How to Get Out of Credit Card Debt

One of the most frequently asked questions we receive is, "How do I get out of credit card debt?" As a disclaimer, we're going to approach debt from a mathematical and quantitative point of view, so you should only take the route that makes sense for you. Your mileage may vary. I am not a personal finance advisor; you should always do your own research.

At the end of the day, there's not a specific model that's the right answer. There are multiple answers to the same problem, and you should do what's best for your situation.

Here are some action steps to take in the right direction. 

1. Figure out your assets and liabilities

One common mistake I see is that people who have debt tend to ignore it. I recommend taking the time to sit down and figure out exactly how much debt you owe, that way you can form an action plan.

Force yourself to sit down and analyze the debt. We created a spreadsheet below to help you create an action plan.


  1. Access the spreadsheet here:
  2. File -> "Download As" or "Make a Copy of" to modify the sheet
  3. Only modify the YELLOW CELLS

Card 1, Card 2, Card 3 can be changed to your card's names. 

In the "Amt" section, enter how much you owe on each account, and the interest rate under "Int." If there's a minimum payment amount, enter the number. In the red section, M = Month.

The minimum payments (or more) are what you should aim to pay off each month, and I recommend tackling the accounts with the highest interest rates first. 

The next step is to figure out how many assets you have. Take an inventory of your bank accounts, investments, and physical goods.

For example, are there any items you don't need that you could sell on eBay? If you have a shoe collection you're willing to part with, you might be able to resell them.

Within your assets, I don't recommend touching your retirement fund because you'll have to pay tax consequences for cashing out early.

2. Increase your income

To pay off debt, you'll need to either increase your income and/or decrease your expenses. 

If you're an hourly employee, you can ask to take on more shifts, if possible. On the other hand, if you're a salaried employee, working longer hours doesn't guarantee a pay increase.

Depending on the industry you're in, it might be possible to get a salary increase by switching companies. For example, if you work at a consulting firm, you might be able to get a promotion and salary increase by switching to a competing firm. This isn't guaranteed, and I don't recommend risking your job to do so. 

Other ideas to generate additional side income is joining the sharing economy (i.e., Uber, Lyft, Bird) on the weekends or after work. 

If you're looking to get out of credit card debt, I don't recommend buying into a course with the hopes of starting a business and being successful, especially if there are high upfront costs and no guarantee of success. 

3. Cut back on expenses

To start saving money, I recommend cutting back on expenses. Take a look at your monthly expenses and figure out which ones you can cut back on.

Some people may say that you should cut off your subscriptions like Netflix and Hulu, but I think those are relatively cheap compared to all other expenses. For example, a drink or dinner costs more than a monthly Netflix subscription. The main difference is that the drink and/or dinner lasts one night, while a Netflix subscription will last one month. 

Buying groceries is another way to save money, especially if you're someone who likes to dine out every day. 

As a reminder, you should take the actions that make sense for you since everyone has a different situation. 

4. Have a payment strategy

Some people may recommend that you should pay off small debts first for a snowball effect, but I recommend tackling the debt with the highest interest rate first.

With credit card debt, interest is usually 15%+, compared to a mortgage which might be 5%. 

Be sure to always make the minimum payment, and pay off more when you can. If you are stuck in this situation, a balance transfer credit card might make sense. Be aware that if you do use a balance transfer, you should have the intention of paying it off, and not getting into more debt.