Step 5: Getting to Work

Up to this point you have accounted for all of your debt. You now understand the difference between good debt and bad debt. You know what debt you want to reduce, what debt to eliminate and what debt should remain the same.

Step five is where it all comes together. Begin reducing your debt!

There are simple ways to create more money to destroy debt:

A) Save Money by Challenging Everything

Get rid of things you don’t need in your life. Sell these items on eBay or Craigslist to generate money to pay down debt.

If you believe you need all your current possessions, consider reading this article. Changing your ‘material mindset’ works wonders for reducing debt.

Challenge everything. Here are some expenses that deserve to be challenged:

Your Home

Do you own or rent a home that is bigger than you need?

Consider ‘downsizing’ and putting the difference toward paying down debt.

Transportation Costs

Have you considered biking to work?

Could you find other ways to put fewer miles on your vehicles?

According the AAA it costs an average of 61.88 cents per mile to operate a vehicle in the United States!

That’s $9,282 per year if you drive the average annual distance of 15,000 miles!

College Tuition

Are you attending an expensive school?

Are you helping pay for your children’s expensive tuition?

Consider cheaper alternatives. One popular option is taking the first two years of a bachelor’s degree at a community college.

After the initial two years of study, you transfer the credits to a 4-year institution. Review this article for more information for saving money on education.


Are you overspending on groceries?

Review this article by Dave Ramsey to see how to save hundreds of dollars on groceries.


Consider taking a massive vacation once your debt is gone. It will be your reward!

In the meantime, consider a staycation.

Gift Giving

Limit your gift giving. Consult this holiday gift-giving guide to determine who deservers your gifts and who can do without gifts.

Charitable Donations

Are you giving to others when you haven’t been looking after yourself?

If your plane loses pressure, what are you supposed to do?

Put on your own oxygen mask first! Then you will be able to help others. The same rule should apply to your finances.

If your finances are out of control, worry about your situation first. Don’t worry about taking care of others financially if you’re not financially strong.

Note: If your religion encourages you to tithe, consult your clergy.


Look over all of your insurance policies and see if you’re paying competitive prices. This includes auto, home, life, health, dental, vision, etc.


Do you outsource tasks that you could do yourself?

Consider cutting back on these expenditures until your debt is under control. Once your debt is under control, you’ll have plenty of money to reclaim your gardener.

If you don’t feel ecstatic enough to try saving money in these ways, there’s a new automatic money saving service that may help you.

Google recently put $2.5 million into a new company called Digit. Basically, it’s an automatic service linked to your checking account.

It senses your spending habits and automatically diverts small amounts of money from your checking account to a savings account.

It keeps you from letting your extra cash pile up. Then, you may be less likely to spend the money on frivolous purchases.

If you need access to the diverted money, you can get it back into your checking account within one business day. You can pause the service at any time.

B) Make Your Current Investments Work Harder

It’s common for people to forget this step. However it is the easiest way to generate more income.

Examine all of your investments. Are they matching or exceeding the S&P 500?

That’s a good benchmark. Remember associated fees as well. The U.S. Securities and Exchange Commission has released an investor bulletin explaining exactly how fees and expenses affect your portfolio over time.

It can be accessed here. The U.S. SEC also has a calculator available to compare the expenses of any mutual fund against another.

It helps visualize how much money you are wasting if you’re in an expensive fund.

Not only are you losing money to fees, you’re also unable to invest that money.

Make sure all of your current investments are appropriate.

Make sure they are making money and charging fees that correlate with fund performance.

You don’t want to lose potential money that could be used to pay down debt!

C) Increase Income

Debt Repayment Strategy

Find ways to increase income during the hours you otherwise waste. Once you work enough hours where you feel you may be exhausted working any more, review these 40 passive ways to earn more income.

Those are the five steps to debt discovery, reduction, and management.

When we began this guide, we challenged you to imagine a life where you feel in complete control of your financial future.

In this life, you understand how much money you bring in and where it all goes.

Debt doesn’t control you, you control debt.

We’ve reached the end of this step-by-step guide. You now have a road map to debt discovery, reduction, and management.

Will you control the debt or will the debt control you?