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With inflation eating away at American’s household finances, many people are starting to really focus on reducing and eliminating debts.  It’s always a great idea to try to reduce debt balances but especially so when there aren’t many great places to earn a good investment return. 

When stock market returns fizzle and credit card balances spike with rising interest rates, it’s the perfect time to make a plan to get debt balances down to zero!  But how?  What is the magic bullet that will help everyday people get out of debt and stay out of debt?

The bad news is that isn’t one single magic formula that is suddenly make all of your debts disappear.  Except for Chapter 7 Bankruptcy!  And we don’t recommend you go down that road unless you are hopelessly in debt!  But the good news is that implementing a few simple changes to your everyday finances will put you on a sustainable path to eliminating all of your consumer debts within 1-3 years! 

Here are some essential, but doable, changes you will need to make in your daily financial lives if you want to be completely debt-free!


The first step is to create a budget and practice living within it.  Creating a budget can sound so boring!  But keep in mind that even really rich people use budgets!  You do want to be really rich right?  Well then do what they do.  Practice using a budget and you’ll be on your way.  Trust me, you will be really excited once you see your debt balances shrinking and your bank balances growing! 

The easiest way to get started is to use a budgeting app that does the heavy lifting for you.  There are a number of great budgeting apps but here are three top suggestions that are free to use:

Without going into detail about each of these apps they all do the basic budgeting functions really well without trying to sell you a bunch of services you may not need.  The idea here is to keep it simple and manageable.  Each of the apps listed will allow you to securely link up your bank accounts, credit cards, and loan accounts to the app so you can see the true picture of where your money is going.  But if all you’re doing is watching where your money is being spent then you are really just reviewing a damage report every month.

The main benefit of the budget app is it will help you tell your money where it needs to go before it ever arrives in your bank account.  It’s time to put yourself in charge of your finances!  By directing your money to the most productive uses you will eliminate unproductive uses of your money! 

Try one of the apps and if you don’t like it you can certainly toss it and try a different one.


Within a short time after using the budgeting app you will see where all of your money is going.  The real magic of the budgeting app is you will be able to set goals of how soon to pay down your debts.  Obviously, getting out of debt fast means you will need to implement an aggressive plan to make large debt payments in a short amount of time. 

Be realistic with your goals.  If your monthly income is very stable then an aggressive plan might work for you.  For most people it will take at least 2-3 years to become fully debt-free.  Set your payments in a realistic manner so you can still do the activities each month that are really important to you.

Your ideal budget should allocate at least 10% of your monthly income to debt repayment.  A healthier level would be 20%.  If you can afford to allocate 20% of your monthly income to debt repayment you will accomplish your goal much faster!  But do what you can do.


A tried and true method of eliminating debt fast is to focus on getting rid of the smallest debts first.  Decide how much extra you can pay towards the smallest debt and then set up your auto-payment plan to knock it out as quickly as possible. 

Then once that debt is gone give yourself some kind of reward!  A simple pat on the back or high-five to yourself will trigger an emotional response in your brain that it is actually FUN to pay off debts!  You might think this sounds silly but it is critically important that you do this! 

Next, redirect the same payment amount from the first debt to the next smallest debt balance.  Watch it shrink until it is gone within a matter of a few months!  Then give yourself another sort of reward!  But this time make the reward more meaningful because you accomplished a bigger goal. 

Keep doing this until your payments are redirected towards loans with higher balances such as large credit card balances, auto loans, home equity loans, and then finally your primary mortgage!  Trust me that this really works!  I’ve helped many clients do this and seeing them experience real joy at becoming debt-free is truly gratifying!


Have you ever seen a friend or family member with a Lyft or Uber light on their dashboard?  You might be tempted to think they have fallen on hard times or something.  It’s possible they are working their own plan to eliminate debts really fast by earning extra money and using that to rid themselves of debt.  Doing something in your spare time to earn a little extra money each month and applying that to your debt payoff plan is a really great way of achieving financial freedom years sooner than you would otherwise.


Paying off debt has an immediate return on your investment.  It is actually one of the very few sources of a guaranteed rate of return!  Paying off a debt that costs you 12% each year is actually better than earning 12% per year because earning money means you’re going to pay tax on that too. 

Now just think about how much you would need to earn to justify carrying a credit card balance at 20% annually!  Do you see the immediate payoff to you? 

Once your debts are eliminated (or nearly paid off) it is time to refocus your monthly income to wealth-building activities.  We recommend adding a consistent monthly amount to a low-cost investment account that will produce a high rate of return over the long-term.  Once you do this consistently then you are well on your way to becoming the rich person you want to be!

About Me

Don Larson, CFP® is the owner and founder of Larson Wealth Management. Don started in the investment advisory industry in 1999 after he graduated from Arizona State University with a Bachelor of Science degree in Business Finance.

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