Debt can feel like a heavy burden, one that affects your finances, mental health, and confidence. Whether it’s mobile loans, credit cards, student debt, or personal loans, getting out of debt is possible with the right plan and consistency. Here’s a simple, realistic guide on how to get out of debt and rebuild your financial stability step by step.
1. Face Your Debt Honestly
The first step to getting out of debt is to understand exactly what you owe. Many people avoid looking at their total debt out of fear, but you can’t fix what you can’t see. List every loan or credit account you have. Write down the total amount, monthly payments, interest rate, and due dates. Once you see the full picture, you can start building a debt repayment plan that works for you.
2. Create a Realistic Budget
Budgeting is the foundation of any debt recovery plan. It helps you see where your money goes and where you can cut unnecessary expenses.
Write down your monthly income (after taxes).
List all your essential expenses – rent, food, transport, utilities.
Identify areas where you can reduce spending (eating out, impulse shopping, or subscriptions).
The money you save here can go directly toward paying off your debt.
3. Prioritize Your Debts
When trying to get out of debt, it’s important to decide which debts to pay first. There are two common strategies:
- Debt Snowball Method: Pay off the smallest debt first while making minimum payments on the rest. Once it’s cleared, move to the next smallest. This builds momentum and motivation.
- Debt Avalanche Method: Pay off the debt with the highest interest rate first to save more money in the long run.
Choose the method that fits your personality – the best plan is the one you’ll stick to consistently.
4. Negotiate With Lenders or Consolidate Debt
If your payments are overwhelming, don’t suffer in silence. Many lenders, especially in Kenya’s digital lending or microfinance space, allow for rescheduled or consolidated payments. Contact your lenders and explain your situation.
Ask about lower interest options, payment plans, or consolidation loans that merge several debts into one manageable payment.
This can ease your monthly burden and help you avoid defaulting.
5. Use Extra Income to Clear Debt Faster
Any extra money you earn can bring you closer to financial freedom.
Start a side hustle (freelancing, selling online, tutoring, delivery jobs).
Sell unused items on platforms. Use bonuses, tax refunds, or windfalls to make lump-sum payments.
Even small additional payments make a big difference over time.
6. Avoid Taking on New Debt
This is key. Paying off old loans while taking on new ones only keeps you trapped.
Stop using credit unless absolutely necessary.
Delete mobile lending apps you no longer use.
Focus on living below your means while you recover.
7. Build an Emergency Fund
Once you start making progress, save a small emergency fund to handle unexpected expenses without borrowing again. Over time, aim for three to six months of expenses saved.
8. Stay Consistent and Celebrate Small Wins
Getting out of debt takes discipline, but every payment gets you closer to peace of mind. Celebrate milestones, like paying off a loan, and remind yourself why you started.
Remember
Getting out of debt isn’t about quick fixes; it’s about steady, smart choices that rebuild your financial health. By facing your debt, budgeting wisely, using extra income strategically, and avoiding new loans, you can break free from debt and regain control of your money. CLICK HERE to learn more about online work trends