How to Start Fighting Debt — Today

Photo: tim geers

Having once had $20,000 of credit card debt, I know what it feels like to face a Goliath-size stack of bills. Fortunately, I also know the joy of victory over the debt giant. Here’s how to wage a successful war against your debts. (See also: When to Use Savings to Pay Off Debt)

Face the Facts

If you’ve ever accidentally cut yourself with a kitchen knife, your first instinct may have been to avoid looking at how bad it was. You just held the cut hand tightly with your good hand, scared to take even a glance.

But if you’re going to stop the bleeding — to your hand or your wallet — you have to take a good, clear look.

Financially, that means adding up your debts. Make a list. Who do you owe? How much do you owe to each creditor? And what’s the interest rate (APR)?

Stop the Bleeding

Before any forward progress can be made, you need to stop moving backwards. That means committing today to going no further into debt. Two bold steps will help.

First, take your credit cards out of your wallet or purse. You don’t have to cut them up (or maybe you do). Just get them out of arm’s reach so that it’s difficult if not impossible to take on more debt.

Next, tell someone how much debt you have. Just thinking about taking this step might rearrange your bones. But it’ll be one of the most helpful steps you can take. There’s something very powerful about getting the news about your debts off of your shoulders alone.

Ask this trusted friend to be your encouragement and accountability partner. Invite them to ask you about your progress from time to time. It’ll go a long way toward helping you build and maintain momentum on your journey out of debt.

Fix Your Payments

One of the simplest steps toward accelerated debt repayment is to keep paying the same amount to your creditors each month. You see, if you go no further into debt, then each month your creditors will ask you for a little less.

That may seem awfully nice of them, but it isn’t kindness. It’s math.

Your minimum payment is based on a percentage of your balance, so if your balance is going down a little each month, so will your minimum due. Paying this declining minimum is one reason why getting out of debt takes so long.

For example, let’s say you have a $5,000 credit card balance, and your minimum due is 2% of the balance. This month’s required payment is $100. But next month it’ll be a little less, and the next month it’ll be even less.

If your card charges 18% interest and you pay the declining minimum due each month, it’ll take you 472 months to get out of debt. That’s over 39 years! Along the way, you’ll fork over nearly $13,400 in interest.

But if you keep paying $100 each month, you’ll be out of debt in “just” 94 months (less than eight years), and you’ll pay about $4,300 in interest.

Wow. That’s a big improvement for just continuing to pay what’s due this month every month.

Ask for a Lower Rate

A huge key to successful negotiating is simply working up the courage to ask for what you want. If you’ve been a good credit card customer, making your payments on time each month, call the company and ask for a lower interest rate.

Just say, “I believe I’ve been a good customer of yours, but I need a better rate. Can you help?” It will work to your advantage if you have a better offer in hand that you can mention. Maybe you received an offer in the mail or saw a better rate advertised online. If they balk, ask to speak to a supervisor.

Sure, they might say no. But if they say yes, lowering your rate from 18% to 14% in the above example will knock your payoff period down to 76 months and your interest payments down to about $2,500. A nice improvement for a 10-minute phone call.

Pay More Than the Fixed Minimum

Of course, if you can find some money to pay more than the fixed minimum each month, you’ll be out of debt even faster. Pay $110 a month instead of $100 in the example above, and you’ll shave another 10 months and about $350 in interest from your debt payoff plan.

By fixing your payments, asking for a lower interest rate, and paying an extra $10 a month, you’ve gone from a payoff period of 472 months and interest payments of nearly $13,400 all the way down to 66 months and less than $2,200 in interest.

Of course, the more you can put toward your debts, the faster you’ll be out of debt. Run some what-if scenarios with different monthly payment amounts using this Accelerated Debt Payoff Calculator.

If you’ve been there and done that with debt, what other steps did you find helpful in getting out of debt?

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How to Start Fighting Debt — Today

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Guest's picture

Great advice, it's also important to note that when you call your creditors, you definitely don't want to tell them you're struggling. They will mark your account as a potentially "bad" account and there's a possibility that they might lower your credit limit. Although, if you're trying to get out of debt it shouldn't be a biggie, but it can definitely impact your credit score

Guest's picture

I've heard recently that calling to ask for a lower rate can actually have the opposite effect. Is there any truth to that? It had something to do with the current state of the economy and how most banks are more cautious than normal.

Guest's picture


You're absolutely correct. If you call in to ask for a lower rate, you don't want to disclose any financial information. At the first sign of financial difficulty, the banks will red flag your account and might lower your credit limit. They will see you as a high risk account.

Matt Bell's picture

The key is whether or not you've been paying your bills on time and aren't using too much of your available credit. If there are evident issues on your account, then asking for a lower rate may, in fact, not work to your favor. You'd be calling attention to yourself. But if you've been using credit responsibly, it's worth asking for a lower rate.

Guest's picture

This is a great article. Some very useful tips. I especially like the accountability partner. At CreditSense we've found that type of open accountability is one of the truly mind changing and freeing experiences our clients can have. It's like standing up and publicly admitting for the first time that you have a debt problem.

Matt Bell's picture

One other benefit to asking for accountability is that by coming clean about your financial situation, that can create the space for the other person to come clean with you. Chances are, there's some way you can be helpful to that person. Becoming each others' accountability and encouragement partners is a great win-win.

Guest's picture

Well-laid out advice! We've come a long way out of our debt and seeing these numbers brings me back to that place of feeling like we were never going to see the light at the end of the tunnel! Thankfully- we're on the other end of things now!! It's a much better place to be.

Matt Bell's picture

Thanks for writing, Marianne. It's always encouraging to hear stories of people who did the work and got to a better place. It was my experience - and I try to tell others - that if you can make forward progress every month, eventually you'll get out of debt. It took me four and a half years, and there were plenty of times along the way when I felt discouraged. But I just kept plugging away. And there was something about the time it took to get out of debt that I think has been helpful in staying out of debt ever since.

Guest's picture

Great tips -- the one thing that helped me the most was to ask someone with absolutely perfect credit to open a 0% interest card in her name, and let me set up the online monthly payment thing. I transferred my balance and paid it off.

Guest's picture

Debt is a very hard thing to deal with, I agree that talking to someone and coming clean about being in debt is the best way to give yourself a wakeup call and start doing something about it.

Guest's picture
Lauralynn Schueckler

Wonderfully written post and very informative! Nice job! It can be really hard to face your debt head on and admit that you have a problem. I really like the advice about talking to someone about your debt. I think everyone should remember that there are some great Non-Profit Credit Counseling Agencies out there that could help. They should be the first person you talk to about your debt, because the counselors are certified and can work with you to create a monthly budget. When you have a monthly budget in place, you'll be able to figure out how MUCH you can afford to pay your creditors each month. The call to a non-profit credit counseling agency is completely free and confidential. There are no obligations. They are only there to help you get out of debt. Check the National Foundation for Credit Counseling (NFCC) website to find a reputable non-profit agency. Best of Luck to anyone here that's in debt and Congrats to those of us who are now debt-free! Thanks again for a great post!

Matt Bell's picture
Matt Bell

Thanks for the feedback, Lauralynn. There's a lot that people can do on their own to get out of debt, but I agree that if they are really in trouble a credit counseling office can be a good option. If going that route, I'd make sure the local office is affiliated with the National Foundation for Credit Counseling, as you mentioned, and also get all fee information up front and in writing.

Guest's picture

I keep trying to pay off my visa, but it seems impossible. If I can, I hope to go to the envelope system.

Matt Bell's picture
Matt Bell

It IS possible to pay it off and using the envelope system would be a great step in the right direction. Here's a simple how-to guide:

Guest's picture

Great tips, thanks so much for sharing!
What's your opinion on debt consolidation loans? Lumping all the debts (8,000.00-ish) into one payment (and far less interest) and paying it off in 3 years.
Sounds tempting, but need an opinion :)