How to Get Out of Debt for Free?

Debts raise huge concerns, especially when the amount in question is quite enormous. The average American owes a lot of money on student loans or credit card loans. Besides these, there are other bills like hospital bills, car payments, house mortgage, and utility. These bills sometimes become overwhelming and make you neck-deep in debt.

So it is not out of place to think of ways to get out of debt and be debt-free. If you want to be debt-free or get out of debt for free when you have minimal resources, there are some essential steps you need to take. This post will show you how to get out of debt for free.

How to get out of debt for free.

To be Debt-free, you need to make some tough money decisions, which might not be very comfortable for you. These decisions could include reducing the number of times you use your credit cards or getting a side hustle to enable you to earn some extra cash.

But more than that, you need to clear your already existing debt. So if you’re wondering how to get out of debt for free, here’s how;

1. Get a debt consolidation loan.

You need to consider if you want to get out of debt for free to get a debt consolidation loan. Debt consolidation is a personal debt that clears off your outstanding debt and puts together all the balances into a single payment to your new creditor.

The debt consolidation loan helps you combine your credit card loans and other debts into one loan, and to do this; you will need a fair credit or something better. Debt consolidation loans offer you a low APR on your debt.

This helps you save the money you would have spent on interests and enables you to pay off your debts faster. It is essential to avoid incurring additional debts while paying off the consolidation loan.

Taking a debt consolidation loan helps to simplify your finances. This way, you’ll put all of your debt in one place, and you will pay less interest. You should know that you need a good credit score to get a debt consolidation loan to qualify.

2. You need a cash-out Mortgage Refinance.

For homeowners, if you have a sufficient amount of equity in your home and you qualify to refinance your mortgage at a low-interest rate, then you should look into having a cash-out refinance.

A refinance will enable you to refinance your mortgage to make some cash from your home equity available, which can allow you to save the money you get towards achieving other goals like paying off debts with high interest.

This is a better way to save some money and help you get out of debt faster. However, for a cash-out mortgage refinance, your home serves as the collateral for the loan.

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3. Renegotiate your debts/Debt Relief.

If you haven’t been up to date with our debt payment and want to get out of debt for free, you should consider renegotiating your debts with your creditors. Although this is quite risky, it works.

You seek debt relief by asking your creditors to look into your debts and renegotiate your debts and accept a smaller payment instead. You can renegotiate your debts yourself, or you can hire a specialist to do it for you.

There are debt settlement companies that offer these services, they meet with your creditors and discuss ways to cut down your debts, and you pay them a fee, a percentage of the amount of settled debt. The creditor may agree or may not, so this shouldn’t be your first resort.

4. Start a side hustle.

How to Get Out of Debt for Free

Having a side hustle to earn more is the right step. This will enable you to pay off your debt faster. To help you get out of debt for free, starting a side hustle is necessary. You need to create some free time and devote it towards starting a side business.

You can do this with little or no capital, and then you can earn some money which you can in turn use to pay off some of your outstanding debts. You can sell off items that are not useful to you anymore or rent out an extra room in your house.

You could even consider offering online classes and collecting a token from those interested in learning. What’s more, you could become a freelancer to provide extra income for yourself.

5. Balance transfer credit card.

Another way to get out of debt is to apply for a balance transfer credit card, this is for those with good credit, and it offers a 0% APR period on transferred balances at the beginning. With a transfer credit card, you will need to make a plan to pay off your debt on time before the zero interest period ends and the new interest rate starts.

By doing this, you get to save a lot of money that you could have spent on interests. Though you might need to pay for a token for using this, it is still better because of the interests saved. With the savings on interest, you can still be ahead with your payments.

6. Make your Debt payments automated.

If you want to be debt-free, it is essential to automate your debt payments. You can use calendars or automated reminders to help you keep track of payment dates, especially when you are paying off different debts simultaneously.

You can even consider using a debt management app that will help you track your debts payments; you could also use automated transfers from your bank account to your credit card.

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How to stay out of debt.

To maintain a Debt-free life or get out of debt for free, you need to stay out of debt. If you’re looking for ways to stay out of debt, here are a few things you can try;

1. Do not take on new debts.

To be debt-free and to maintain this position of being debt-free, you need to stop taking on new debts. When you borrow money from one source to pay another, you are just doing the same thing differently.

To stop owing debts, you should take precautionary measures like not opening new credit cards or applying for loans unless they are for particular purposes. Stop any activity that will make you owe a debt.

2. Pay off small debts.

Getting out of debt for free is not an easy task, but you need to make conscious efforts to reduce your total number of creditors. You can start with paying off the smaller debts, debts like credit card debts, car repair debts.

When you start small and see improvements, it gives you the zeal to continue until you are eventually Debt-free; starting with smaller debts will help clear out more accounts from your ledger faster. This method is called the debt snowball method; it involves paying off small debts before moving to more enormous debts.

3. Pay off bigger debts.

After paying off small debts, the load becomes lighter, and you can now focus on paying off the bigger loans that require more money. You can adopt the debt avalanche method. This method ensures you pay off the minimum payments on each bill, and then you use the remaining funds to pay off the debt that has accrued the highest interest rates.

Those debts with large interest increase every month because of their interest rates, so it’s important to pay them off quickly so you can have money to pay the debts with little or no interest rates.

4. Have a Budget.

Having a budget helps you plan your resources effectively. You know how much you spend, how much comes into your account, and how much goes out.

When making a budget, you can begin with making a list of all your sources of income and then track your expenses, the ones that are recurring expenses and the ones that are fixed expenses.  Then you proceed to subtract your expenses from your income.

You also need to make a list of everything you will be spending your money on for each month, and then you can keep aside the extra money for paying off any debts you have, which is dependent on the amount left and the amount of debt you have.

When making a budget, you can consider using the 50/30/20 rule. Use 50% of your income for bigger expenses like housing, 30% for your wants like groceries, clothing and 20% for savings and debts.


Getting out of debt is a big win. You become mentally balanced to function well. However, it is a task that requires discipline. To get out of debt and stay debt-free, you need to pay close attention to all the steps mentioned. If you owe a lot of creditors, you should check out the debt consolidation loan option; it could be of great help.


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