How to Get Out of Debt ASAP

Andrew Weber is senior director of Planning Philosophy, Research and Guidance at Northwestern Mutual.

If you feel like debt has taken over your finances, you aren’t alone. According to Northwestern Mutual’s 2026 Planning and Progress Study, many of us are dealing with it. And more than a fifth of Americans say personal debt is their primary obstacle to achieving financial security, while the average amount of debt (not counting mortgages) for those who carry personal debt is now $21,700 versus $21,500 in 2025. Credit cards are the biggest culprit—and the number one source of debt for 29 percent of Americans, followed by car loans at 12 percent.

Now for some good news: The right approach can help you pay down your balances and save on interest over the long run. Whether you’re buried in debt or doing a good job managing what you have, you might be wondering how to be debt-free or at least have it under control. Here are some simple strategies to help reduce your debt load.

1. List all your debt balances, monthly payments, and interest rates

The first step is to get clear on your debt. Build an understanding of:

• The amount of each open balance,
• The name of each lender,
• The minimum monthly payment for each account, and
• The interest rate for each account.

Also note which balances are revolving accounts. (Credit cards fall into this category.) These are lines of credit that allow you to borrow up to a certain point. As you pay down your balance, your borrowing power increases because you’re freeing up more of your credit limit.

These accounts are different from lump-sum loans like a personal loan or car loan. You cannot add to these balances.

Seeing it all on a single list might feel overwhelming. Just remind yourself that you’re taking control of your finances—and knowledge is power. By adding together your monthly debt repayments, you can calculate your debt-to-income ratio, which may be important if you want to buy a home. Remember that you’re not the only one in debt.

2. Decide what debt to pay off first

If you’re looking for a motivation boost, the 2026 Planning & Progress survey found that six in 10 adults are prioritizing paying down their debt. This compares with 38 percent prioritizing saving money.

Also keep in mind that not all debt is bad. When used wisely, debt can actually be a powerful financial tool.

When you know what your debt balances are, start to think about what you’re going to prioritize paying off first. It’s okay to carry some “good debt,” but “bad debt” should probably get your attention first. Here’s the difference between the two:

Good debt

Good debt has a low interest rate and helps your overall financial situation. A mortgage, for example, can allow you to buy a home and increase your generational wealth. Paying off student loans might be worth it if they funded your education and led to a better-paying career. So long as you’re making your monthly payments for good debt on time, your payment history can help strengthen your credit score. These debts don’t necessarily need to be at the top of your priority list, especially if other debt is costing you more money.

Bad debt

Bad debt is incurred on credit cards and other high-interest debt. This is debt you’ll want to tackle first. Paying down bad debt as quickly as possible can save you money on interest and help end the debt cycle faster. When deciding which debt to pay off first, consider the following factors and methods:

• Interest rates: The balance with the highest interest rate represents your most expensive debt. The longer you keep it around, the more interest you’ll pay in the long term. Prioritizing these accounts is the basis of the debt avalanche method.
• Balances: Other debt management strategies prioritize your open balances. The debt snowball approach, for example, has you pay off your lowest balance first, regardless of the interest rate. Eliminating these debts can provide quick wins—and help you stay motivated to keep going.
• Delinquency: If you have any accounts that are in bad standing, you probably want to put those first. That includes balances that have a history of late payments or have been sent to collections. Setting these accounts right can help improve your credit score.

3. Consider debt refinancing or consolidation

Just as you might switch your mobile or internet provider if a competitor is offering a deal, consider refinancing your credit card debt at a lower rate. This can be key as you’re creating a financial debt payoff plan. If you have good credit, you may be able to qualify for a personal loan or consolidation loan. You can also consider:

• Moving your balances onto a balance transfer credit card that has a 0 percent introductory rate: There may be a balance transfer fee (typically 3 to 5 percent of the transfer amount), but it could allow you to save money in the long term. Just be sure you can pay off the balance before the promotional period ends—and interest kicks in.
• Refinancing your student loans: This can allow you to put multiple student loans into one new loan with a lower interest rate. Just be aware that refinancing federal student loans means losing some borrower protections. That includes the ability to go on an income-driven repayment plan.
• Refinancing your mortgage: This debt payoff move can unlock a lower mortgage rate, which could save you a significant amount of money. You’ll want to shop around and compare rates to find the best lender. A strong credit score can go a long way here.

4. Reduce expenses and increase your income

Good financial management is key to debt reduction. Look for areas where you can cut back expenses and/or increase your earnings to free up more funds for debt repayment. Then, once your debt is paid off, you can put more dollars toward growing and compounding your wealth.

Ways to reduce spending

Budgeting isn’t meant to feel like you’re boxed in. When done right, it can give you greater control of your finances—and allow you to spend money on what really matters to you. Once you start tracking better, you might be surprised by how much you spend on subscriptions you’re no longer using or on things that don’t match your values.

Ways to boost income

Asking for a raise, increasing your hours at work, or selling unused items are good ways to increase your earnings, even if only temporarily. Or maybe your role offers overtime or ways to earn a bonus or incentive.

Taking on a side hustle can also help increase your income. Driving for a ride-sharing service might be an easy way to make some extra cash. If that isn’t a good fit, explore freelancing or consulting within your industry, monetizing a hobby, tutoring, starting a blog, or opening an online shop. There may be a money-making opportunity right under your nose.

5. Build up an emergency fund

It’s ideal to have a financial cushion for the unpredictable parts of life. An emergency fund is a shock absorber that helps you stay on your feet when things don’t go according to plan, like if you lose your job. It can avoid the need to put surprise expenses on a credit card that charges a high interest rate.

If you don’t have money in an emergency fund yet, the key is to just get started. To figure out how much you should have, start with a goal of one month of expenses. Keep in mind that the right amount for you can look different depending on your situation. For example, unmarried people may need larger reserves if they’re flying solo financially.

6. Keep the big picture in mind

Don’t let today’s debt distract you from accomplishing your goals for tomorrow, like saving toward retirement. Review your employer-sponsored retirement plan, such as a 401(k) or 403(b), and see if you can get money called “the employer match.” This is usually a dollar-for-dollar match on your retirement contributions, up to a certain limit. It’s like free money for your retirement fund!

When you add everything up, the effective return you can get from your work retirement plan may be much higher than your debt interest rate. Yet it can be tempting to put lots of money toward your debt and not get the full employer match. But that can amount to leaving money on the table.

Maybe you just don’t like the idea of owing money. If so, upping your debt payment may feel better than saving toward a retirement that’s decades away. But if you can earn a high return in a 401(k), it may be a more strategic way to use some of your money. (That’s especially true if you got a low interest rate on your debt.) Talk with a financial advisor and compare the interest rate you owe to what you’re likely to earn on the investment.

7. Break the debt cycle

Debt management strategies don’t have to be boring. Finding ways to make things feel easier—even a little fun—can help you stick with it. One option is to participate in a savings challenge. The 52-week money challenge, for example, involves saving a certain amount every week, which could help you pay off your debt a little faster.

You could also work with your Northwestern Mutual financial advisor to set goals for reducing your debt. They can help you prioritize debt repayment and provide accountability so you’re able to get rid of bad debt. That way, you can put the money you were using to pay off debt toward your savings goals.

When deciding how to get out of debt or bring your repayments under control, remember that it’s a journey, even if you hit some temporary setbacks. What matters most is progress toward your goal, not perfection. And don’t be afraid to celebrate the wins along the way.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^®, and CFP^® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.