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Student loan debt has risen so high that Senator Elizabeth Warren is making a proposal to cancel $50,000 in student loan debt for those who make $100,000 or less per year. Right now, the average student loan debt stands at over $37,000 per person, according to a CNN article. b

However, it isn’t just students in America who are in trouble with debt. The average American holds more than $6000 in credit card debt and owes almost $25,000 in what’s called non-mortgage debt. This would include debts such as car loans, personal loans, and the like.

With debts reaching staggering amounts, many are left wondering what they can do about the debt that they have. The truth of the matter is the answer is simple but not easy. Getting out of debt in our experience comes down to a few critical elements.

A Word About Creating Debt

An article on The Balance admits that not creating new debt won’t get you out of debt. However, it won’t add to your debt either. 

This is an important point that not just The Balance recommends. Financial guru Dave Ramsey tells those saddled with debt to stop creating it. He recommends that those who are heavily in debt use cash to help them keep track of their money and to prevent them from overspending. 

All of the work that you do to get out of debt will be for naught if you don’t take this step before you implement any other debt reduction strategies. Not doing so is a bit like bailing water out of a sinking boat and expecting the leak to stop on its own.

1. Do a Side Job

Tackling debt with a side job or a side business counts as one of the fastest ways for you to get out of debt. Taking on a job at the local Starbucks, for example, could net you anywhere from $800-$1000 extra a month if you are paid around $10 an hour and work between 15 and 20 hours a week.

You would apply this extra money toward your debt. Usually, when people are deeply in debt, they will very often only pay the minimum payments. By doing so, you will remain in debt for a lot longer period of time. 

The extra money that you earn from a side gig at a coffee shop or a business of your own allows you to put more money toward your balances than just the minimum, helping you get out of debt at a much faster rate.

2. Create an Emergency Fund

The financial advisors, and the debt experts at Roseland Associates, recommend that you have between three and six months worth of income in savings. Some financial planners go as far as to recommend not only having the three to six months of salary in savings but also some extra money for smaller emergencies. 

Here’s how this works. You should first save about $1000. This is the fund will be used to pay for smaller emergencies, like a broken faucet in the bathroom or a random trip to the emergency room. The idea behind this money is that when you have such an emergency you don’t use your credit card. 

Rather, you use the money that you have in your emergency fund. If you do dip into the emergency fund you must replace it once you have the opportunity.

Once you have funded your emergency fund, then you start putting away money for those bigger emergencies, like a job loss or an illness. Having a savings account filled with enough money to get you by for three to six months will allow you to not borrow money on your credit cards and other credit tools.

3. Getting a Refund? Use it to Pay Down Your Debt

The AARP cautions debtors not to use that tax return to go on a splurge. Instead, they should use it to pay down their debt. Anytime you get extra funds like this, you should automatically plan to put it towards your debt until you are out of debt. 

Doing this allows you to compound the power of the other debt reduction strategies that you’re already doing. Anytime you can put extra money toward your debt, do so.

Final Words

Debt experts at organizations like Roseland Associates offer some standard advice to those who want to get out of debt. First of all, if it’s in your power at all to get a second job or to create a side business, you should consider it. This extra money, which might be equal $1000 a month or more goes a long way toward putting a dent in your debt.

Second, you should have an emergency fund. The emergency fund prevents you from having to use your credit card when a job loss or even a smaller emergency, like a new set of tires or a trip to the emergency room befalls you. After all, the best way to get out of debt is to try to stay out of debt in the first place. 

Finally, if you get any kind of refund like a tax refund, then you should also put that money towards your debt.