Debt is something we all deal with at some point in our lives. Some of us are riddled with debt, stuck in its invisible grasp with no sight of escape. Some of us just have school loans, which seem harmless because of low fees and payments, so we ignore the soul-sucking and bank-account-syphoning elephant in the room. Some of us are able to use debt to our advantage to escape a bad month of business or get through hard times. But debt is dangerous and it needs to be dealt with head-on.

Did you know the average credit card debt per U.S. adult, excluding zero-balance cards and store cards is $4,878*?

How about the fact that 26% of small business owners carry a balance of nearly $10,000 on their business credit cards*?

Or did you know that more than 35% of Americans are seriously concerned about being able to meet essential financial obligations such as their mortgage, loans, credit card, or bill payments*?

These are serious issues. Debt is a crisis in our country, and that's evident at the highest level of our government and for the lowest-income worker in Devil's Lake, North Dakota (nothing against Devil's Lake, I've actually been and its a lovely little town).

I think it's fair to assume that if you're reading this article, you have debt and you want to have it stop looming over your head like an ominous dark raincloud.

I'm not coming at you like some high-and-mighty financial analyst. Instead, I'm coming at you from the perspective of a small business owner who racked up over $100,000 in debt keeping my business afloat. If you're stressed out about your $5,000 credit card balance, imagine what it would feel like if you had 20 additional maxed out credit cards! Plain and simple: It sucked.

I want to be clear that I didn't get into overwhelming debt overnight. I also wasn't buying extravagant things. My business had monthly operational costs. These costs ranged from salaries, design/development expenses, advertising/marketing, and countless products and services that kept everything organized. Over the course of a year, I went from $12,000 spread across two credit cards to more than $100,000 across six different credit cards.

Having six credit cards may shock some of you, but I wouldn't be too surprised if a large portion of people reading this have three, four, five, or six credit cards. It's a slippery slope that many of us end up sliding down without control.

Alright, you get the picture. I had a huge amount of debt. You have debt. Now the how the heck did I (and do you) get out of debt?

Step #1: You have to draw your line in the sand.

For me, when I hit $100,000 I knew something had to change. Unfortunately, that change came with the tough decision of closing my business's doors. That meant letting people go. Cutting as many expenses as possible. And accepting the fact that my business was no longer profitable and was, in fact, the exact opposite.

I hope, for your sake, that $100,000 is not your number. I hope it's a drastically lower number.

If you don't have debt for business purposes, your line in the sand should happen right now at whatever your current overall debt is (across all cards and loans).

TIP: A great thing to help draw your line in the sand is to have someone hide your credit cards so you can't have access to them. Or just cut them up. Start using just debit cards or cash only.

Step #2: Change your mindset.

We're a country driven by consumerism. Turn on any TV. Open any magazine. Browse any website. There's a new gadget, a shiny new car, something that begs you to pull your wallet out of your pocket and spend money you don't have. Today is the day you tell yourself, "I don't need XYZ thing. I want it, but I don't need it."

How many things have you purchased with your credit cards in the past year that you can actually name off the top of your head? If you can't remember what you spent your last couple thousand dollars on, it wasn't that important and you didn't actually need to buy it.

What's more important in your life? Owning a couple new material goods, or not being stressed out over your current financial situation?

Drive a less expensive car for awhile. Enjoy the TV you have (or just watch stuff on your laptop and get rid of your TV and cable). You already own way more stuff than you could ever need. It's time to stop spending.

I was incredibly inspired by Joshua Fields Millburn and Ryan Nicodemus of when it came to changing my mindset about material goods and debt. I'd highly recommend spending time reading their articles or books.

Step #3: Make a spreadsheet of all your current expenses.

Spend a few hours and write down all your expenses. Your mortgage or rent. Your car payment. Your home utilities (cable, electricity, water, phone, etc.). Your insurance(s). The amount of money you spend on food per month (eating out and groceries). How much you spend on alcohol or at bars. Any subscription services you pay for (Netflix, Spotify, etc.). Your credit balances and monthly payments.


You can use a service like or spend a little bit of money to have a financial planner help you (your local bank should be able to help you find someone).

It's very important to list every single thing out so you can see the big picture. The problem with debt is that it's usually separate from your bank account and therefore you don't see things side-by-side. Also, I was shocked when I learned that I spent almost $2,000 on food per month. I thought it was just $10 here and $20 there. I was able to save a bunch of money just by cutting back in that area, and I'll get to that more in a moment.

Step 4: Reassess your expenses.

Now that you have a spreadsheet, sit down with someone and look them over. If you have spouse or family member, this is a great person to start with. You'll probably be embarrassed to show them--but you know what--that's a huge red flag that you NEED to show someone your finances.

Look at places where you can cut back and start saving money (money you'll be applying to get rid of your debt). A couple places that made a big difference for me were:

Cell phone bill: I was paying $260/month for a family plan. I went into AT&T and asked them if they had a better option based on my usage. They did and changed me to a $140/month plan. Yearly savings: $1,440

Cable bill: I was paying $185/month and hadn't changed my plan in years. I called and asked for a better plan and although it took a good bit of patience, I was able to reduce my rate to $135/month. Yearly savings: $600

Food: I was paying $2,000/month on food ($1,400 was eating out). I knew I needed a budget, so I told myself I could only spend $1,500/month on food (half for eating out, half for groceries). When I ran out of money for eating out, I couldn't eat out again until the next month. Yearly savings: $6,000

Entertainment: Drinks with friends, seeing movies (and getting popcorn), two Netflix subscriptions in one house, and a bunch of other stuff. Writing all this out showed me I could cut back and save over $150 per month. Yearly savings: $1,800

Just by reassessing my finances and creating a little bit more of a budget, I was able to find almost $10,000 I could apply to my debt!

Do a little bit of cutting back in the short term and you'll find it is definitely worth it. You'll be amazed at how living frugally for a short time can help get you out of debt exponentially quicker.

This exercise should also help you set a new monthly budget for yourself, which you can easily create in Google Spreadsheets or Excel.

Step #5: Make a few difficult phone calls to your credit card/loan companies.

Did you know that American Express has a hardship case that will lower your credit card APR to 0% for three months, 1% for the next 3 months, and then 9.99% for the 6 months that follow? All you have to do is call the number on the back of your American Express card and ask to talk to someone about a hardship case.

I didn't know this existed when I called American Express and was simply looking for any way to reduce my 24% APR. I explained my business was going through hard times and instead of defaulting on my payments, I was hoping they had a way to help me out. It helped my case that I'd almost never missed a monthly payment and had been a cardholder for 5+ years. Those aren't mandatory items for a hardship case, just use them to your advantage if you do call in.

NOTE: If you apply for American Express's hardship case, they do have to lock your cards during that time period. This sounds scary, but you shouldn't be using your cards anymore, anyway.

I also called Citi Card and Wells Fargo Platinum Card. While they didn't have a hardship case like American Express they were both willing to lower my APR by over 10% on each card.

All-in I spent about an hour making these incredibly humbling phone calls. But given the amount of debt I had and the lowered interest rates, I was now on pace to save over $400 in credit card fees each month.

That's an additional $4,800 which when you add in the savings from my expense-reassessment, meant I had nearly $15,000 to pay toward debt.

NOTE: I didn't have student loans, so I'm not sure this would work with them. I think it's absolutely worth a try though. I don't think this would work with auto loans. If you have a mortgage you could talk about refinancing, but I'd seek more professional advice for that.

Step #6: Build a get-out-debt plan.

Just like you created a spreadsheet for expenses, it's time to make another one that shows you exactly how much you owe on your cards, how much you're paying each one down per month, and what your plan is for the next 12 months.

You should aim to pay off the credit card or loan with the highest interest rate first. Plus, as Dave Ramsey says, paying off one card creates a snowball effect. Once you see that one card paid off, it motivates you to want to pay off the rest (instead of evenly reducing all cards).

Seeing my debt laid out this way, on one sheet, was incredibly powerful. Yes, the total amount of debt staring me in the face sucked, but the fact that I could see a path to paying down my debt was encouraging.

This plan won't be perfect and that's okay. When I created my first plan I was hell-bent on paying off all $100,000 of my debt in 12 months. Well, things didn't go according to plan. I didn't make as much money as I'd hoped and I had a few unexpected expenses pop up. Nevertheless, I tweaked my plan along the way and was able to make a huge dent in my debt.

I was supposed to pay nearly $2,000 per card per month to reach my goal of being debt free in one year. Some months I couldn't pay that much and some months I had to actually only pay the minimums. But throughout the year, I did my best to stay on track. I was able to pay off $65,000 of my debt in 2014. More than $25,000 of that came from money I was already spending (cutting back and budgeting, hurray!). The rest of it came from working a bit harder and putting extra income directly toward debt and not travel or material goods.

I'm not 100% debt free, but I'm incredibly proud of the progress I've made and know I WILL be debt free in the next few months by sticking to this plan.

*Credit Card statistics sourced from

Published on: Feb 5, 2015
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