Tips

How to Get Out of Debt Fast -- No Matter How Much $$ You Owe

by Rachael Ray Show Staff 2:20 PM, September 23, 2016

Aired May 31, 2017

No matter where you live, you probably know what it feels like to come up a little short at the end of the month. But would you ever choose to be broke on purpose? Melody and Marcus Wright are doing just that to tackle their $212,000 debt! Melody is still in school working on her PHD, and Marcus is a software engineer. Together, they created a website to help others like them pay down their debt.

Between credit cards, two car loans and lots of student loans, it can be hard to figure out where to start. Here are the Wright’s top tips for getting out of debt in a hurry.

Step 1: Figure Out Your Needs and Wants
“We had to make huge changes. We gave up eating out, coffee, shopping and cable,” says Melody. Once you’ve cut out unnecessary expenses, start tackling your debt.

Step 2: Get a Side Hustle
“One of the fastest ways to pay down your debt is to get a side hustle,” says Melody. Don’t have a lot of time? Take on smaller jobs like taking online surveys or dog walking. Every dollar adds up!

Step 3: Create a Budget
“It’s kind of hard seeing all your money going toward debt, so we like to have a little bit of ‘mad money,” says Marcus. “Kind of like an allowance each month. With that money, you’re able to do whatever you want -- that’s your money!” Melody is a self-proclaimed ex-shopaholic, so she created a money envelope system to help her stay on track. At the beginning of each month, divide your “mad money” amongst the envelopes -- you can have an envelope for coffee, getting your nails done, movies, shopping, you name it! But once that money is gone for the month, that’s it -- you cannot spend in that category anymore. “It helps you think about your purchases before you make them,” says Melody.

Step 4: Tackle Consumer Debt
According to the Wrights’, the best way to pay off consumer debt is by tackling the smallest debt first, and pay just the minimum on everything else (don’t worry about interest rates here). Every time you pay off one of these debts, that minimum payment will then roll over into the next debt that you tackle.

Step 5: Get Rid of Those Student Loans
Once you’ve paid off all of your consumer debt, it’s time to tackle those student loans. For these, you’ll want to tackle the loan with the highest interest rate first. Keep on going until it’s all paid off!

Step 6: Celebrate
Celebrate each and every milestone no matter how big or small. “That’s what keeps us going, and that’s what’s going to drive your passion for getting rid of that debt,” says Melody.

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