding the tactic. If you can contribute even a small amount more per month, the benefits can be significant. See for yourself by calculating your savings using this calculator.

Alternatively, you can use the “debt snowball” method which I explain here (at around 2:00):

Step 3: Eliminate temptation

If you ever expect to pay down your debt, you can’t add more to it.

That’s why you need to do the following things:

  1. Take out your wallet.
  2. Dump out all your credit cards.
  3. Mail them all to Antarctica.

Well, maybe you don’t have to be that extreme…but the point is to remove all temptation of ever using your credit cards again until you’re out of debt.

Here’s my favorite tip: plunge your cards into a bowl of water and shove it all into your freezer.


Once you literally freeze your credit, you’ll have to chip away at a massive block of ice in order to get it back — giving you time to think about whether or not you want to go through with whatever purchase you were going to make.

Alternatively, you can lock them in a safe or have a friend/parent/sibling/whoever-you-trust hold on to them for you. As long as you’re not adding more to your credit card debt, any method is good.

Step 4: Negotiate a lower interest rate to save THOUSANDS

Not many people realize this, but you can actually save over $1,000 in interest with a single 5-minute phone call.

Through simple negotiations, you can lower the APR on your credit card and put thousands of dollars back into your pocket.

I LOVE negotiating interest rates.

It can be crazy simple too — in fact, here’s a word-for-word script that many of my readers have used already to lower their interest rates:

YOU: “Hi, I’m going to be paying off my credit card debt more aggressively beginning next week, and I’d like to lower my credit card’s interest rate.”

CC REP: “Uh, why?”

YOU: “I’ve decided to be more aggressive about paying off my debt, and that’s why I’d like to lower the interest rate I’m paying. Other cards are offering me rates at half what you’re offering. Can you lower my rate by 50% or only 40%?”

CC REP: “Hmmm…After reviewing your account, I’m afraid we can’t offer you a lower interest rate.”

YOU: “As I mentioned before, other credit cards are offering me zero percent introductory rates for 12 months, as well as APRs that are half what you’re offering. I’ve been a customer for XX years and I’d prefer not to switch my balance over to a lower-interest card. Can you match the other credit card rates, or can you at least go any lower?”

CC REP: “I see…Hmm, let me pull something up here. Fortunately, the system is suddenly letting me offer you a reduced APR. That is effective immediately.”

It’s really that simple to save money in 5 minutes.

Make the call, and if you’re successful, do two things:

  1. Celebrate your accomplishment (this is a big deal).
  2. Make sure to adjust your debt chart from step one. You get to chop that big ugly interest rate down and lower your monthly payments.

Repeat this process for any other cards you can, and then move on to my favorite step.

Step 5: Decide how you’re going to pay off your debt — and use Hidden Income to do it

If you’ve followed along this far, you’re probably thinking, “This is great and all, but where do I get the money to pay down all these bills?”

I recommend 4 things:

  1. Use the cash you’ve freed up from Step 4.
  2. Use money you have from your Conscious Spending Plan (this is how my friend spends over $21,000 a year on going out)
  3. Tap into Hidden Income
  4. Earn more money

I’ve already explained how to get cash from lowering your interest rates and you can learn more about creating a Conscious Spending Plan here.

Now, I want to show you how to get money with methods that’ll push your self-development to the next level and build a foundation for your Rich Life.

Tapping into Hidden Income

Instead of strict budgets or extreme frugality, I prefer to cut costs mercilessly on everyday bills. These are things like your cell phone, car insurance, and other monthly expenses.

Saving money on these everyday items is an easy way to free up cash to put toward your debt. The cool thing is, we can show you how to save $1,000 in a week — without cutting back on the things you love — like these people did:

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It’s a great way to focus in on your willpower and expand your knowledge on how you spend money.

Try the challenge and see how much money you could put toward your next debt payment.

Earn More Money

I’ve always believed that there’s a limit to how much you can save but no limit to how much you can earn.

What does that have to do with paying off debt? Well, imagine having an extra $1,000/month (or more) that you could put toward your bills.

The best part: it’s far easier to earn $1,000 than to slash $1,000 from your budget.

Just a few examples of ways to earn more money:

Whatever you choose, the rewards can be huge and make a significant dent in your debt today.

Getting out of debt quickly is one of the best financial decisions you’ll ever make.

And earning more money is the secret weapon for paying down your debt as fast as possible.

Wipe out your debt — and live a Rich Life

Once you’ve eliminated your debt, congratulations!

You’ve not only beat a system designed to keep you drowning in debt, but you’ve also gained valuable knowledge and skills you can take with you on your journey to living a Rich Life.

But eliminating debt is just the first step on that journey.

Download a free copy of my Ultimate Guide to Making Money to learn my best strategies for creating multiple income streams, starting a business, and increasing your income by thousands of dollars a year.

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