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I Want to Get out of Debt, but I Have No Idea Where to Start! What Should I Do?

Rachel Cruze

Money Management for Parents

Q: I want to get out of debt, but I have no idea where to start. What should I do?


First, I’m so excited that you’re motivated to get out of debt. Once you live debt free, you’ll never want to go back!

The first thing you need to do is build a small $1,000 emergency fund. This fund is designed to catch all of life’s emergencies—like repairing a flat tire, an unexpected doctor’s visit and things like that.

Having that fund set up, in just a traditional savings account, allows you to stay focused on paying off debt when emergencies pop up—and they will.

After you have your emergency fund, I want you to start working on the debt snowball.

If you have multiple debts, the debt snowball is an awesome way to knock them out one by one. List out your debts, one by one, from smallest to largest. Don’t worry about interest rates. This is a behavior issue, not a math issue.

Now, put as much money as you can toward the smallest debt while paying the minimum on the others. Once the smallest one is paid off, take all of the money you put toward it each month and add that to the minimum payment on the next smallest debt. Keep at this until you work your way through all of your debts.

The debt snowball allows you to get a couple of quick wins and gain momentum as you begin to pay off debt. Paying off the smallest debts first might not seem that important, but those early wins help you stay positive and motivated to knock out all your debt.

Remember, build a small emergency fund first. Then, go crazy paying off debt with the debt snowball. This is a proven plan that works and has the power to change your life!

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Rachel Cruze

Growing up as Dave Ramsey's kid, Rachel Cruze learned the basic principles of money at an early age. She travels across the country teaching those same principles, in a personal and passionate message of money and hope, to teens and young adults. To find out more about Rachel, visit or follow her on Twitter at @RachelCruze.