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The First Steps On Your Journey Out of Debt
April 14, 2025
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There's so much advice floating around about how to get out of debt. The basic method of, well, paying it back is simple enough to understand, but when you're weighed down by debts – be they student loans, medical debts, mortgage, car payments, or from another series of disasters or bad decisions – it's so much easier said than done.

The journey out of debt can feel overwhelming, especially when you're staring at a mountain of bills with seemingly no clear path forward. Many people find themselves trapped in cycles of minimum payments, constantly juggling between different creditors, and feeling like they're making no progress despite their efforts. This can lead to anxiety, stress, and even health problems that further complicate your financial situation.

What can you do today to redirect yourself onto a path towards financial freedom?

Steps You Can Take Today


Meet with a Financial Advisor

In this post we can only give general advice. A financial advisor can take a closer look at your personal finances and help you make specific decisions.

Where might you be able to find a financial advisor who's qualified and trustworthy? Start by checking with your bank or credit union, as many offer free financial counseling services to their members. Nonprofit credit counseling agencies like the National Foundation for Credit Counseling (NFCC) provide low-cost or free services. Community colleges and extension offices sometimes offer financial workshops and one-on-one counseling. Look for advisors with certifications such as Certified Financial Planner (CFP) or Accredited Financial Counselor (AFC), and always verify their credentials before sharing your financial information.

Remember that a good financial advisor:
  • Won't judge your past decisions but will focus on creating practical solutions for your future.
  • Should be able to explain complex financial concepts in terms you understand
  • Should be transparent about any fees for their services.


Debt Consolidation

If your debt is spread between different sources or lenders, it may be possible to consolidate your debt.

Why should you consolidate your debt? Debt consolidation combines multiple debts into a single loan, often with a lower interest rate. This simplifies your payments – instead of juggling multiple due dates and minimum payments, you'll have just one monthly payment to manage. This can reduce your stress levels significantly and potentially save you money on interest payments over time.

Options for debt consolidation include:
  • Personal loans: These unsecured loans can be used to pay off high-interest debts like credit cards.
  • Balance transfer credit cards: These offer 0% or low introductory APR periods, giving you time to pay down your debt without accruing more interest.
  • Home equity loans or lines of credit: If you own a home, you might use your equity to secure a lower interest rate, though this puts your home at risk if you can't make payments.
  • Debt management plans: Credit counseling agencies can help you set up these plans, which may include reduced interest rates and waived fees.

Before consolidating, carefully calculate whether the new loan truly saves you money and be honest with yourself about your spending habits. Consolidation only works if you commit to not accumulating new debt while paying off the consolidated loan.


Setting Your Financial Priorities

We suggest:
1. Rent
2. Utilities
3. Transportation and work-related costs
4. Debt repayment
5. Food
6. Other necessary payments
7. Recreation, entertainment, etc.
Going point by point, what does this look like?

Rent
Rent, mortgage, or other permanent and stable shelter is generally the highest cost that people deal with, and it's so important for physical and mental wellbeing.

It's hard to get and keep a job or access resources without a permanent address. Debt repayment is important, but you have to be able to live a life in order to repay those debts.

If your housing costs exceed 30% of your income, you might consider finding a roommate, negotiating with your landlord, or exploring more affordable housing options. However, moving itself can be expensive, so calculate the true cost before making a change. Government assistance programs like Section 8 or local housing authorities may provide support if you qualify. Whatever you do, avoid letting housing payments slide – eviction creates a cascade of problems that can take years to recover from.

Utilities
Utilities go along with rent. You need to have access to clean, hot water, heat, cooling, waste disposal, communications, and internet access. It's almost impossible to have a job today without those last two.

Many utility companies offer budget billing plans that spread your costs evenly throughout the year, making monthly budgeting more predictable. If you're struggling, contact your utility providers directly; many have hardship programs or can suggest conservation measures to lower your bills.

Simple habits like unplugging electronics when not in use, using energy-efficient light bulbs, taking shorter showers, and maintaining appropriate thermostat settings can substantially reduce your utility costs without significantly impacting your quality of life.

Transportation
Transportation is another essential. If it's possible to get to your work, the grocery store, and other obligations using a bike or public transit instead of paying for a car then that would be a place where you can make a cut, but whatever form it takes you need to ensure that you have reliable transportation when you need it.

If you own a vehicle, regular maintenance is cheaper than emergency repairs. Shop around for the best insurance rates annually, and consider raising deductibles if you have an emergency fund. Carpooling with colleagues can split fuel costs, and planning efficient routes for errands saves both time and money.

If public transportation is available, monthly passes are usually more economical than paying per ride. For occasional needs, ridesharing services might be cheaper than car ownership when you factor in all expenses.

Debt Repayment
Debt repayment should be your highest financial priority that isn't a cost of living.
When tackling multiple debts, two popular strategies are:

1. The Avalanche Method: Focus on paying off the debt with the highest interest rate first while making minimum payments on everything else. This saves the most money over time.

2. The Snowball Method: Pay off the smallest debt first, regardless of interest rate, then apply that payment to the next smallest debt. This creates psychological wins that help maintain motivation.


Whichever method you choose, consistency is key. Set up automatic payments for at least the minimum amounts to avoid late fees and credit score damage. If you receive unexpected money – tax refunds, work bonuses, or gifts – consider applying at least a portion to your debt repayment plan.

Food 
You might ask "Why is food so far down on the list?" We did not put this down below repayment because we think you should skip meals or give up things like coffees or avocado toast. It's because of all the things in these first five financial responsibilities, food is the easiest one to get assistance with. Whether it's EBT, soup kitchens, family assistance, church, school, or another program, it is much, much easier to get food for free than it is to get assistance paying your rent.

If you have to make a choice between paying for rent or for groceries, pay your rent and then ask for help with the groceries.

Careful meal planning and bulk cooking can also dramatically reduce food costs without sacrificing nutrition. Building meals around sales and seasonal produce, using store brands, and minimizing prepared foods all help stretch your food budget. Apps like Ibotta or Fetch Rewards offer cashback on grocery purchases, and local farmers' markets often have better prices than supermarkets for fresh produce. Don't be ashamed to use food assistance programs – that's exactly what they're designed for.

Other Necessary Payments
These might include insurance (health, auto, life), childcare costs, ongoing education, minimum payments on debts not included in your consolidation plan, or medical expenses.

Insurance shouldn't be eliminated even when money is tight – going without coverage can lead to catastrophic costs if emergencies arise. However, you can shop around for better rates or adjust coverage levels to fit your budget.

For childcare, explore whether you qualify for subsidies or tax credits, or consider cooperative arrangements with other parents. Medical costs can often be negotiated. Many hospitals and providers offer income-based sliding scales or payment plans for those who ask.

Recreation and Entertainment
While it might seem like an obvious place to cut when in debt, eliminating all enjoyment from your life is unsustainable. Instead, look for free or low-cost alternatives to your usual entertainment.

Libraries offer books, movies, and often free events. Parks, hiking trails, and community festivals provide recreation without cost. Many museums and cultural venues have free days each month. Subscription services can be shared with family members, and restaurant expenses can be replaced with occasional potlucks with friends.

The goal isn't to live a joyless existence until you're debt-free, but to find balance – small, affordable pleasures that keep you mentally healthy while you work toward financial freedom.

Use These Priorities to Create Your Budget

Using these priorities, list all your monthly expenses and categorize them. Be brutally honest about what you've been spending. Review bank statements and credit card bills from the past few months to ensure nothing is overlooked.

Once you have a clear picture, compare your expenses to your income. If there's a shortfall, you'll need to make adjustments based on the priority list above. Returning to our first bit of advice, a financial advisor can help you with making a budget and strategizing how to stick with it.

Tracking apps like Mint, YNAB (You Need A Budget), or even a simple spreadsheet can help you monitor your progress. Regular check-ins with your budget – weekly at first, then perhaps monthly as you develop better habits – will help keep you accountable.
 

Cutting Things Out/Eliminating Expenses 

This is the section of financial advice that usually goes "you don't need that cup of coffee" or that advises you to forego anything new or pleasurable until you are debt-free. And it's another thing that's easier said than done; especially if the person giving the advice has not experienced poverty or privation with no end date in sight.

You can't always eliminate a bill or even reasonably lower it. For example, many people in the US today rely on having a smartphone for a number of purposes, and it's not always possible to end your current phone contract and buy a cheaper phone.

An important question to ask about lowering your expenses is "Will this change be bad or just uncomfortable/inconvenient?" Cutting back on premium TV channels might be uncomfortable but won't harm your wellbeing. Skipping necessary medications to save money, however, could have serious health consequences and ultimately cost more.

Focus on gradual, sustainable changes rather than drastic cuts that you'll abandon after a few weeks. Small adjustments across multiple categories often add up to significant savings without feeling like major sacrifices.


Most Important: Stick With Your Plan 

Debt repayment is a marathon, not a sprint. There will be setbacks – unexpected expenses, emergencies, or moments of weakness – but don't let these derail your entire plan. If you slip up, forgive yourself and recommit to your goals the next day.

Consider finding an accountability partner – someone you trust who knows your financial goals and will check in with you regularly. Some people benefit from visual reminders, like debt thermometers that show progress as you pay down balances, or calendars marking important milestones in your journey.

Celebrate small victories along the way. Paid off a credit card? Take a moment to acknowledge that achievement, perhaps with a small, budget-friendly reward. These celebrations reinforce positive behavior and help maintain motivation during what can be a lengthy process.


When to Reassess?

Your financial situation will change over time – hopefully for the better as you reduce your debt burden. Plan to reassess your strategy at least quarterly, or whenever there's a significant change in your income or expenses. Ask yourself -
  • Are you making progress toward your debt repayment goals?
  • Have any interest rates or minimum payments changed?
  • Has your income increased, creating opportunities to accelerate payments?
  • Are there expenses in your budget that you've been able to eliminate permanently?
  • Have new financial priorities emerged that need to be addressed?
Regular reassessment ensures your plan remains relevant and effective as your circumstances evolve. It also provides opportunities to accelerate your debt repayment as your financial situation improves.

Remember that the journey out of debt takes time and persistence, but each step forward brings you closer to financial freedom. The habits you develop now will serve you long after your debts are paid, helping you build wealth and security for your future.

At Las Vegas Finance, we're here to support you at every stage of your financial journey. Contact us today to learn more about our personalized debt management solutions.
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