Become Debt Free – Create A Debt Destruction Plan

Becoming Debt Free – My Story

Just a heads up: I typically don’t talk about myself when writing, but debt is a topic that is very personal for a lot of people.  For that reason, I have opted to share a personal story throughout this post, to provide a personal example that becoming debt free really is possible.

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On the day that my wife and I got married, I said “I do” and pulled some baggage down the aisle with me… my $11,000 of debt.  Over the first two years of our marriage, I continued going to school, we purchased a newer car, and we also had our first child.  The result?  We added $5,000 more to the pile of money that we already owed.

I recognize that repaying $16,000 may not seem like much for a young couple still in college (that amount included student loan debt), but to us it was crushing and caused us financial stress.

To make matters worse, we didn’t have great jobs (we were college students after all) and we had a little baby who needed…well…baby stuff!

It was a trying time for us…between all the bills, the constant reruns of Baby Einstein, the diaper changes and messy hands, we didn’t know if we would ever be able to escape that burden of debt.

Muggies Diapers - Debt

Perhaps you spend too much on name brand diapers?

If you are feeling the crushing burden of debt, PLEASE know that you are not alone!  We were there too…we understand!

Are you like us?  Do you have debt that is causing you financial stress?  What kinds of debt do you have?

  • Student loan?
  • Credit card debt?
  • Toys (motorcycle, boat, etc.)?
  • Home mortgage?
  • Vehicle?
  • Name brand diapers? ☺
  • Other consumer debt?

No matter the type, I want to help you learn how to get out of debt!  No more “what if’s”… and no more excuses!

My wife and I faced the mountain we needed to climb and came up with our very own “Debt Destruction Plan” (good title right?).  Together, let’s formulate a game-plan…your own Debt Destruction Plan so that you can one day find the financial freedom and peace of mind that comes from living debt free!

The rest of this article will show you how to pay off debt quickly in a few simple steps.  There are also some specific debt reducing tips at the very end.

So roll up your sleeves, stand in front of a fan, strike an epic pose with that wind blowing through your hair (wearing a cape can greatly enhance the effect), and let’s get started!

Good Debt Vs. Bad Debt

The financial world says that there are two types of debt… good debt and bad debt.  While it seems like this may be true, keep in mind that ANY DEBT, good or bad, can potentially flatten your dreams and wreak havoc in your financial world.

And the biggest problem of all is that it is just too easy to get into massive amounts of debt these days!  Beware….the slippery slope to “Debt-onation”!

Debt-Onation Infographic

Debt statistics show that as a nation, we are heading towards troubling times. The slippery slope to d=Debt-onation…it’s an easy slope.

The numbers in the infographic are real stats; real people.  You might be a part of that number.   And the reality is that even having student loans or a home mortgage (typically looked at as good) can become a ball and chain (if you let it) …and some will be dragging it around forever!

The hope is that at some point you will want to rid yourself of all debt, good or bad; or at least as much as you can.  For those who are at that point, this article is meant for you.

So let’s move past categorizing debt as good or bad, and let’s pave a way to a brighter future… without the ball and chain!

Create Your Debt Destruction Plan

Just a disclaimer… this is the boring part, but it’s also important… so deal with it! ☺

Step #1 – Pick A Method

There are many different ways of paying off debt.  There are a few common ways out there that seem to have the highest success rate.  Here is a quick introduction on each of those (plus a bonus one):

1. The Snowball Method – (Based on Psychology)

Debt Free - Snowball Method

The snowball method

Summary: With the snowball method, the process is to list out debts in order of the smallest to the largest amount owed.  This method disregards interest rate.

Pro:  Early wins can be obtained as you knock out the lowest balance debts first.  This leads to a growth of confidence and determination to see the plan through the end.

Con:  You will pay more interest in the long run, since interest rates aren’t the main focus.

Who is this plan for?  For those who allow money to be tied to emotions.  Knocking debt out early will help you push through the last tough months.  The extra interest is the price to pay for seeing successful results early on.

2. The Avalanche Method – (Based on Math)

Debt Free - Avalanche Method

The avalanche method

Summary:  With the avalanche method, the process is to list out debts in order of the largest to smallest interest rate.  This method disregards amount owed.

Pro:  You knock out the worst interest rate offender first.  As a result, less interest is paid over the long run.

Con:  You may not get early wins…for this reason it may be harder to “stay in the game” and finish the plan.

Who is this plan for?  For those who make financial decisions based on numbers and facts, with little to no emotion; early wins aren’t needed to keep you going.  Clearly, saving money on the interest in the long run is more important.  You won’t see early wins, but you know that strides are being made towards your goals anyhow.

3. Hybrid Method – (Based on both Psychology & Math)

Debt Free - Hybrid Method

The hybrid method (a combination of snowball and avalanche

Summary:  With the hybrid method, we will combine both methods.  The process is to take the highest interest rate debt and list that at the top of the list. Next, list out the remaining debts in order of amount owed from smallest to largest.

Pro:  You will knock out the worst interest rate offender first, but then a quick win (or two) comes immediately afterwards.  You will save a significant amount of interest up front, but will still get the psychological win soon after

Con:  There really isn’t one…unless your personality matches better with one of the other plan options.

Who is this plan for?  For those who want to get the highest interest rate done right away, yet then immediately get some quick wins so that they can hang on till the end.

**Bonus – The Annoyance Method – (Based on Pure Irritation)

Debt Free - Annoyance Method

The annoyance method

Summary:  With the annoyance method, the process is to list out the debts in order of irritation.  In this way, it’s custom to you personally.  Consider which debts frustrate you the most and put those at the top.  This method disregards amount owed or interest rate.

Pro:  The most annoying debts get eliminated first.  This will provide less stress throughout the rest of the process.

Con:  You may not get early wins, and you may pay more in interest over the long run.

Who is this plan for?  For those who have specific debts that are extremely annoying, or aren’t convenient.  For example, if you have a $5,000 loan from a sibling, you might get annoyed when they ask for payment at every family outing.  It may make sense to put this debt at the top of the list…pay it off, get your sibling paid out and improve your family relations.  This is a custom approach.

What did we do?

My wife and I chose the snowball method.  Our interest rates were all pretty close, with the highest being at 13%, but it was also the smallest amount owed.  We also didn’t have any “annoying” debts.  For our situation it made sense to move forward with the snowball method and let psychology do it’s thing!

What will you do?

So which method seems best to you?  You are in the driver seat here…do you need the psychological reinforcement?  If so, choose the snowball method.  Are you concerned more about the numbers and saving money in the long run?  If yes, then go with the avalanche method.  Somewhere in the middle?  Then choose the hybrid.   For those who have specific debts that are annoying then go with the annoyance or custom approach.

The reality is that all of these options are great and anyone can find success regardless of the method that is chosen.  Just follow your heart and pick the one that feels right for your situation.

Remember that personal finance should be PERSONAL …so pick the method that you believe will bring about the most success, and then follow through with it!

ACTION STEP: Pick your method.  There’s no right or wrong.  Just think about your personal situation and pick the method that seems more appropriate.

Step #2 – List Out the Debts

If you want to pay debt off quickly, you need to be organized and this step will help you do just that.  You have already picked the method you want to move forward with.  Now, it’s time to create a list.  In this step list out each debt as it stands TODAY.

Here is an example of what each method might look like:

The Snowball Method

*All about the amount owed (from smallest to largest)


The Avalanche Method

*All about the interest rate (from largest to smallest).


The Hybrid Method

*List the debt with the highest interest rate first, then the rest of the debts follow based on amount owed (smallest to largest)


The Annoyance Method

*This is custom.  List the debts that are the most annoying.  In our example, the credit cards are probably the most annoying so I have listed those first, followed by the others in order of annoyance.


ACTION STEP: Create a list of debts in the same order along with the method you chose.  Do this on a piece of paper, a spreadsheet, or feel free to use this Debt Payoff spreadsheet.

Step #3 – Create a Surplus of Cash

Now that you have chosen your method and listed the debts, now it’s time to look at your budget.  For those who haven’t budgeted before, please check out this article on creating a budget before you move on.

After a budget is in place, the next logical move is to create a surplus of cash that you can use to get out of debt.  A savings plan can help achieve this, by removing or reducing certain items in your budget.  Also consider adding extra income into the picture. 

This is the next step.  Get your budget in order, and then create a savings plan so that you have a surplus of cash left over at the end of the month.

ACTION STEP: Create a budget and savings plan (if you haven’t already), then move on.

Step #4 – Throw the Surplus at the Debt

Now that you have a surplus of cash (by removing or reducing certain items from the budget) it’s time to start the debt payoff process.  This is where the magic happens!  You are now organized and ready to pay off debt in a systematic order.

Regardless of the method you are using (Snowball, Avalanche, or Hybrid), these same steps will be followed:

  1. Pay the minimum payment for each loan (the minimum payment is the smallest amount that can be paid to stay in good standing).
  2. Take the surplus of cash and apply the entire amount to the first debt on your list.
  3. Continue doing this until debt #1 is completely paid off.

ACTION STEP: Pause here and start this process.  Pay your minimum payments for each loan.  Then use the surplus of cash you created and apply it to the first debt on your list.

Step #5 – Rinse and Repeat

Now that you have finished paying the first loan off (congrats by the way), it’s time to “rinse and repeat”.  Again, regardless of the method chosen in step #1, the principle here is the same.

Each time you pay off a debt, take the minimum payment that was being paid and add that amount to the surplus of cash.

For example, if I had picked the snowball method and I had paid off Hospital ABC ($500; minimum payment = $100), the I would take the $100 and add that into our surplus of cash…that means that my surplus just got $100 larger by doing nothing other than paying off debt #1.  Cool, right?

In this stage, you will “rinse and repeat”, paying off each loan one at a time.  This is where you will start to pick up more and more momentum the longer you are working on the debt elimination process.

ACTION STEP:  Rinse and repeat, until your Debt Destruction Plan is complete (hey, that rhymed!).

Step #6 – Stay Positive; Commit

Just think… one day in the future, you can have no more debt!  What will debt free living look like?  Will you have extra money at the end of the month?  Perhaps taking your spouse out on fun dates every week, or taking the family out on fun outings once a month can actually become a possibility.

Rest assured that this is the best way to get out of debt.  It’s organized… it’s systematic…it’s your Debt Destruction Plan!    Commit now and stay with it.

There is a reason now to be positive.  You have a reason to believe that getting rid of debt is possible.  Keep your head up and shoulders back… be confident that you can get this done!

If you have an emergency and have to use some of your savings to pay for that emergency, then pause on paying off your debts, and build that emergency fund back up again first.  Emergencies and random events happen to all of us.  There is no shame in having to take a longer amount of time to get rid of debt.  Stay with it and you will one day reach your goals!

ACTION STEP: Make a commitment to yourself to stay positive and see your Debt Destruction through to the end.

Further Readings – Get Out of Debt

Other Debt Reducing Tips

Tips & Advice Debt Free

Debt Free Tips: Toss the credit card, plan with spouse, track spending, and make sacrifices.

Anyone that truly wants to get out of debt needs to get serious about their efforts .  Here are four specific debt reducing tips to consider (and just great life tips):

Tip #1 – Give up Your Credit Cards

There are probably many out there that have seen the movie, “Confessions of a shopaholic”.  IN that movie, there is a hilarious scene where the main actress freezes her credit card in a block of ice in the freezer.  She does this in an attempt to keep herself from using her credit card.  Later in the movie, in a clear act of desperation, she takes out the block of ice and throws it all over her apartment trying to break the credit card free!

While that’s just a comical scene from Hollywood, a lot of us probably have a small addiction to our credit cards too.  Let’s be real!  We all have the impulse to slide our cards through the reader, instead of giving cash.  It’s easier…it’s more convenient… and oh ya, let’s not forgot…you get benefits now for swiping too!

And that is the problem right there!  It’s too easy…it’s too convenient…and the perks are too hard to pass up.  In the end, we probably all spend way more than we would have on food, toys, and travel, if we were paying in cash and not with a credit card.

Consider using cash instead of using a credit card…even if it is just while you are working on the Debt Destruction Plan.  If you can’t come up with the ability to slice your card into oblivion, then lock it up somewhere (or put it in the freezer!).

Tip #2 – Get on the Same Page as Your Spouse

Financial problems are a big deal in a marriage… in fact they could be potentially lethal to anyone’s marriage.  Spouse’s who are committed to the same financial goals will have a greater chance of staying together, and have an increased level of contentment.

Money management is a big deal and both partners should be in on this…together.  In fact, if you really want to be in sync, create this Debt Destruction Plan together.  Make it a date night!  Have a positive bonding experience and allow this to help bring you together.

Tip #3 – Recognize Your Spending Tendencies

It goes without saying that you know yourself…or at least I hope you do! When do you spend the most?

Take a second and think about your spending tendencies.  When and where do you get the itch to spend money?  The recognition of these moments in time, will be the key to avoiding them!  You’ll be surprised at how much this will help.

Tip #4 – Make Sacrifices

Getting out of debt isn’t a sprint…it’s a marathon.  Please be aware that this may take months or possibly even years to get all of the debt out of the way.  That means you will have lots of opportunities to learn how to sacrifice.  Be OK with shopping at Goodwill instead of Nordstrom!  Be OK with eating at In-N-Out, instead of Red Lobster.  Embrace giving up some things…you’ll live!

Also, it’s OK if you need to tell friends and family NO!  You don’t always have to go out and spend money.  Making small sacrifices now will help you reap great rewards later on.

Further Reading – Debt Tips

Final Thoughts on Becoming Debt Free

So back to my story of escaping the burden of debt…my wife and I skimped, saved, and sacrificed everything we could to help rid ourselves of that burden (including our nice road bikes ).  With the help of our Debt Destruction Plan, and with some dedication, we were finally able to relieve ourselves of that $16,000.

Now that we are debt free, our world has changed!  And I hope that your world can change too.

Hopefully this article has been helpful for you.  With any luck, the debt advice that you needed to start moving forward with your financial future has been provided.

Become Debt Free

Becoming debt free is hard work, but it IS possible; and well worth it.

If you still owe money, you now have the tools to start managing debt the right way.  Because you have a plan in place, you can now get out of debt fast (or at least faster than you would have without a plan!)

Learning how to become debt free is a practical money skill that is needed to financially survive in our world today.  You can become a Personal Money Manager by creating a Debt Destruction Plan and then living true to it!

Managing money is one of many key life skills that put YOU in control…and once you have that control, then you truly have POWER OVER LIFE!

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Become Debt Free - Create A Debt Destruction Plan
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Become Debt Free - Create A Debt Destruction Plan
Becoming debt free is a key life skill to help you succeed in life. Learn how to become debt free and get your life back. LEARN MORE HERE.
Jacob Merkley
Power Over Life
Power Over Life
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