How to get out of debt fast (…even if you’re dead broke)

Getting out of debt isn’t easy — but it is possible, even if you have no money, no assets, and no idea how to start. Check out these tweets from people who followed my advice and got rid of their debt forever:

debt testimonials twitter

Today, I’m going to teach you my five-step system for quickly paying off debt so you can join them too.

Bonus step: Turbocharge your debt payments with my favorite resource

Bonus: Want to know how to make as much money as you want and live life on your terms? Download my FREE Ultimate Guide to Making Money

Step 1: Use this tool to find out how much debt you REALLY have

You wouldn’t believe how much money people waste by skipping this step and blindly paying off any bills that come in with no strategic plan.

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.

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.

It might be painful to learn the truth but you have to bite the bullet. Then you’ll see that it’s not hard to end this bad habit. In fact, you can get the credit card companies to help you. Just look at the back of your credit cards for their number, call them, and ask them for the amount of debt you owe, the APR, and the monthly minimum payment on the card.

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

Use this tool to track it (it’s the second link on this list). The chart looks like this:

debt credit card chart

It’ll help you find out how much you owe to each company and what your interest rates are.

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.

Once you know how much you owe, the next step in learning how to get out of debt is …

Step 2: Choose your “plan of attack” for paying off debt

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.

To get out of debt the absolute fastest, you’re going to want to pay off the loan with the highest interest rate first.

For example, let’s say Credit Card A has a balance of $1,000 and a 12% interest rate, and Credit Card B has $1,500 at 6% interest. You put down $150 total every month, paying the minimum payment (3%) on one and whatever’s left on the other. You’re going to save more money by eliminating Credit Card A first ($147 in total interest) vs Card B ($188).

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 paying down your debt 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:


Monthly Payments Total Interest paid You Save
$115 $3,810 $0
$215 $1,640 $2,169
$315 $1,056 $2,754
$415 $782 $3,027


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). Mathematically it isn’t the fastest method, but it’s designed to make you feel GREAT about making payments:

Bonus: Ready to ditch debt, save money, and build real wealth? Download my FREE Ultimate Guide to Personal Finance.

Step 3: Freeze your credit card debt — literally — to stop it from growing

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: Follow this script to negotiate a lower interest rate (saves you THOUSANDS)

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

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Negotiate the impossible: How to save big on student loan debt

If you find that no matter how you run the number you’re not going to be able to pay your student loans off in any reasonable amount of time, it’s time to call your lender.

Look at the phone number on that monthly bill staring you down. Call them up and ask for their advice.

Seriously, I can’t emphasize this enough. Your lenders have heard it ALL, from “I can’t pay this month” to “I have five different loans and want to consolidate them.”

For your purposes, ask the following:

  • “What would happen if I paid $100 more per month?” (Substitute any number that’s right for you.)
  • “What would happen if I changed the timeline of the loan from five years to 15 years?”
  • If you’re looking for a job, you might ask, “What if I’m looking for a job and can’t afford to pay for the next three months?”

Your lender has answers to all these questions — and chances are they can help you find a better way to structure your payment. Typically, they’ll help you by changing the monthly payment or the timeline. Just think: With that one call you could save thousands of dollars.

Step 5: Tap into your “Hidden Income” to drum up an extra $1,000+/month

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 four 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 — without cutting back on the things you love — like these people did:

Testimonials from students on Facebook

Just check out my guide to lowering your monthly bills here.

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

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.

Bonus: Turbocharge your debt payments with my favorite resource

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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