How to Get out of Debt

Easy Financial Tips from Someone Who's Been There

How to Get out of Debt
Photo by Michael Longmire on Unsplash

*Disclaimer, I am not a financial advisor. These are merely my own experiences*

Being in debt sucks.

You start living paycheck to paycheck so you’re sure you’ll at least meet the minimum payments. You put off necessary car repairs because you’re afraid they’ll cost too much. Your tires are far more worn than they should be, and you wear those shoes until the soles have holes.

Between graduate school and living in Los Angeles, I racked up a fairly large amount of debt. I also fell for lifestyle creep each time I received a raise, attempting to bring my lifestyle back to that of my upbringing.

It was crushing at first. I was too scared to ask my family for help because then I’d have to admit what happened, but I didn’t know how to fix it. I kept paying the minimums on credit card bills, throwing all the extra cash on the largest of the four, and saving very little.

I finally bit the bullet and hired a financial advisor for the first few months of 2019. That was the best financial decision I’ve ever made.

For one, I was held accountable with biweekly and then monthly check-ins. I set savings goals, and was informed that, yes, it’s okay to take out a personal loan to cover credit card debt.

The best thing she did for me was to change my mindset from one of fear to one of I can do this.

I’m still working through some of the pain I put myself through, but with a lot of hard work, saving, and a side hustle, I’ve been able to turn my finances around.

Here are a few things I did to help find extra money, budget, save, and get my finances back in order:

1. Analyze Statements

The first thing I did was pull all my bank and credit card statements and reviewed each and every transaction. I asked myself:

  • What’s do I purchase that’s unnecessary?
  • Are there any subscriptions I don’t use? That I don’t need?
  • Is there anything I can live without?

I realized just how many times I purchase snacks from the vending machines at work, how many months I’ve been paying for Amazon Kindle Unlimited without using it, and did I really need that new pair of shoes?

By reviewing my statements I became more aware of how many little $1 - $5 transactions I make in a given month and the impact it has on my bottom line. I realized how little I used certain subscriptions or how I could make do without.

Cutting out unnecessary purchases not only helped my account at the end of the month, but positively impacted my waistline too!

2. Make a Savings Rule

After eliminating subscriptions and unnecessary purchases, I was now able to see just how much extra I had in my account each month. I calculated how much I could transfer into savings each pay check, and set the accounts to automatically transfer the money.

This helped me to grow my emergency savings twice as fast and allowed me to allocate money for my other savings goals.

3. Designate Accounts for Particular Purchases

I technically have three savings accounts: one at a credit union with a higher interest rate, and two at my primary bank.

I designated each for particular saving goal and keep that goal in mind each and every time pay day comes around.

The high interest account is for my emergency fund and once this account reaches the goal I’ve set of three to six months of expenses, I’ll start investing the extra money.

The other two accounts are designated for fun and practicality. One account is designated for travel and the other for the upkeep of my car, or the eventual purchase of a new car.

By designating each account for a particular purpose, I keep my long-term goals in mind and avoid pulling money from them too soon.

4. Personal Loans to Consolidate Credit Card Debt

I never intended for my credit card debt to get as high as it did, but then again, I’m sure no one intends to spend far more than they can pay.

What’s worse is that debt came at a sky-high interest rate from a financing credit card (that was probably the most expensive iPad in the history of iPads). I not only had a large amount of debt on this card with nearly 25% interest, but I had three other credit cards with debt.

I kept paying minimums and trying to pay more on to this ridiculous card, but I couldn’t get anywhere with it.

It wasn’t until someone suggested a personal loan to me that I was able to make a dent in my debt. I checked with several companies and while they wouldn’t let me take out a loan, LendingClub did (and I earned air miles through their partnership with United Airlines).

I received a loan for the amount on the card with significantly less interest, and was able to pay that card off right away. Now I pay on the personal loan at a fixed interest rate, and it’s not revolving credit (hallelujah!).

A few short months later, LendingClub offered another loan which was able to cover the next highest interest rate credit card. Now I’m on may way to having just installment loans rather than revolving debt.

Things to Watch For:

Citizenship or Residency Status

My financial advisor suggested I open a high interest savings account. Now, there are several out there, but the one I had my eye on is with my primary bank on the East Coast. I was excited, here I could earn a significant amount of interest in comparison to my other savings accounts (including the savings at the credit union), and it would be easy to open it with my bank.

Or so I thought. Now, I’m a Canadian Citizen and a US Permanent Resident for nearly 20 years. I normally don’t encounter any issues with jobs, banks, credit cards, or other financial products but online accounts? Yeah, those are reserved for US Citizens only.

In order to open this account, I would have to make an appointment in a branch. That would be great, but my primary bank is based on the east coast, so this is a no-go for me.

Racking Up More Debt After a Personal Loan

Remember those personal loans I talked about? After I was able to pay off two of the cards with those personal loans, I made the mistake of thinking I had more money than I actually did. The credit card raised my line of credit and whoah - now I could buy more things!

Don’t fall into this trap. Now I not only owe on the personal loans, but I have to pay that credit card off again.

Increased Lines of Credit

Watch what happens when you start paying off your credit cards. You’ll notice something peculiar - the line of credit will increase the more you pay it off.

It can feel like a relief to “have more money,” but in actuality, it’s not your money. This was my downfall on several occasions. I’d think “Okay, now I can buy those airline tickets” or “I do need new tires…”

Watch that you don’t increase your spending each time the credit card companies increase your line of credit. You’ll just end up budgeting for those payments again.

Getting out of debt is not an easy task, especially when you’ve buried yourself deep into student loans and credit cards. The good news is though, that with determination, hard work, and scrappy living it is possible to clean up your financials, save for the perfect vacation, and live your life debt free.

personal finance
Kristi Jacobsen
Kristi Jacobsen
Kristi Jacobsen

Podcast Manager. Entrepreneur. Writer. Digital Nomad.

Life and travel are the inspiration for my work and all that I do.

Fine me online advocating for women in the music industry through Broken Glass Media LLC at

See all posts by Kristi Jacobsen