When’s the Best Time to Get Out of Debt?

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Many people wonder when the best time to get out of debt might be. Maybe when the kids are older. Or there’s more money. Perhaps when I get that new job. You know, when we have our act together. Let’s look at a few things first, and then decide when the best time to get out of debt is for you.

What is debt and is it all bad?

First, let’s look at what debt is–simply, something owed. Be that credit cards, student loans, car loans, home equity loans, mortgages, and any ole little loan in between. If we owe someone any amount, we are in debt.

It is estimated that some 80% of Americans are in some kind of debt. Don’t believe me? Check out this article from Dave Ramsey.

Mortgages are the most common debt that Americans carry, followed closely by unpaid credit card balances, car loans, and student loans. No matter what form debt takes, it’s safe to say that all these bills are keeping many people from living the lives they want—the lives they always imagined. ~ Dave Ramsey

Debt is not all bad because it’s not all equal. Loans that allow us to purchase something that increases in value are certainly not bad, unless of course, we can’t afford such loans. But loans that helps us purchase things that only go down in value are not a good idea — car loans, or credit used to purchase goods (or services).

What about student loans?

Student loans are definitely in the “bad” category as far as I’m concerned because they take FOREVER to pay off. They are too easy to qualify for in the first place and defer later. In the end, you pay way more than you originally borrowed.

The truth is, most people could–if they worked very hard and attended a reasonably priced school–pay for college a semester at a time. We know this to be true because we are currently taking that route with our oldest. Remember, we have a ton of kids and live on one income, so it’s not like we have some financial advantage. 

Ten years ago, paying for college out of pocket would have been a much harder burden, but 10 years ago, we were in debt. Also, ten years ago, taking only the classes we could afford was a concept not known to us. I understand if you are at our “10 years ago” point. Do the best you can.

Related: Get on Track With Your Finances, Part 3: 10 Ways to Dig Out of the Hole

Can it actually be done?

With all this debt we often find ourselves in, we wonder how we can actually *get* out of debt and when is the best time to get out of debt?

It’s like that “when’s the best time to plant a fruit tree?” question. The answer? Seven years ago. But the next best time is right now, not wasting any more time, but getting the thing in the ground now.

The same is true for “when’s the best time to get out of debt?” Seven years ago, or five, or even three would have been best, but the next best time is right now, not waiting another week, another month, or another year. Right now!

How do I even get started?

So, you’ve decided that right now is the best time to get out of debt. What’s the first step?

I discussed this way in more detail in this post, but the first step is cut up those credit cards (don’t request a new one). The second step is to stop spending. Only spend what is necessary for survival and to keep your bills paid. That’s it.

Related article: First Steps to Get Control of Your Finances
Related article: 3 Necessary Pieces for Financial Freedom

What if my debt is so overwhelming, there’s no way I can pay it off in a realistic time frame?

We understand that, as well. It’s like eating an elephant or taking a long journey. You eat that elephant one bite at a time. And you begin the long journey with just one step. That’s not to say you won’t get full or exhausted from just one more step. You will. That’s when you take a deep breath, read some “debt free” stories from Dave’s book The Total Money Makeover, listen to the Dave Ramsey radio show, or shoot me an email saying, “I’m so over this debt free journey,” so that I can walk you off the proverbial edge.

The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness Is your “owe” starting to show? Shrink your waste line, bulk up your bank balance, and get into financial shape with money expert and radio host Ramsey’s comprehensive—and simple—plan for debt-free living. You’ll be fiscally fit in no time!

Sacrifice is never easy, and we almost never are going to want to do it. Sometimes, in order to get to a particular place in life, sacrifice is the only way to get there. That’s what will get you from broke and bound to debt to financially free indeed!

You will find tons of free resources go get you well on your way HERE on Dave Ramsey’s website. And also, HERE on Crown.org. Until we were out of debt, we only used free tools because that’s what we could afford. They work if you put them into practice.

There’s not time like right now. Start today!