$940.96.

That’s how much I pay towards my debt each month.

That is roughly half of my entire take-home pay from my first post-graduation job two years ago. I was never the best kid in the class at math, but something tells me that isn’t sustainable.

Every month I stare at that check and wonder what else I could be doing with that $940.46. Here are some ideas:

• Save up a real emergency fund
• Bolster my pitiful retirement savings
• Save up for a down payment on a house
• Go to Norway
• Buy 443 tacos (just kidding…kind of)

It gets even worse. If I continue to just pay the minimums on my debt, I’ll shell out an extra $31,446 in interest payments alone until the debts are gone. That’s 14,833 tacos’ worth of interest.

That’s not even going towards the principal! It is solely the fee for being too poor to afford the things I bought with that money. I’d also be paying these debts off for the next 18 years of my life.

Instead, I’m calling bullshit. I refuse to spend tens of thousands of extra dollars over the next two decades of my life.

Maybe you’re the same way too? Are you in debt and think there’s no hope? That you’ll just be another schmuck paying off debt for the rest of your life?

Have no fear, my friends! I’ve got a plan—a master plan—and I’m getting the hell out of debt one step at a time. I’ll show you how. If you want, you can come along too!

Step 1: Assess Your Debt Situation

A lot of people don’t actually know how much debt they’re in. Here at Go Science Finance, we shout it loud and proud, right from the sidebar (that’s $107,187.29, if you’re reading this from a cell phone and can’t see the sidebar).

You can’t develop a debt-slaying plan if you don’t know how much debt you’re in. So, take a bit of time and tally up all of your debts. Specifically, you’ll need to know:

• Type of debt (student loan, personal loan, credit card, etc…)
• Remaining balance (how much you still owe)
• Interest rate (how much you’re charged each month by the lender)
• Monthly payment (duh)

I recommend keeping tabs of this information in a sweet program called Undebt.it (affiliate link). It’s totally free to use and it’s pretty much my favorite thing ever since bacon tacos. Enter your debt information in here and we’ll come back to it later.

P.S., this step can be a little scary to see the total amount of debt you’re in, so I recommend a nice drink while running through this step. My favorite is a good Moose Drool Brown Ale, because a) it’s super tasty, b) it’s cheap, and c) moose.

Step 2: Start An Emergency Savings Fund

Open a separate savings account and name it if your bank allows it. Ours is named the Oh Shit Fund.

It may seem paradoxical to start saving before you pay off your debt, but stick with me. One of the main reasons people actually get into debt is because they don’t have emergency savings. I’m still paying off a $12,000 loan for unexpected housing repairs myself.

Don’t believe me? A full 46% of Americans can’t even afford a $400 emergency. $400!

So, let’s not get caught with our pants down. The best way to do that is by protecting ourselves in the future so we don’t have to take on any more debt.

I recommend a high-interest bank account because you can grow your money faster. I use Ally because they pay 1.05% APY. So far this year I’ve earned an extra $26.81 in interest. Compare that to your local credit union which probably offers you peanuts, gumballs, and well-wishes.

For more info on how to save, check out my guide on balancing debt with savings.

Step 3: Make More Money

I hear you. You’re saying, “But what if I can’t afford to save more?”

I’m glad you asked, my friend. I have just the thing for you. It’s called making more money.

What, you didn’t think you were just limited to your day job, did you? You can make money doing literally anything. I had a friend who got paid to strip nekked in college and sit on a pedestal in front of art students.

There is no excuse you can come up with for why you can’t make more money. No matter how hectic your schedule, you can always find a way. You can even make hundreds of dollars per year by installing passive apps on your phone—you don’t even have to do anything after it’s set up!

Related: The Side Hustle Path by Nick Loper

I’m not gonna lie though. You might have to make sacrifices. You might need to turn your friends down sometimes to work on your side hustle, but which would you rather have? A lifetime of debt, or a martini? Debt, or martini? I know what I’d choose.

Related post: Make More Money: A Fear-Busting Game Plan To Start Side Hustling

Step 4: See If You Can Refinance Your Loans

Some loans like mortgages and student loans last a long time. If you’re currently paying a higher interest rate than you could get elsewhere, you could be paying thousands of extra dollars over the life of the loan.

You could be spending unnecessary months and years paying off the higher amount. And the higher your interest rate, the more you’ll be paying for longer.

Here’s an example. Let’s say you’re starting to pay back $50,000 in student loans over 10 years. If your interest rate is 6.8%, you’ll pay $19,048.20 in interest over the life of the loan.

But if you refinanced at 5%—just 1.8% cheaper—you’d pay $13,639.61 in interest. That’s a savings of $5,408.59. You could buy 2,470 tacos with that kind of cash! Think of the tacos!

My favorite place to shop around for student loan refinancing is LendEDU (affiliate link). It’s simple, free, it won’t hurt your credit to check, and you can compare offers from a whole bunch of companies in one spot. Booyah.

A few cautions:

If you have federal student loans, you’ll lose out on any of those nice goodies like income-based repayment plans or student loan forgiveness. Consider carefully if you’re cool with losing those benefits before you refinance, because your new private lenders won’t offer these programs.

Be careful with taking on super-long terms. Sure, you can refinance for 20 years and get a super-low payment, but you might actually end up paying even more interest if you do this. Make sure you compare how much you’ll actually save over time by using a student loan refinancing calculator.

Step 5: Debt Avalanche Or Debt Snowball

The time has come! Now you can pick a battle plan to slay your debt. We’re going to draft up a hit list of debts. You’ll pay off these debts in a specific order, depending on which method you choose.

You can pick from two main debt-payoff methods: the debt avalanche, or the debt snowball.

The debt snowball method is a perennial favorite. With this one, you line up your remaining balances from small to large. It might look like this:

• Auto loan: $300
• Student loan: $5,500
• Credit card: $10,000

The idea with the debt snowball method is that you get quick wins right out of the gate. That $300 loan? Yeah, you can take care of that in a snap. Boom! Already killed one.

The debt avalanche method is the more mathematical-based approach that will save you the most money. Instead of lining up your debts by remaining balance, stack them up from highest interest rate to lowest interest rate. That could look like this:

• Credit card: 24% APR
• Student loan: 5.5% APR
• Auto loan: 4.0% APR

Because you don’t pay any heed to the remaining balance with the debt avalanche method, it could be quite some time before you actually pay off one of your debts in full. But because you’re focusing on the most expensive debt first, you’ll save more money in the long run.

Confused on which you should pick? Don’t worry. Remember how you entered all of your debts into the Undebt.it program? If you log back into your account and select the Payoff Plan tab from the side menu, you’ll see another option called Compare Methods.

Behold! As long as you entered everything in correctly (and it can be a bit time-consuming, I agree), you can see exactly how much each plan will cost you. Here’s how much interest I’ll pay according to each method:

• No payoff plan (i.e., minimum payments forever): $31,446
• Debt snowball: $14,474
• Debt avalanche: $12,701

Guess which method I’m going with? The debt avalanche—aww, yeah!

Step 6: Pay Off Your First Debt

The battle begins! Now that you’re stocked up with plenty of backup ammo (i.e., an emergency fund) and have a concrete battle plan, you can start!

Throw any extra money you come across towards your debt, according to whichever battle plan you chose (debt snowball or debt avalanche). Before you know it, the first chain will be broken!

Step 7: Pay Off Your Second Debt (And Third, And Fourth…)

Woohoo! You’ve got your first one down. Now’s not any time to rest on your laurels, though. We’ve won one battle, but we’re in this for the war, remember?

You’ll now have a newly-liberated monthly payment. For me, the first debt on my hit list is my personal loan. It has a $369 monthly payment.

Once I pay that off, then I’ll use that $369 as more ammo to throw at the rest of my debt. I went this long without that extra $369 available in my budget. I can go just a bit longer if I can use it as a weapon to nuke the rest of my debt.

My next debt on my hit list is one of my student loans, with a $218.36 monthly payment. That means I’ll be sending in a total of $587.36 ($218.36 + $369) towards this debt each month until it’s gone.

What happens after that? I take that $587.36 and apply it to the next debt on the list—one of Zach’s student loans.

Rinse and repeat. Take out each debt—one at a time—like the slow zombies from Shaun of the Dead. Boom! Whack! Thud! Crash!

By the end of it you’ll have won the war! You’ll be totally debt free, and you can finally move on with your life.

What would you do with an extra $940.96 in your budget each month?

Final Words

In 1,943 words I’ve described to you the exact way—step by step—to get out of debt. If you follow these steps—assess your debt, make more money, refinance your loans, pick a debt payoff plan, and then pay off your debts—you’ll be debt-free before you know it.

Of course, life isn’t that easy. There will be things that’ll happen to trip you up. Know that ahead of time, expect it, and develop a game plan for what to do when that happens. Paying off all of your debt requires iron dedication to each step of the plan, both from you and anyone else in your household.

I once heard someone say, “Being in debt is hard. Paying off debt is hard. Choose your hard.”

I couldn’t agree more. Which type of hard will you choose?

What steps are you taking towards getting out of debt? Leave a comment below!