Previous: Debt Pt. 1: A Primer on Borrowing Money
Next: 5 Things to Know when you Turn 18



View count:13,164
Last sync:2023-11-12 08:15
Visit to get a free report comparing all your debt relief options.

Paying back debt can be a difficult and stressful endeavor. But with a deep breath, a plan of attack, and some research, you can get off to a good start.

Huge thanks to Sarah Manuel for supporting us on Patreon!

Support How to Adult on Patreon at

Or at DFTBA Records!

"How to Adult" is a "life skills" edutainment channel brought to you by Executive Producers Hank Green and John Green. Subscribe for new videos!



Researching services:

Producer Caitlin Hofmeister on Avocado Toast:

On Budgeting:
Financial Diet -
How to Adult -
A Conversation About Budgeting ft. The Financial Diet [HTA&TFD]:

On Freelancing:
This episode is sponsored by National Debt Relief, a Better Business Bureau A+ accredited business with over 13,656 client reviews and growing daily.

They can help you reduce your debt to a fraction of what you owe if you qualify. Get a free report comparing all your debt relief options at [♪♩INTRO].

In part one of our two part series on debt, we talked a little bit about different kinds of debt. In part 2, we're going to talk about a couple strategies to get out from underneath it. First off, though, I think it's important to take a moment to address some of the psychological responses that owing money elicits.

Debt has a nasty way of making you feel fearful and full of self-loathing, but neither of those responses are actually helpful. When you're in fight-or-flight mode, you are not equipped to analyze a situation and formulate an effective plan of attack. So, just like you wouldn't let an alcohol-drunk friend drive a car, don't let an adrenaline-drunk you drive your brain.

Do your best to stay calm, so you can be at your best when you need to think critically. Remember, you are more important than your debt, and if you're struggling, you're not the only one. So let's dig in, get uncomfortable, and talk about some strategies for dealing with debt.


Prep: Create a Budget The first step to any financial plan is to understand what's going on with your money. Creating a budget is a way to take a look at how much money is coming in, how much is going out, and where it's going. Check out the description for links to a few videos on creating a budget. Strategy

One: Adjust Spending Now that you've made your budget, one of the most theoretically simple ways to save money is to adjust your spending habits. And yes, that is code for spend less money. Remember that there are a lots of people who get paid lots of money to get you to spend more money, and they've got tools to make you feel like you need stuff that you probably don't. Your budget is a tool to help you recognize some of those tricky money pitfalls, and it can feel empowering to identify them, and cut spending in non-essential areas.

Each adjustment you make can be one step towards putting a little more of that debt behind you. However, no one who inhabits the real world seriously believes that you'll be able to buy a house or pay off large student loans just by skipping avocado toast, no matter what some rich Australian guy says. Adjusting your spending is most likely going to work in concert with other strategies, and doesn't mean that you're a bad person if you buy a latte every once and awhile.

Strategy two: Create Additional Income. The flip side of adjusting your spending is getting new income. This can seem kind of daunting, especially if you've never done it before, but depending on your situation, side-hustling these days can be pretty accessible.

This can mean many different things. You can monetize a hobby like making jewelry or painting, tutor students or teach English, drive for a rideshare service, run errands for someone, or even start your own business. Just make sure you keep track of all the income you receive, and the expenses you incur for tax purposes.

That can bite you later if you don't. Now the next strategy is less about trying to pay more on your debt, and more about trying to arrange your payments so they do the most work. Strategy three: Snowballs and Avalanches.

If you have multiple sources of debt, and can afford to pay more than the minimum payment on each, you are faced with the choice of what percentage of your money to send where. Rule number one, research seems to indicate, is to focus on one loan at a time. This applies to both avalanches and snowballs.

In the snowball method, you pay the minimum amount on all sources of debt, and use anything left over on the smallest debt. Once you finish paying off that debt, add its minimum payment as well as the extra money to the next smallest debt, until you're putting all of those minimum payments and leftover money towards one large debt—a magnificently large snow boulder rolling towards being debt-free. This strategy has the benefit of giving you quicker milestones to celebrate, and a visible amount of progress made.

However, it completely ignores interest rates, so you might actually end up paying more money overall. The avalanche method is similar to the snowball method, except instead of paying off the smallest debt first, you pay off the debt with the largest interest rate first. This strategy has the benefit of reducing the amount of interest you have to pay overall, but it isn't necessarily as motivating as the snowball effect, because the results are often less visible.

If you feel highly motivated, or you have a loan with an extraordinarily high interest rate, the avalanche method is probably the way to go. But studies have shown that the snowball effect may have better long-term outcomes, because we're human and we don't always behave rationally. If you feel your motivation flagging, consider knocking out a smaller debt first.

So mix and match depending on your circumstances. They both have snow-based names so your metaphor still makes sense. Strategy four: Ask an Expert.

Avalanches and snowballs can only help you so much if you have some extra money to put towards your debt. But what about if you're barely making ends meet or just making the minimum payments on your maxed out credit cards? If you feel like you're not sure which path you should take, it might be worth calling in an expert.

Right off the bat, though, while there are many credible and helpful services out there, there are also services that are unhelpful and scams designed to take advantage of you while you're feeling vulnerable. Before you dive into any service, make sure you do plenty of research, and read everything carefully before signing. The Federal Trade Commission has a pretty good guide for researching services, link in the description.

Credit counselors will review your budget and provide education about debt management. They may also suggest enrolling in a debt management plan—a strict repayment schedule that may result in lower interest rates or other benefits, depending on your individual circumstance. Some credit counselors charge for their services and some don't, so make sure to ask about it if you sign up.

You'll still have to pay back everything you owe but you may be able to do it at a lower interest rate. And finally, debt settlement programs -- like National Debt Relief, who sponsored this episode—can also be a helpful resource. These programs charge you a portion of your debt in exchange for negotiating with creditors on your behalf to reduce the amount you owe and consolidate your debt into a single lump sum.

You'll have to see if your situation qualifies, but if it does, you could pay back a fraction of what you owe in less time compared to making minimum payments over the next ten to twenty years. Debt settlement is a good option if you're drowning in a large amount of unsecured debt. National Debt Relief recommends their program to folks who have over $10,000 in unsecured debt—which is the kind of debt we talked about in part 1 that doesn't have collateral behind it.

And remember, the very best thing you can do to combat debt is to educate yourself, so just by searching Youtube, watching this video, you are already off to a good start. For this series we partnered with National Debt Relief, a debt settlement program with a Better Business Bureau A+ accreditation and over 13,656 client reviews from folks who are no longer drowning in debt thanks to their services. They're completely performance based and charge no fees until their clients see their debt reduced, and offer a free savings estimate that can show consumers how much they can save with no obligation.

Visit to get a free report comparing all your debt relief options. So just like you wouldn't let an alcohol-drunk friend drive a car, don't don't let an adrenaline-drunk brain... drive your brain... [laughter]. Theoretically simple ways to heff—hevffhevff.

And they've got tools to make you feel like you need stuff that you probably don't or to spend money when you probably don't have to or even want to, you just do it because they're so good at manipulation things... They've done lots of research on you. They've done so much.


Psych: we talk about that a lot. We talk about that a lot. There's a thing, there's a whole—I probably shouldn't do it but there's a whole—like, we keep doing it. Like, I like these—these—where it's like, "Here's how it works... and why it works... and it's still going to work" How much they s— [garbled].

Visit https://www.national— Can I just say National Debt Ok [laughter].