How to Get Out of Debt and Start Saving

To get out of debt, you list everything you owe, stop adding new debt, keep a small emergency buffer and then put every extra dollar toward one debt at a time while paying the minimum on the rest. Knowing how to get out of debt is only half the plan; the other half is starting to save as you go, so the next surprise doesn't undo your progress.

This guide covers the two main payoff methods, how to fit saving in, where to get free help and how to avoid the debt relief scams that target people under pressure. If debt feels overwhelming, you're not alone, and there's help that doesn't cost you anything.

Why does paying off debt come before most saving?

Because high-interest debt usually costs more than savings earn. According to the Federal Reserve, the average interest rate on credit card accounts that were charged interest was 22.15% in the second quarter of 2026, while the FDIC's national average savings rate was well under 1%.

Every dollar used to pay down a card at that rate "earns" you the interest you no longer pay. That's why most educators suggest tackling high-interest debt before building large savings, with one important exception: a small emergency buffer first.

Step 1: List everything you owe

Write down every debt with four details: who you owe, the balance, the interest rate and the minimum payment. Include credit cards, personal loans, car loans, buy now, pay later plans, medical bills, overdrafts and money owed to family.

It can be uncomfortable, but you can't make a plan for numbers you haven't seen. Many people find the total less frightening once it's on paper and broken into pieces.

Step 2: Stop adding new debt

A payoff plan can't work if new balances keep appearing. That doesn't mean cutting up every card; it means not using credit for everyday spending while you pay it down.

Two things make this possible:

• A realistic budget, so regular costs are covered from income. Our guide on how to build a budget that works explains how.
• A small buffer, so surprises don't go on a card.

Both are core parts of our step-by-step method to save money, which is designed to work alongside a debt payoff plan.

Step 3: Build a small starter emergency fund

Before throwing everything at debt, set aside a small buffer. It breaks the cycle where each repair or medical bill goes straight back on the card.

The buffer doesn't need to be large, just enough to cover a common surprise. Once high-interest debt is gone, you can grow it into a full emergency fund. See how to build an emergency fund for targets and where to keep it.

Step 4: Choose avalanche or snowball

The CFPB describes two main strategies. In both, you pay the minimum on every debt and put all extra money toward one target debt. When it's paid off, you roll its payment into the next one.

Example (hypothetical): you owe $2,500 on a card at 26%, $600 on a store card at 20% and $6,000 on a car loan at 8%.

• Avalanche order: the 26% card, then the store card, then the car loan.
• Snowball order: the $600 store card, then the card, then the car loan.

Neither is wrong. The CFPB suggests weighing the pros and cons and finding the one that works for you. If you've struggled to stay motivated before, a quick first win from the snowball might be worth a little extra interest.

Step 5: Find extra money to speed things up

The faster you pay down high-interest debt, the less interest you pay. Common sources of extra money:

• Cut or renegotiate bills. Phone, internet, insurance and subscriptions are a good place to start; see our money saving tips for everyday life.
• Ask for a lower rate. Call your card issuer and ask; the worst answer is no.
• Use windfalls. Split tax refunds and bonuses between your buffer and your target debt.
• Sell what you don't use.
• Add income if you have the time and energy; see our guide to making money online for realistic options.

Where can you get free help with debt?

If payments feel unmanageable, talk to a reputable nonprofit credit counselor before you fall behind, or as soon as you do. It's often free or low-cost.

According to the FTC, a good credit counseling organization:

• Doesn't charge fees before helping you
• Has accredited or certified counselors
• Offers budget counseling, not just a debt plan
• Gives you fee information in writing

Credit unions, universities, cooperative extension offices and military financial managers may also offer low-cost counseling. The US Trustee Program publishes a list of approved nonprofit agencies for people considering bankruptcy.

A counselor may suggest a debt management plan, where you make one monthly payment to the agency and it pays your creditors, sometimes at reduced interest. The FTC notes these plans often last four years or more and that you usually can't open new credit during the plan.

Help outside the US

• UK: MoneyHelper offers free, confidential debt advice and a debt adviser locator. If you use a fee-paying provider, check that it's authorised by the FCA.
• Canada: the Financial Consumer Agency of Canada explains how to choose a credit counselling agency; look for one in good standing with a provincial or national association.
• Australia: the National Debt Helpline offers free financial counselling on 1800 007 007.

How do you spot a debt relief scam?

Be very careful with companies that promise to settle your debts for less. The FTC says it's illegal for debt relief companies to charge fees before they settle or resolve your debts.

Red flags, according to the FTC:

• They want money upfront before settling anything.
• They promise to settle all your debts or get fast loan forgiveness.
• They tell you to stop paying or stop talking to your creditors without explaining the consequences.
• They mention a "new government program" to erase personal debt.
• They contact you out of the blue by call or text and ask for personal or financial details.

Even legitimate debt settlement carries real risks: creditors don't have to agree, stopping payments can damage your credit and add fees, and forgiven debt may be taxable. Get free advice first.

How do you start saving while paying off debt?

Keep your small buffer topped up, and every time you pay off a debt, split its old payment between the next debt and savings. That way saving grows as debt shrinks.

Once high-interest debt is gone:

1. Grow your emergency fund toward three to six months of essential costs.
2. Keep the automatic payments going, now into savings instead of to lenders.
3. Consider long-term goals, such as retirement accounts and investing. Our guide on emergency fund vs investing explains the order. Returns on investments are not guaranteed.

If your income is tight, our guide on saving money on a low income has more realistic starting points.

Next steps

This week, make your debt list and choose avalanche or snowball. Then set up an automatic payment for your target debt and a small automatic transfer to your buffer.

For a monthly routine that combines paying down debt with building savings, see our simple method to save money every month.