Getting Out of Debt: 5 Do’s and Don'ts | CCCS of Iowa
Skip to Main Content

Getting Out of Debt: 5 Do’s and Don'ts

If you’re like millions of Americans trying to climb their way out of debt, you know it’s no easy feat. According to CNBC, the average household in the U.S. now owes more than $155,000, including debt from credit cards, auto loans, student loans, and home equity lines of credit. If you can be sure of anything, it’s that you’re not alone. But you can take steps to help yourself get out of debt more efficiently, while also ensuring that you don’t fall back into debt once you’ve paid your way out.


There are plenty of mistakes to be made along the way, so here are some do’s and don’ts to help you get out of debt:


DO pay your bills on time. Making payments on time is essential to paying down debt. When you miss a payment, you can incur late fees, take a hit on your credit score, and end up with creditors calling. Worse, your interest rates can go up, making it so you ultimately owe more money over time.


DON’T just make a minimum payment. If all you can do is make the minimum payment then of course, that’s what you need to do. But over time if you only pay the minimum, it will take significantly longer to pay it off and you’ll end up paying more on interest, which means more overall. Paying more than the minimum will help you pay your loan off more quickly and efficiently.


DO pay off higher interest rate loans first. While different methods of paying off your debt demand different tactics, making your high-interest loans the priority is the most efficient, accelerated way of paying off debt. That’s why the debt avalanche is one of the preferred methods. While making minimum payments on your other debts, the debt avalanche has you focus on paying off the one with the highest interest rate first. This way, you are knocking out high-interest debts, so you won't have to pay more over time.


DON’T neglect your savings. We know it may seem hard to put money away, but make sure to designate a certain amount of money into savings each month. Try to follow the 80/20 rule, which means you pay 80% of your monthly income to bills and necessities and 20% toward savings. Create a savings nest egg, and you will always have something to fall back on during hard times. 


DO get professional credit counseling when you need it. Just like anything in life, if you need help, don’t be afraid to ask for it. Credit counselors can help you get on top of your bills by helping you set up a budget. If you qualify, you can enroll in a debt management program, where a counselor will work to get your interest rate lowered, your loans consolidated into one monthly payment, and your debt paid off in three to five years.