Getting Out of Debt

If you're struggling with debt or have an uncomfortably high credit card balance, you're not alone.

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Face Your Debt


If you’re struggling with debt or have an uncomfortably high credit card balance, you’re not alone. 98 million U.S. households (78 percent) have some form of debt.

Many of people can manage their debt just fine. But if you feel your debt is too high or your debt is more than a third (33%) of your income, it may be time to do something about it.

Begin your debt reduction plan 

  • Determine what you earn and what you spend.
  • Add your total income (your paycheck and other income sources).
  • Separately, add your fixed expenses: recurring bills such as rent or mortgage, utility bills, insurance payments, car payments. 
  • Add to that your variable expenses: food, clothing, entertainment, gifts, etc.
  • Now subtract your total expenses from your total income.

If you have enough money left over to begin paying off debt, good. Most of us have very little left over after subtracting expenses from income. Read below for more on finding money in your budget.

Our online calculators can also help.

Find money in your budget

  • Our What’s it worth to reduce my spending online calculator shows how cutting costs can add up to savings.
  • Look at your fixed expenses. Can you get a better deal? For example, a less expensive phone plan that provides most of what you want.
  • Check out online resources and books or magazines on money-saving and debt reduction techniques.5 You may find a debt-reduction plan that really makes sense to you.

Damage control

  • If you find it difficult to pay off certain loans or bills, contact your creditors (the people or companies you owe money to).
  • You can often arrange easier payment terms by being proactive, forthright, and willing to problem-solve. Do this before your account is given to a debt collector.
  • Make sure you’re not sabotaging your debt reduction plan by unwisely using your credit cards.

Pay Down Your Debt

Clever strategies for paying down debt

Motivating techniques work with your nature, not against it, and help you develop good financial habits.

Put yourself on a spending diet

  • Consider sticking to a modest budget that covers your variable costs.
  • Open an additional checking account with a debit card and move your budgeted amount to the account every month.
  • Don’t allow yourself to spend any more than your budgeted amount.

Start with small wins

  • Consider paying off your smallest debts first.
  • A few small victories can motivate you to tackle the rest of your debt load.
  • You may pay less interest over time if you pay off higher-interest debts.

Make your success visual

  • Consider tracking your progress. Use an Excel spreadsheet or a paper-based record.
  • Tracking allows you to set a target date for when you’ll be debt-free. Having a target date can make you more confident you’ll achieve your plan.
  • Tracking can also keep you on-plan. For example, monitoring your credit card spending to make sure you’re not making impulse purchases or spending beyond your budget.
  • Reviewing your credit card statement regularly may also reveal questionable charges that you can investigate and dispute. It also lets you ensure you’re not being overcharged or paying for things you don’t need.

Increase your income

  • Consider taking on a small second job or some other income-generating activity. For example, driving for a ridesharing company or renting out an extra room.
  • Over time, even small amounts of extra income can shave months off your debt-reduction schedule.
  • Consider putting pay raises, bonuses, or holiday or birthday cash gifts toward paying off debt. Treat it as unplanned money that you won’t miss.

Find Debt Relief


Debt relief and debt consolidation

There are two ways to handle debt if your debt is too much for you to handle.

Debt relief

  • If you’re saddled with more debt than you can handle, consider contacting a debt relief service. This is typically a credit card counselor or debt settlement firm.
  • Both can provide advice and strategies for controlling expenses and bills and repaying creditors.
  • Do your homework before hiring anyone. Your state attorney general’s office or state consumer protection agency may have information on the firm you’re considering.
  • Get clear on the details, including costs, services provided, and the timeline, and get it in writing.

Debt consolidation 

  • This strategy rolls all of your debt into one loan such as a second mortgage or home equity line of credit.
  • Our Should I consolidate my debts online calculator can help you compare your existing loans and credit cards with a new, consolidated loan.
  • Debt consolidation may lower your interest charges, among other advantages.
  • Be aware of the risks. Debt consolidation often uses your home as collateral, which could put your home at risk if you fall behind on payments.
  • Research the details and get everything in writing.




This article is for informational purposes only and is not intended for use as legal, accounting, tax or professional financial advice by People’s United Bank or any of the bank’s subsidiaries. Financial calculators are for illustrative purposes only. Always consult your legal, accounting and/or tax advisor to fully understand how information may or may not apply to your personal or business financial situation.

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