What's the Best Way to Get out of Debt?

Too many people try and take the easy route out, as opposed to doing their best to put absolutely everything into their debt in order to pay it off. Excellent post, too many people need to work hard to get out of debt and don't.

I think the part of making a payment, no matter how small is so important. I have a huge amount of private student loan debt. When I was in school to go into a lucrative profession it didn't seem like such a big deal, when I got sick during my first pregnancy and my son was born prematurly everything changed -- I couldn't work for a while, and then when I was able to work again it was not for as many hours or in my field as I had expected because my children needed me home as much as possible. I was at my wits end, I wanted to pay back my loans and always had every intention of doing it but I couldn't even come close to making the minimum payments. For quite a while I didn't pay anything -- I finally talked to the loan people and they were willing to take $50.00 a month and keep my loan in good standing on my credit report. I've been able to keep upping that ammount as time as gone on. Even though it will take longer and cost more in intrest its really been a good thing to pay just a little bit at the time. For anyone who has a lot of debt and can't pay talk to the creditors. Even a very small ammount might help save your credit and will encourage them to work with you since they know you intend to pay it off.

my first husband agreed to an easy divorce if I took on his business debts. I made up a form letter, sent it to all his creditors offering to pay each of them a set minimum amount each month until the debt was gone. Those who made nasty phone calls got the option of taking me to court and getting nothing (I had no assets, only an income). They all agreed and I eventually got them all paid off. It was the best deal I ever made; my ex was arrested/convicted/imprisoned within a year for dealing drugs.

Money is just too easy to get these days, with credit cards and low interest loans and zero percent interest purchases. Its so easy to get into debt in America, that its become another national security issue.

People neeed to have a plan for paying back their loans before they take them, or better yet, they need to save for short term purchases and invest for long term goals.

Congratulations on a significant achievement. My circumstances weren't too different.

I do want to make sure that people understand that bankruptcy -- under previous or current law -- is not immoral. We give it a stigma, but it's a legal and ethical way to handle one's being overwhelmed. It is a *last, last, last* resort. Several U.S. Presidents had filed for bankruptcy, for example.

There are also legal, ethical means of debt reduction and cancellation. But it comes through working *with* the lenders, and not despite them. The book mentioned at the start of the comments is a great resource.

A loan to buy a car is not the same as credit card debt. If you're not careful, the terms you accept may be foolish, but it is not "bad debt."

Thanks for writing the piece.

nmh - I'm proud of you.

It ain't easy to pay off a debt like that. It's agonizing and slow and demoralizing. And yet you seem to have a positive attitude about it.

I worked for years (and continue to work) to pay off my student loans. I lived on the cheap and did without and struggled with my new family to pay off my debt. At the same time, my best friend went to Jordan and bought a new house before declaring bankruptcy. To get the biggest bang for her buck she financed a "free" trip to Italy just before filing.

She called me not long afterward to complain that her student loan wasn't forgiven. Here I was, proud to have paid off my college credit cards and starting in on my student loans without having the benefit of her luxuries, trying to be understanding. I did explain to her that responsibility with her student loans meant that another kid would have those loans available. Also, it wasn't her lender's fault that she didn't finish her graduate program. She wasn't open to that so I dropped it. I do value her friendship even if I don't share her financial values.

Anyway, you are doing a great personal favor to me. You make me feel good about my struggle. It's good to know you are in the world.

I feel that HONESTY is one of the KEY VALUES when dealing with such financial obligations. If you are not honest with yourself and your own personal financial situation, then you won't cheat yourself out of taking the necessary actions to reduce debt and in the long term eliminate it.

It's probably just being the daughter of a frugal mom (MSN Money blogger) but I always approach debt as "What's the best way to get out of debt?"

Now, I say "always" because I had an illness at 19 that has caused health issues and hindered my ability to work. But I'm stubborn and wouldn't admit it, so there were years of just barely getting by. And, towards the end, debt for some medicines I couldn't afford out of pocket.

My husband also has health issues that have recently left him unemployed. We're making do with unemployment while we try to figure out what he can do more steadily -- and still making payments on our debt.

That said, we're tackling his student loans first. (I was raised to attack high-interest stuff first.) He's had them for years and wants to be rid of them. I suppose technically that means we're snowflaking -- but I still advocate getting high APR debts paid down before low APR debt. (If it's not as psychologically rewarding enough as paying down small debts first, calculate how much interest you've saved with your last payment and leave it up on a white board as a nice reminder that you're making progress.)