Armed with advice from financial experts, you’ll be out of the red before you know it.

By Angela Kwan
Updated December 23, 2016
Craig Cutler
Craig Cutler

Recognize the Problem

“Too many Americans are ashamed. They try to look the other way and pretend debt’s not there,” says Sean McQuay, credit and banking expert at NerdWallet. “That can be very damaging.” Many people go into debt not because their finances are bad, but because they’re not willing to think about where their finances are going, he explains. Start by making a list of all the debt you owe including the interest rates.

Reduce Your Rent

For most people, housing is the single biggest monthly expense, says Laura Adams, author of Money Girl’s Smart Moves to Grow Rich. “If you can, make radical cuts,” she advises. For instance, downsize to a smaller apartment, take on a roommate or move to less trendy neighborhood. Her recommendation for young people: If you’re willing, move in with your parents for six months to a year. Then you can put whatever you save on rent toward paying down debt faster.

Eliminate Unnecessary Expenses

“It’s the recurring expenses you never think about that cost a lot over time,” says McQuay. This is a good time to assess what you can live without. Are you paying for cable that you never watch? Maybe it’s time to cut the cord and rely on streaming services like Netflix or Hulu you already subscribe to. (If you’re not using those, cancel them too.) When was the last time you hit the gym? Perhaps a punch card at a local yoga studio may be more economical. Are you overpaying for unused data or minutes on your cell phone? Consider downgrading to a different plan. Look at your credit card statement and see which auto-payments you can decrease or cut altogether.

Get a Side Hustle

“At some point you can only pare down expenses so much. The next best thing is to discover ways to earn more,” says Farnoosh Torabi, financial expert and host of the podcast So Money. She recommends creating revenue streams to tackle debt. With the rise of the sharing economy, it’s easy to land opportunities to earn extra bucks without giving up your day job. Bonus: These types of gigs typically pay the same day or soon after. Dog lovers can find pups to walk or sit at The good-with-kids set can log onto Brainiacs willing to invest in a slightly bigger commitment can share their smarts through “It’s cool to take on a side hustle you enjoy because you never know where it will lead,” Torabi says.

Prioritize High-Interest Debt

“Find out which debts are costing you the most,” says McQuay. “Look at the APR.” If you want to pay the least amount of interest, focus on paying off the debt with the highest interest rate. In most cases, credit card debt is going to be more expensive than other types of debt. McQuay recommends this approach because it’s cheaper in the long run.

Or … Prioritize Small Amounts of Debt

Having multiple types of debt (say, several credit cards and student loans) or simply a large amount of total debt can feel overwhelming. Consider starting with the smallest amount and work your way up. Paying off smaller amounts first may boost your confidence and motivate you to keep going, helping you eventually reach your financial goals. “If you need a gold star, paying off small debt amounts first can really help,” says McQuay. Remember that personal finance is personal. Find what works best for your personality even if it’s not mathematically superior.

Consolidate Credit Card Debt

If you have good credit, typically 620 or higher, consider opening a balance transfer card. This type of credit card lets you avoid paying interest for a designated period, usually 14 to 21 months. “It lets you get ahead of debt because you are saving those interest payments,” says McQuay. Take this time to assess your finances and develop a game plan. While a balance transfer card does not erase your debt, it gives you room to breathe, adds McQuay.

Refinance Your Debt

If you have a variable interest credit card or loan, like a mortgage, now may be a good time to refinance. The problem with a variable interest rate is that it fluctuates, so you never know for sure how much you’re going to pay. “Over time, you could see the rate jump to a point that is no longer manageable,” says Torabi. She recommends refinancing and locking in a rate if you don’t plan on paying off the loan in the next year. Refinancing typically requires fees. As such, it only makes sense to refinance only if you will benefit from the reduced/fixed interest rate over time. Do the math and make sure you’ll come out ahead.

Fess Up to Your Partner

This can be a tough conversation, especially if your partner is clueless about your debt or if you’re the only one who brought debt into the relationship. However, you should think about tackling debt as a team. “You’ll have so much more power if you go at it together,” says Adams. She recommends examining all debts together and agreeing on a plan. Make sure to come up with a communication plan—for example, a monthly date night where you can check progress. What you want to avoid is putting each other down and being negative. “Ultimately you need to be on the same page,” she adds.