How to Get Out of Debt and Take Control of Your Money

If you’re reading this, chances are you’re carrying some kind of debt—and you’re ready to do something about it. Maybe it’s credit cards, student loans, medical bills, or some combination of everything. The truth is, debt can be overwhelming. It can feel like a dark cloud hanging over your life, quietly growing while you try to keep up with day-to-day expenses.

And if you’ve been avoiding your debt, ignoring the statements, or telling yourself you’ll deal with it later—you’re not alone.

But here’s the truth: you can’t fix what you can’t see.

Knowing exactly what you owe is the single most important first step in taking control of your financial life. You don’t need to be good at math. You don’t need a financial advisor. You just need to be willing to take an honest look at your situation.

In this article, we’ll walk you through how to identify, list, and understand your debts so you can begin building a plan that works for you. This is about clarity, not judgment. About moving forward, not beating yourself up. Let’s begin.

Why It’s So Important to Know What You Owe

When you're in debt, it's easy to operate in what's called "financial fog." You might pay minimums, dodge collection calls, or just keep hoping you'll get a raise that changes everything. The longer you avoid looking at the full picture, the more stressful—and expensive—your situation becomes.

The Dangers of Avoiding the Truth

• Missed payments lead to late fees, higher interest rates, and credit damage.
• Growing interest compounds over time, increasing your total balance.
• Anxiety builds when you know you're not in control.
• Disorganization makes it hard to create any kind of plan.

The Power of Clarity

• When you know exactly what you owe, you take back control.
• You can make informed decisions.
• You can prioritize the most harmful debts.
• You gain a sense of direction, which lowers stress.

This isn’t about paying it all off tomorrow—it’s about starting with knowledge.

Step-by-Step: How to List Out All Your Debts

1. Gather Your Information

The first step is to collect the facts. Don’t estimate or guess—get the real numbers. You’ll need to gather:

• Credit card statements
• Student loan records
• Auto loan documents
• Medical bills
• Personal loan paperwork
• Collection notices
• Pay-later services like Klarna or Affirm
• Any informal or family debts

Be thorough. Debt hides in places like old utility bills, parking tickets, or past-due subscriptions. One of the best ways to see your full picture is to pull your free credit report from AnnualCreditReport.com. You can get one from each of the three credit bureaus (Equifax, Experian, TransUnion) once a year. These reports will show open accounts, collections, and the balances associated with each.

2. List the Key Details for Each Debt

Now that you’ve gathered everything, it’s time to write it down. For each debt, include:

• Creditor name (e.g., Capital One, Navient, local hospital)
• Total balance owed
• Minimum monthly payment
• Interest rate (APR)
• Due date
• Type of debt (credit card, student loan, auto loan, etc.)
• Current status (e.g., current, late, in collections)

Don’t just focus on big debts. Even small balances can accumulate fees if ignored. Getting them on the list gives you power over them.

3. Organize the Information

Once you have your list, you can begin sorting and making sense of it.

Sort by Balance

Sorting your debts from smallest to largest balance is helpful if you plan to use the Debt Snowball method, where you pay off the smallest debts first to build momentum.

Sort by Interest Rate

If your goal is to save the most money over time, sort by interest rate from highest to lowest. This helps with the Debt Avalanche method, which focuses on knocking out high-interest debt first.

Highlight Priority Debts

Some debts are more urgent:

• Any accounts in collections
• Any accounts with very high interest rates
• Any debts that are impacting your housing, utilities, or transportation

Mark these so you can deal with them first or factor them into your short-term action plan.

What This Information Tells You

Seeing your total debt picture in one place can be sobering—but it can also be incredibly motivating. Here’s what this list reveals:

• Total Debt: The size of the mountain you’re going to climb. It's okay if it feels big. Now you have a trail map.
• Minimum Payments: What it takes to stay current and avoid damage to your credit score.
• High-Interest Traps: These are the debts that cost you the most to carry and should be tackled strategically.
• Urgency & Risk: Debts in collections or with legal implications need to be addressed immediately.

With all this information, you now have the raw material to create a real plan.

Common Pitfalls to Avoid

Getting organized is empowering, but there are a few traps that can sabotage your momentum:

Ignoring Small Debts

It’s easy to overlook the $100 here or $250 there—but those debts often have high interest rates or can go to collections quickly. Include everything.

Only Focusing on One Debt Type

Many people obsess over student loans or their biggest balance, but forget to look at the entire picture. Credit cards, car loans, BNPL purchases—they all matter.

Looking at Monthly Payments Only

Low monthly payments can be deceiving. Some loans are structured to look affordable, but drag on for years while costing thousands in interest.

Not Updating Your List

Debt numbers change every month. Set a recurring reminder to check and update your list so your plan stays relevant.

Understanding Your Emotional Response

Once you’ve listed everything out, you might feel:

• Shocked
• Guilty
• Motivated
• Overwhelmed
• Relieved

These are normal reactions. The important thing is that you’ve done something many people never do—you’ve faced the truth. That alone is a huge step forward.

Next Steps: Build a Strategy That Fits

Now that you know what you owe, you’re ready to:

• Create a starter budget
• Choose a debt payoff method (like the snowball or avalanche)
• Begin tackling high-priority balances
• Track your progress month to month

The most important thing is that you now have clarity. No more guessing. No more hoping a raise or tax return magically solves everything. You have a foundation.

From here, every step gets easier.

Final Thoughts

Getting out of debt doesn’t begin with a perfect plan—it begins with facing the numbers. When you know exactly what you owe, you remove the power that debt has over you. You can look it in the eye and say, "I’ve got this."

Debt is hard. But avoiding it makes it harder.

Take 30 minutes. Gather your numbers. Get it all down on paper or in a spreadsheet. You’ll be amazed at how much better you feel—not because your debt is gone, but because now you’re in control of it.

This is the first—and most powerful—step in your journey toward financial freedom. And you just took it.

If you're serious about getting out of debt, one of the most powerful things you can do starting today is track every single dollar you spend. It might not sound exciting, but it's one of the most eye-opening and game-changing habits you can build for your financial future.

Why? Because you can’t control what you don’t understand. And most people have no idea where their money actually goes each month. They might have a rough sense—"I think I spend around $200 on groceries" or "I don’t eat out that much" —but when they actually look at the numbers, they're often shocked.

The goal of tracking your spending isn’t to make you feel guilty. It’s to help you take back control.

In this article, we’ll walk you through why tracking matters, how to do it effectively, and what to look for once you start seeing your real spending patterns.

Why Tracking Your Spending Is Essential

When you're carrying debt, every dollar matters. And the truth is, small leaks in your spending can slow down your debt payoff by months or even years.

Tracking helps you:

• See the full picture of where your money is going
• Identify unnecessary or wasteful spending
• Spot habits you didn’t realize you had
• Create a realistic, accurate budget
• Find extra money to put toward your debt

Without tracking, budgeting is just guessing. With tracking, it becomes a strategy.

The Psychological Shift That Happens

When you start tracking your spending, two important shifts happen:

1. Awareness: You notice patterns you were blind to before. Maybe you didn’t realize how often you grabbed coffee or how frequently you ordered takeout.
2. Mindfulness: Knowing that you’ll have to record a purchase makes you think twice. You pause before spending. That pause is where smart money habits begin.

These small shifts add up fast. You might reduce your spending just by tracking—without even setting rules.

Step-by-Step: How to Start Tracking Your Spending

1. Choose a Method That Fits Your Style

There’s no "one right way" to track your spending. The best method is the one you’ll stick to.

Here are a few popular options:

Pen & Paper
Old school but effective. Just jot down each purchase with the date, amount, and category.

Spreadsheets
Google Sheets or Excel are great for those who like structure. You can create categories and totals that auto-calculate.

Apps
Free tools like Rocket Money, EveryDollar, Mint, and Goodbudget make tracking easy and mobile-friendly. Some sync with your bank accounts; others require manual input for added awareness.

Digital Notes
Simple note-taking apps on your phone can work, too. The key is to log spending as close to the moment of purchase as possible.

Pick the method that works for your personality. Don’t overcomplicate it.

2. Set a Tracking Period

Start with one full month to get an accurate picture of your spending habits. If that feels overwhelming, commit to two weeks as a mini-start.

Every time you spend money, log:

• What you bought
• How much it cost
• What category it fits into (e.g., groceries, dining, gas, entertainment, bills)

Do this for every expense, no matter how small. Yes, even that $1.79 coffee.

3. Categorize Your Spending

Once you’ve logged your expenses, group them into broad categories:

• Housing (rent, utilities)
• Transportation (gas, insurance, maintenance)
• Food (groceries, dining out, snacks)
• Personal care (toiletries, haircuts, etc.)
• Entertainment
• Subscriptions
• Health
• Debt payments
• Miscellaneous

Categorizing helps you identify which areas are under control and which ones might need attention.

4. Total It Up

At the end of your tracking period, calculate how much you spent in each category. Then calculate your total spending for the entire period.

Compare that to your total income. Ask yourself:

• Are you spending more than you earn?
• Where are your biggest spending areas?
• What surprised you?
• Where can you cut back without sacrificing your well-being?

This process gives you data to build a realistic budget. It also helps you find extra cash to direct toward your debt.

Common Spending Leaks to Watch For

As you track your expenses, you might notice small amounts that really add up. These are your "spending leaks."

Some common ones:

• Eating out (fast food, coffee shops, delivery fees)
• Subscription services you forgot about
• Impulse purchases (especially online)
• ATM fees or late fees
• Convenience store runs
• Rounding up with tap-to-pay habits

When you spot them, don’t beat yourself up. Just ask: “Do I really want to spend $150/month on this?” If not, that’s money you can redirect to more important goals.

How to Make Tracking a Habit

Tracking only works if you keep doing it. Here’s how to make it stick:

• Track daily: Set a reminder to log purchases at the end of each day.
• Pick a time: Morning coffee? Before bed? Tie it to a habit you already have.
• Celebrate small wins: Noticed you spent less this week? That’s progress.
• Don’t skip weekends: That’s when most unplanned spending happens.
• Review weekly: Check in with yourself to see how you're doing.

Consistency matters more than perfection. Missing a day doesn’t mean starting over—just keep going.

What Comes Next?

Once you’ve tracked your spending for at least a few weeks, you’ll be amazed at what you learn. Most people find money they didn’t even know they were losing. And suddenly, the idea of budgeting isn’t so scary—because now it’s based on reality.

With your spending data in hand, you can:

• Build a starter budget that reflects your actual lifestyle
• Decide where to cut back
• Set realistic spending limits
• Free up extra money to pay off debt faster

Tracking is the bridge between living reactively and managing your money with purpose. And now you know how to cross it.

Final Thoughts

Tracking your spending is one of the simplest and most effective financial habits you can build. It puts you in the driver’s seat of your money and gives you the insight you need to make smarter choices.

If you're feeling overwhelmed by debt, this is your first real lever of control. You might not be able to increase your income overnight. You might not be able to pay everything off this month. But you can start seeing exactly where your money is going.

And once you see it, you can change it.

Every dollar you track brings you one step closer to financial freedom. So start today. You’ll thank yourself tomorrow.

Budgeting can feel like a buzzword that’s easier said than done—especially when you’re juggling debt, bills, and life. For many people, budgeting has become synonymous with restriction, sacrifice, and guilt. But at its core, budgeting isn’t about giving things up. It’s about giving every dollar a job so that you stay in control of your money, not the other way around.

If you’ve tracked your spending and listed your debts, you’re already ahead of the game. Now it’s time to turn that information into a practical, realistic starter budget—one that’s simple, flexible, and built for progress, not perfection.

Below, you’ll learn how to build a budget that works in real life, even if you’ve failed at budgeting before.

What Makes a Budget “Realistic”?

A realistic budget:

• Is based on your actual income and spending habits
• Makes room for essential needs, debt payments, and flexible spending
• Allows for occasional fun and mistakes
• Can be updated as life changes

Too many people start with a fantasy version of their budget—cutting all the fun, slashing grocery bills in half, and pretending surprise expenses won’t happen. Then when real life hits, the budget falls apart and they blame themselves.

Let’s not do that. Let’s build a budget that actually fits your life.

Step 1: Know Your Total Monthly Income

Start with your take-home pay (after taxes). Include:

• Regular paychecks
• Side hustle or gig income
• Child support or alimony
• Any other reliable monthly income

Use your lowest monthly average if your income varies. It’s better to under-budget than overestimate.

Step 2: List Your Essential Expenses

These are your non-negotiables:

• Housing (rent or mortgage)
• Utilities (electric, water, internet)
• Transportation (car payment, gas, insurance, transit)
• Groceries
• Phone bill
• Health insurance or medical costs
• Childcare (if applicable)

Tally these first. These costs are your foundation.

Step 3: Add Your Minimum Debt Payments

Now list out the minimum required payments for:

• Credit cards
• Student loans
• Personal loans
• Auto loans
• Any other recurring debts

At this stage, we’re only budgeting for minimums. Later, when you build a debt payoff plan, you’ll find ways to throw extra at these balances.

Step 4: Include Variable & Flexible Expenses

These are the categories where most people overspend. Be honest here.

• Dining out / takeout
• Entertainment
• Clothing
• Personal care
• Subscriptions (Netflix, Spotify, etc.)
• Miscellaneous or “everyday life” spending

If you’ve been tracking your spending, use your actual averages. If not, estimate conservatively. You can adjust next month.

Step 5: Budget for Savings & Emergency Buffer

If you're in debt, saving money may feel like a luxury. But having even a small emergency fund ($500 to $1,000) can prevent you from going deeper into debt when unexpected expenses pop up.

Budget something for savings if possible—even if it’s $20/month. This builds the habit and gives you a financial cushion.

Step 6: Balance Your Budget

Now it’s time to check your totals:

• Total Income - Total Expenses = What’s Left (or What You’re Missing)

You want this number to be zero or positive. If you’re negative, go back and trim. Start with flexible spending categories before touching essentials or minimum debt payments.

If you have money left over? Great! That’s where your debt payoff power begins. You can use that extra to accelerate your financial goals.

Step 7: Make It Work in Real Life

Here’s the truth: your first budget won’t be perfect. And that’s okay.

Expect surprises. Expect to adjust. The goal isn’t perfection—it’s awareness and consistency.

To make it stick:

• Check in weekly and adjust categories as needed
• Use automation where you can (bill pay, savings transfers)
• Track spending to stay aligned with your plan
• Review monthly and update based on real life

Mindset Tips for Budgeting Success

• Don’t treat your budget like punishment. It’s a plan for your goals.
• Budgeting is a skill, not a talent. You get better with practice.
• Allow some breathing room. Don’t cut everything fun.
• Celebrate wins, even small ones. Paid all your bills on time? That’s a win.

Final Thoughts

A starter budget is just that—a start. It gives your money a purpose and helps you stop living in financial reaction mode. The more consistently you use it, the more powerful it becomes.

This is your roadmap out of debt, toward savings, and into the financial future you want.

Start simple. Be honest. Adjust as you go.

And remember: a budget isn’t about saying no to everything. It’s about saying yes to the things that truly matter—and building a life you can afford without anxiety.

Once you know what you owe and you've built a basic budget, you're ready to take the next big step: choosing how to attack your debt. Paying off debt without a strategy is like wandering around a city without a map. You might make progress, but it’ll be slower, more frustrating, and easier to give up.

The good news? You don’t need a financial degree or a complicated spreadsheet to choose a debt payoff plan. You just need to pick a method that fits your mindset, income, and lifestyle.

Let's walk through two of the most popular (and effective) debt payoff strategies, help you decide which one is right for you, and share tips to stay motivated as you work through your plan.

Why You Need a Debt Payoff Strategy

Debt thrives on confusion and disorganization. Without a clear approach, it’s easy to:

• Make random payments with little impact
• Forget due dates
• Miss chances to save on interest
• Feel like you're not making progress

A strategy gives you a roadmap. It simplifies decision-making. And most importantly, it helps you see wins early on—which is key to staying motivated.

Option 1: The Debt Snowball Method

The Debt Snowball method is all about momentum and motivation. Here’s how it works:

1. List your debts from smallest to largest balance, regardless of interest rate.
2. Make minimum payments on all debts.
3. Put any extra money toward the smallest debt first.
4. Once that debt is paid off, take the amount you were paying on it and apply it to the next smallest debt.
5. Repeat until all debts are gone.

Pros:

• Quick wins keep you motivated
• Great for people who need emotional wins to stay on track
• Easy to follow and measure progress

Cons:

• You might pay more in interest over time if your higher-interest debts are larger

Best For:

• People who feel overwhelmed by debt and need visible, early progress to stay engaged
• Budgeting beginners who want a simple structure

Option 2: The Debt Avalanche Method

The Debt Avalanche method is all about math and saving money. Here’s how it works:

1. List your debts from highest to lowest interest rate.
2. Make minimum payments on all debts.
3. Put any extra money toward the debt with the highest interest rate.
4. Once that debt is paid off, apply that money to the next highest rate.
5. Repeat until all debts are paid.

Pros:

• You pay less in interest over the life of your debt
• Helps you get out of debt faster if you stick with it

Cons:

• Progress can feel slow at first, especially if your highest-interest debt also has a large balance

Best For:

• People who are motivated by numbers and long-term savings
• Those with high-interest debt that’s eating up their income

Snowball vs. Avalanche: Which One Should You Choose?

There’s no "right" answer here—only what’s right for you.

Ask yourself:

• Do I need quick wins to stay encouraged? (Snowball)
• Am I more motivated by saving money and optimizing interest? (Avalanche)
• Am I likely to switch methods or lose motivation if progress is too slow? (Snowball might be better)

If you’re unsure, start with the Snowball method. The psychological boost of knocking out a debt quickly often leads to better results, even if it costs slightly more in the long run.

And remember: the best plan is the one you stick with.

What If I Can’t Pick One?

You can combine strategies! Pay off a small debt first for the motivational boost, then switch to the Avalanche method to save on interest. Your plan can evolve over time.

The goal is progress, not perfection.

Staying Motivated Through the Process

Paying off debt takes time. Here’s how to stay focused and fired up:

• Track your progress visually (use a chart, app, or coloring sheet)
• Celebrate milestones (every time you pay off a debt, mark the occasion)
• Automate your payments so your plan keeps moving forward
• Remind yourself why you’re doing this (more freedom, less stress, better future)

Final Thoughts

Choosing a debt payoff strategy gives you a clear plan and a sense of direction. Whether you pick Snowball, Avalanche, or a mix of both, the most important thing is to start.

You don’t have to get it perfect. You just have to stay consistent.

Debt freedom doesn’t happen overnight, but with a strategy in place, every payment brings you closer. You’re not just paying off debt—you’re taking your life back.

And that’s worth every dollar.