Drowning In Debt – Follow My Step by Step Guide To Beat Debt Now

Drowning in debt is really harsh situation that can lead to anxiety and insomnia

I know how it feels when you are falling deep in debt

There are few affiliate links, if you click a link and make a purchase, I may receive a commission at no extra cost to you

Because I passed through this feeling and I had to pony up my debt

Believe it or not, paying your debt requires a determination, plan and a will to start a new commitment

drowning in debt
a man drowning

If I visualize it, I will draw a man climbing a steep mountain but once you start you would definitely reach the top

In this post, I want to share my experience on how to pay your debt fast

What does drowning in debt mean?

Drowning in debt simply means you owe a lot of money to creditors

In today's economy, usually people owe debts to financial organizations like banks

It is very hard to reschedule its terms or reduce the interest rates

Sometimes it can lead to foreclosure and freezing your assets if you are not able to pay your debt in time

If this happens, you declare bankruptcy and spend around 7 years living with no credit until you are allowed to start building a new credit again

Does unpaid debt ever go away?

First, there is something called statute of limitations it is simply a time limit

For example, in Ontario, Canada it is 2 years

In other states, it can be up to 7 years

If this time period passes, debt collector will not sue you in court

But that doesn't mean that your debt will go away, debt collectors will trouble you frequently to pay it

Beside it will negatively affect your credit score and rating

To summarize it, statute of limitations can help you not be sued

But your debt will not disappear

You will still have to pay it or it will leave a black mark on your credit score

How much debt is too much debt?

There is something called Debt to Income ratio and abbreviated as DTI

DTI is a percentage of how much you owe compared to how much you earn

If your DTI is 43% it will be hard for you to get Mortgage approval

Usually DTI of 36% is acceptable but it should be lower than that

What to do if you are drowning in debt?

I remember when I got married in 2010, I was working at Walmart with a minimum wage

At the same time I had to buy furniture and few appliances

My point is falling in debt was inevitable

I had no other choice

I am not sure if I can say I was drowning in debt

But I know that I followed most of the steps below

1) Make a list of all your debts

This step is crucial, it will keep you motivated and provide you with a payment plan

Create an excel or google sheet as shown below

List all of your debts under column A and their equivalent minimum payment under column B

Add interest rate under column C and amount owed under column D

pay off debt fast by listing all your debts

The plan is to pay more on the highest interest rate so you minimize your accumulated interest

Dave Ramsey has an idea to pay more on the lowest debts to finish them while paying the minimum to all debts

After you finish your smallest debts you will get motivated

Use your momentum and direct your payment which was used to finish your smallest debt to pay the next one

2) Create a budget

To build a realistic budget based on your income you have to collect all your expenses made on your debit and credit cards for the last 3-6 months

Sort all your expenses into fixed like mortgage or rent

While other expenses are variables like utilities, gas and groceries

After you come up with your real amounts for each expense

You can either keep using your credit cards and keep track of what you spend on each expense category – this is one option

Or you can leave your credit cards at home and start using the cash envelope system

3) Set new goals and plans

I will tell you a secret about those who were able to pay their debts

When they were asked about how they manage to fight their debts

Most of them used to have a solid plan written on paper and visible to them

Financial Goals Roadmap
writing down your financial goals

The above is my financial goals roadmap, I have it in my download page

4) Stop using credit cards

It is really hard to track your expenses when using your credit cards

Think about it, you use a plastic card which can pay for any amount

But if you use the cash envelope system you will be cautious with your spending

5) Cut your expenses

After completing your budget, it will open your eyes where you spend your money

The first round of cutting your expenses is supposed to be easy

You can cut your fast food and dinning out

Also your drive thru coffee and many more

Your second round is to cut your luxury items if you have the will like your GYM membership

6) Prioritize paying debt with high interests first

There are 2 methods to tackle your debt

Either to put more money into high interests or smallest debts

Actually Dave Ramsey is the one who suggests to pay the small debt first

He calls it the snow ball effect

7) Finish paying lowest balance first

As I said earlier, if I have 2 debts let's say $7,000 and $6,400

I wouldn't consider $6,400 to be small debt

If I have $7,000 and $500 then I would tackle the $500 to finish it

This will boost your energy

8) Double up on payments

If you are paying a debt and it happens that you finish it

You use its money to pay the next targeted debt

Dave Ramsey describes it like the snow ball rolling to crush your debt

9) Use bonus and tax refund to pay down debts

If you are expecting a bonus or tax refund, this is a good opportunity to pay it towards your debt

Also if you are not aware during the year you will get 2 extra payments

What I wanted to say is to use any extra money towards your debt

10) Pay more than just the interest to overcome being overwhelmed with debt

Paying just the interest will not finish your debt

You will keep paying your debt forever

The only way is to pay the interest and a big portion of the principal

11) Sell unused belongings

This practice should not take long

Go into every room and check what you can get rid of

Starting from electronics to personal items like sun glasses or watches

You can sell these belongings on Facebook Marketplace for cash

You will get load of people in your area looking to buy what you have

Your other option is to use eBay

12) Cancel unnecessary subscriptions

Go and take a look at your recurring subscriptions on your credit card

I did this practice before on PayPal and I found 2 subscriptions I don't need

13) Negotiate or lower your bills

Look for all subscriptions where it is hard to cancel like your cell phone plan

Do your shop around to see if you can find a competitive rate from another provider

Take this rate to your current provider and see if they can beat it

Most of the time, they will do much better to keep you as a loyal customer

What is even better, try to look if you really need this plan or you can lower it down

For example, your plan can have 10 GB of data while you usually consume 5 GB

You can downgrade your plan and pay less

14) Be satisfied with what you currently have

Don't ever compare yourself to your friends and family

You don't know their circumstances and what they bear in their lives

Be content with what you have and focus on your debt payment

you have to be happy with what you got

Always be positive and look for good reason in bad situations

May be being in debt is to teach you a lesson to live a frugal life

15) Avoid committing to new debt

While you are paying your debt, try not to commit to any new debt

Even if it is of small amount like buying recliner chairs on credit or installments

You should put on hold anything and focus on your needs like shelter, food and transportation

16) Analyze your shopping habits

Analyze what makes you spend money on your wants

Do you hang out with your friends and so you spend lot of money on dinning out or drinks outside

May be you have spare time and so you spend your time at shopping malls

Usually when you buy anything which is on great sale, you always don't need it on the first place

best ways to save money on shopping

17) Find a side hustle to increase your income

Remember expenses can be lowered to a reasonable amount

On the other side, increasing your income has not cap

Try to find a side hustle that can make you money to beat your debt

I recommend to read the below

How to Make an Extra 1000 a Month From Home Doing Easy Side Hustles

18) Volunteer for a good cause

This will not pay your debt but it will make you feel lucky with what you have

Although you are drowning in debt but there are others who don't have shelter

19) Overcome your addiction

It is time to overcome your addiction

If you smoke or drink alcohol a lot, it is time to give up

I know it is hard to give up, this will not only improve your health

But it will give you a great confidence that will stay with you a lifetime

20) Buy only your needs not your wants

Do you know the difference between your needs and wants

If not, it is time to know now, your needs is the essential things that keep you alive

Like your shelter, food (not all kinds of food) and transportation

Your wants are all the things you can put on hold like clothes (only essential ones) and you still can survive

21) Learn basic financial knowledge

You need to learn the basics that's what you need to know

I want you to know the difference between assets and liabilities

Go ahead and read my post I wrote about personal financial literacy

Also I recommend reading these books called the budgeting habit or Financial peace planner by Dave Ramsey

22) Be positive and stay motivated

Don't let drowning in debt put you down

Believe in yourself and your abilities

Say loudly I can overcome my debt and one day I will be debt free

be positive and stay motivated to pay debt quickly

Don't get despaired or you will lose hope

You need to keep your motivation high to overcome your debt

23) Speak to your bank or credit counselor for free

Taking decision to fight your debt is really a good step towards being debt free

But first, think about going to your bank and ask about your options

May be you can get a home equity line of credit to use its money to pay all of your debt

Usually it is a credit of very low interest

Other option is to speak to credit counselor for free to see your options

24) Get a consolidated loan

Did you receive one day your credit cards offer to transfer any balance to them for some days usually one year term with no interest

Actually these type of offers are really good if you plan to move a specific amount you plan to pay within a year

Also you can get a consolidated loan to pay all or some of your debt where you get lower interest rate than what you currently pay

25) Refinance your mortgage

You own your home – great you have a great chance to apply for home equity line of credit

This is one of the lowest interest loans – you can use it to pay your debt

26) Save on groceries

Grocery is one of the flexible expenses that you have full control on

You just have to know how and that's why I recommend you to read my previous post on how to save money on grocery

How do I get out of debt with no money?

Actually this is a very tricky question

I assume you are drowning in debt but you are living paycheck to paycheck

It is similar to asking how can you untie the robe around your body from the chair you are sitting on without using your hand

First, I want you to be honest with yourself

Make sure to live according to what your income is

And learn from your lesson and avoid future debt at all costs

Find a second job or side hustle

You know I told you before to find a side hustle

But this time you have no option

Go and look for a way to make more money

I heard a story of someone who used to work for 12 hours during the weekend at a gas station and use that money to pay his debt

It took him 30 months to kill his debt living frugally and on the very minimum

At the end, he is debt free and looking forward to build his future

Start with selling your luxurious items

This is one of the way to pursue if you are overwhelmed with debt

You and your partner should be aware of how you are drowning in debt

Both of you are in the same boat

There is nothing wrong if you can sell your household jewelries

Actually you won't pawn it using pawn shops as you won't be able to return it back

You go and sell it and pay partial amount of your debt

Ask for money from your first degree relatives

I know it will be kind of insulting if you ask your son

But if you go and ask your parent

Just go and admit that you are drowning in debt

Parents know all of their properties will be passed to their heirs

Or the government will seize it which nobody wants that to happen

Think about using one car only

I remember before having our 2 kids

We were living with one car for a long time

If your kids are grown up – definitely you won't need 2 cars

Sell the most expensive car and contribute the money to pay your debt

Talk to your bank

Perhaps your bank can help with any low interest loan

Sometimes, they can extend your home equity line of credit if you have one to be able to pay your debt

Or they can offer you a balance transfer 0% interest for certain period, seize the opportunity and transfer a small amount you can sure to cover during that period

Get rid of stocks or mutual fund under your Roth IRS or TFSA

I recommend you use this step only if your debt interest is greater than 10%

What is the point of earning 9% to 13% on mutual funds while you are paying accumulated interest of more than 10%

Yes you would lose your hard earned tax free money

But it is better than letting interest making your debt grow substantially


Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.