You're Drowning in Debt — Here's How to Swim

Melissa Lyken | December 07, 2023

Melissa-Lyken
Legal Expert, Paralegal
Melissa Lyken, BS

Melissa Lyken is a senior paralegal and legal-finance content writer with over eight years of professional legal and business experience and a bachelor’s degree in Sociology and Community Studies from the University of California, Santa Cruz.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Can't seem to make your debt go away no matter what you try? Here's a plan to get out of debt and have the freedom you deserve.

You're drowning in debt, and you are up to your eyeballs in high monthly payments. The very thought of the amount of debt you're in is overwhelming. Whether it’s a car note, student loans, a mortgage, medical expenses, or all of the above. We understand how quickly things can add up and become a monster that's too big to fight on your own. We have a few steps that can take you from a drowning victim to an Olympic swimmer. Let's dive in!

Find Your Motivation to Get Out of Debt

This first step is critical as it helps to determine your real motivation for getting out of debt. Are you fed up with your high monthly payments? Are you looking to buy a house soon and your debt-to-income ratio is too high? Whatever your motivation is to get out of debt, make sure that it is stable and real enough to encourage you to stick to your goals.

If your why isn't powerful or solidified, what often happens is you may continue to fall into the cycle that keeps you stuck in the never-ending wheel of debt. The last thing you want to do is backtrack. Don't pay off thousands in debt only to end up financing something you know you cannot afford or continue making large purchases when you have an important goal like paying off debt.

Paying off debt can feel like a lonely process as there are things that you will have to give up to reach your goals. However, when you go from drowning in debt to an individual who is completely debt-free or has a minimal amount of debt, it then opens you up to a life of freedom.

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Use the Debt Snowball Method to Pay Off Your Debt

In this next step, make a list of your current debts. As daunting, annoying, and frustrating as this may be, you need to have an accurate understanding of just how much debt you are in if you want to tackle this beast. You must be honest about all of your debts, not only the debts you owe to creditors, any debt that you may have that is in the back of your mind that you know you need to pay off. Once you have all of your debts in front of you, order them from smallest to largest.

We recommend that you use the debt snowball method. This is the best method for you to pay off your debts and feel motivated while doing so. It is hard to have a large amount of debt and try to pay it off little by little, feeling like you're not tackling the beast. Paying off your smallest debts first allows you to feel a sense of accomplishment while reaching your overall goal of becoming debt-free or minimizing the amount of debt you have.

Once you pay off your smallest debt, check it off of your list, feel the sense of relief that comes with it, and move on to the next one. In this step, you must be honest with yourself about your debts and create an accurate and realistic timeline for getting your debts paid off.

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Create a Realistic and Strict Monthly Budget

To reach your goals of becoming debt-free or reducing the amount of debt you have, you need to reroute where most of your money is going. To do so, create a strict and realistic monthly budget.

1. Make a list of your income streams. Include any sources of income consistently coming in every month. The exact dollar amount might change each month depending on whether you're a salaried employee, so make sure you update your budget to reflect that month's income.

2. Evaluate your actual monthly expenses. This step is crucial, so you want to make sure that you include your monthly subscriptions, rent/mortgage payment, bills, monthly payments, groceries, etc.

3. Find out where you can reduce spending. Are you currently overpaying for your car insurance? When was the last time you renegotiated your phone contract? All of these small yet essential expenses add up. The goal is to have your income significantly exceed your monthly payments. You're going to have to pay your monthly expenses every month; that’s not something that can be negotiated that much. However, the amount of money you bring in and keep each month is important as these funds will be used to pay off your debt aggressively.

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Analyze Excessive Spending Habits

While you are creating your monthly budget, go through 3 to 6 months of your bank account and credit card statements to analyze where you may be excessively spending money. This includes eating out consistently, retail shopping, or just not shopping around for good deals.

When you have more of your money going out than you do coming in, you will have less money to pay off your debts aggressively. The monthly budget you create in the previous step will help you become more consistent about living within your means.

Get a Side Hustle to Increase Your Monthly Income

Sometimes it's just not possible to aggressively pay down debt if you're living paycheck-to-paycheck. So it may be necessary for you to increase your income by getting a side hustle. In today's day in age, you can make money from the palm of your hand by using your phone or your car. Consider the many options that are available to you to increase your income:

  • Tutoring
  • Babysitting
  • Affiliate Marketing
  • Virtual Assistant
  • Uber/Lyft
  • Monthly yard sales to get rid of old stuff
  • Selling physical or digital art

As you can see, there are many ways for you to make money from home in your downtime. Take some time to evaluate your skills and the amount of free time you have to increase the amount of money you bring home.

Consider Debt Consolidation to Lower Your Interest Rates

Depending on the amount of debt that you have, you may want to consider debt consolidation. You may have accrued tens of thousands of dollars in debt at a high-interest rate. Unfortunately, it may be challenging for you to pay off this debt when you pay anywhere between 10 to 25% in interest on the amount of money you initially borrowed. While you're trying your best to pay off your debt, it just keeps adding up.

Before you consider debt consolidation to seek a lower interest rate, contact your original creditor to see if you can negotiate a lower interest rate with them. This will allow you to pay off the debt quicker by attacking the premium instead of the accruing interest.

SoloSuit lets you respond to creditors in 15 minutes.

Stay Motivated and Do Not Give Up Hope

Paying off debt can feel like a daunting and lonely process, but it doesn't have to be. You don't have to go at this alone, nor do you have to feel like it's a burden. There are Facebook groups, blogs, and communities dedicated to helping people get out of debt. If you slowly but surely work at paying off your debt, the freedom will make it all worth it in the end.

What is SoloSuit?

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How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

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"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

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Stop collection calls

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Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

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