Most Americans have some amount of personal debt.

If you include secured debts, like homes and cars, an astonishing 80% of Americans have accrued some form of debt.

Take the secured debts out of the equation, and 50% still have personal debt.

In addition, 10% of the public carries more than $10,000 in credit card debt, which is one of the reasons why most Americans should not use credit cards.

Moving beyond the statistics, I want to discuss the real cause of this phenomenon, and offer some tips and strategies to get out of debt.

I had almost $30,000 in debt, and I paid it off in less than three years. If you have less than $30,000 in debt, then you can pay it off in less than three years by employing some simple strategies.

Excuses for Being in Debt

Let’s dispel a few common myths as to why people believe that they have debt:

Job Loss

Many people have lost their jobs in recent years. If you have lost your job, you will have to work much harder once you find employment, or take on a second job to help pay off accumulated debt. You also need to prepare your finances so you have a cushion in case you again become unemployed.

Insufficient Income

If you feel that you don’t make enough money to pay off your debts, you can find ways to earn more money. Do what you can to get a raise at work, look for a new job, or start your own side business. It may seem difficult at first, but with hard work, you can pay off your debt.

The Belief That Debt Is a Way of Life

A monthly car payment is not a way of life, and paying credit card interest is not a way of life. You can buy a car with cash to avoid monthly car loan payments and eliminate credit card debt by making some changes to your lifestyle and to your spending habits.

The “I Need” Mentality

So many people claim they have debt because they need this or they need that. You can solve your personal debt and avoid accumulating more debt by learning how to distinguish between wants and needs.

The list of excuses that people give for having debt is long and varied. In the end, these excuses don’t put you any closer to paying off your debt, and they don’t help you acknowledge the real reason for having debt.

The Real Reason Is You

You have nowhere else to place the blame for your debt. The reasons why you have accumulated your debt include:


If you spend more than you make on a monthly basis, then you will have debt forever. If you can’t afford to pay off your debt by the end of the month, then you simply can’t afford to make the purchases.


Do you currently pay for a gym membership that you no longer use? Do you stop at a convenience store every morning for a cup of coffee? Do you pay for a landline telephone that really serves no purpose? Do you pay for premium channels in your cable package? Getting out of debt involves changing behaviors, adjusting your habits, and learning to live with less.


Do you think that credit card debt is an acceptable part of life? Do you think that the income from your job is the only way to generate income? When you think about making a major purchase, do you understand the effects that the credit card interest will have on your finances? Do you have the ability to distinguish between wants and needs? Changing various aspects of your mindset can help you get out of debt.

Once you understand the reasons for having debt, you can begin working on ways to reduce your debt.

What to Do About It

In order to pay off your debt, you need to change the way you manage your finances. Some tips and strategies to help you get out of debt include:

1. Create a Budget Make a budget that tracks your income and expenses. You cannot tell if you spend more than you make unless you know exactly how much you spend each month and how much you earn.

2. Spend Less Than You Make Determine the difference between desires and necessities, and eliminate as many of the wants as you can until you have paid off your debt. You do not need to eliminate them forever; only eliminate these items until you are clear of debt.

3. Change Spending Behaviors Take a good hard look at how much money you spend, and where you spend it. Do you buy lottery tickets? Stop buying them until you have paid off your debt. Do you go out to lunch each day? Pack a brown bag lunch. Do you spend a lot of money on clothes? Resist the temptation and wear what you have for the time being.

4. Be Persistent Recognize that the biggest obstacle to overcome may be thinking that you will always have debt. If you owe $20,000 to creditors, and can only chip away $3,000 in six months, do not get frustrated or give up. As your balances decrease, you eliminate debt at a faster rate. Stay focused on your goal to solve all of your debt issues.

It may seem difficult to make all of these changes. Having a better idea of why you need to get out of debt can help you stay on track.

Why You Need to Get Out of Debt

You have no idea how much finance-related stress you have in your life until you have paid off your debt. When you clear your debt, your stress level quickly dissipates, as though someone lifted a heavy weight from your shoulders.

In addition, you need to get out of debt in order to plan for your retirement. Believe it or not, 34% of Americans have nothing saved for retirement. If you pay hundreds of dollars each month in credit card interest, you probably cannot afford to open a Roth IRA or start contributing to a 401k plan.

As your debt shrinks, begin putting more cash away for retirement. Your savings will mature and you will have more money to enjoy when you retire.

Final Thoughts

No one will pay off your debt for you, so it’s very important to take responsibility for any and all debt you have now. In the end, take heart in knowing that the situation is not hopeless. No matter how much debt you carry, remember that you can pay it off. It just takes time.

Do you have any other ideas for paying off personal debt? What’s your great motivation for doing so?

David Bakke writes about making smart financial decisions and saving for the future on the personal finance blog, Money Crashers.


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Comments | 2 Responses

  1. LauLau81 says

    I really learn about the debt, I will always remember this different idea to consider in order to be aware in every decision i made. Thank’s a lot.

  2. Trading_Trends says

    excellent article,

    i think the debt snowball system is a great way to eliminate debt…

    gives you hope going forward.., crush them one at a time..

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