Debt elimination – How to get out of debt quickly

Since my official website launch, I’ve been contemplating on my main goals for my journey to wealth. One key and important topic I believe in order to reach success is debt elimination or how to get out of debt quickly.


Let’s define “debt”

According to Meriam-Webster dictionary, debt is something owed or a state wherein one is under obligation to pay or repay someone or something in return for something received.

That is the general definition of debt. However, I myself have read a lot of books about how to become debt free. One of the books that has greatly influenced me is Robert Kiyosaki’s Rich Dad Poor Dad book. If you have not read this book I highly recommend you reading it.

So let me introduce you to the two types of debt.

Types of debt

Essentially, there’s two types of debt. There’s a good debt and there is a bad debt. I’ll discuss the two in more detail shortly.

In the meantime, it goes without saying that most people turn out incurring bad debts than good debts. There’re many factors that contribute to this but below are some major reasons we end up getting ourselves into a pit hole of bad debts:

    • the mentality of wanting or having something quickly
    • the lure or lust for the latest and the greatest be it gadgets, smartphones, fashion, furniture, appliances, etc.
    • impulsiveness or out-of-control spending
    • man’s covetous nature of keeping up with the Joneses
    • growing up in our modern culture of entitlement and attaining every “wants” quickly
    • bombardment of consumerism advertisements left and right
    • lots of scams where people trying to take advantage of other people (a sad reality)

I think you’re getting the point, if you can think of some more contributing factors, feel free to leave them at the comment section below and I’d appreciate your inputs very much.

Keep reading below and I’ll be outlining a debt elimination plan that will help you become bad debt free.

Good debt

Now let’s go on and define good debt. I’ll start with this type of debt more so because as the word implies this not something that negatively impact our lives.

Having good debt is good. I can’t overstate that enough. As Robert Kiyosaki puts it, if it is a debt that puts money in your pocket, than that is a good debt. That’s the plain and simple definition of a good debt.

Sample of good debts I can think of right of the bat are:

    • taking a loan to start a “well-thought-out” business venture (notice on the emphasis)
    • mortgage on a rental property
    • loan for investment use, wherein essentially the ROI is greater than the loan interest

There you have it some examples of a good debt. As I stated above these are debts that put money back in your pocket that will enable you to pay off the debt and then some that you can keep in your pocket.

Also known as “Leveraging”

Another word for this is called leveraging. This basically means using other people’s money. This is taking advantage of other people’s or institution’s resources, such as a bank for example, in order to venture into a business or an investment with the objective of earning back more than what you originally owed.

This is also one of the ways that can help you accelerate getting rid of your bad debts quickly.

Ultimately the objective is to build up your assets through leveraging and thereby grow your wealth, eliminate your bad debts and reach financial freedom and success.

Do you have any other examples of a good debt, leave them in the comments section below, I’d like to hear your thoughts.

So let’s move on to the second type of debt.

Bad debt

Now this type of debt is obviously something that negatively impacts your life and your financial baseline.

Plainly speaking bad debt is a debt that takes money out of your pocket, again as Kiyosaki would put it.

I’ve mentioned above some contributing factors on how we as consumers end up in a pit hole of bad debts, and sometimes to the point of insurmountable proportions.

Now let’s list some examples of bad debts (some of this will need some more explanation):

    • credit card debts that cannot be paid up in full by the due date
    • buy now pay later or installment types of purchases for the latest and the greatest gadgets, furniture, etc.
    • leasing or financing for a “brand new” vehicle (I will expound on this a bit further below)
    • leasing or financing for a “second” vehicle (I know this one too needs expounding)
    • mortgage of your home (yes you’ve read that right and I’ll also expound on this further down below)
    • student loans
    • home equity loans for the use of purchasing the latest and the greatest again

These are some that I can think of for now, again as I usually say, if you have more ideas of samples of bad debts comment, comment and comment them below.

Explanation of some examples

Now on to explaining some of the bad debt examples I stated above.

    • lease or finance of a “brand new” and/or “second” vehicle

I know, I combined the two points above as basically they’re quite similar. The thought process here is, obviously if you’re in over your head or I would even dare say for as long as you still have bad debt especially credit card ones, buying a brand new or getting a second vehicle should not even cross your mind as you’re only digging a deeper hole for yourself.

Bear in mind though that I’m not saying that you shouldn’t purchase a vehicle. I recommend that if you really need a vehicle then just get a second-hand that is within your means to pay off and maintain as well.

If you are single, then be frugal and disciplined enough to make use of your city’s transit system while you’re in the process of eliminating your debt.

Now once you’re at a point of having more assets, especially once you’ve reached that state where you can make your assets pay for this purchase, then that would be a lot better and you can go ahead and purchase the vehicle of your desire.

    • mortgage of your home

I know most people would react to this and say that home mortgage is an asset. I dare say not. This is probably more so because of Kiyosaki’s influence on me, where he defined assets as entities that puts money in your pocket.

Obviously a home mortgage takes money out of your pocket regardless however convincing your bank says that they are assets.

Again as I stated on my point about the vehicle purchase above, it’ll be better once you reach the state of your assets – entities putting money in your pocket – being able to pay for your home mortgage.

Now I am not a hypocrite to say that I have not done this myself. My wife and I have bought into a home mortgage and are paying it off with our “active” employment income. It is my aim though to build up our assets so that eventually our mortgage will get paid off by our “passive” income or investments. (That’s one of the purpose of this website, it’s a journey and a process).

There you have it folks, my sort of Debt 101 course for ya.

Let’s get into the “bad” debt elimination process.

How to eliminate “bad” debt quickly

Write down all your bad debts or put them in a spreadsheet

Treat your bad debt as your enemy. Writing them down is a way of putting a target on your bad debt so that you will remain focused into eliminated them and not get side tracked.

Also, this will help you as you go through the process as you see your debts decrease and gets eliminated one by one, it will encourage you to keep striving forward.

Write down the interest and minimum payment or amount you intend to pay for each debt

This exercise will give you insights as to which debt you’ll have to tackle first. Like I said focus is the key and having a clear view of your debts would help you as you tackle them all.

Re-order your bad debt list

Now there are three different and common ways I’ll introduce to you in ordering your list.

1) You may choose to order them from least to greatest based on the amount of debt.

This style of list will be used to tackle the smallest ones first so that you’ll see your debts getting eliminated quickly one by one and then you proceed on to the next one.

The only drawback on this is if you have a higher interest on a debt that is bigger then you’ll end up paying more interest than necessary.

2) Or another way is one that has the higher interest rate down to the one with the lowest interest rate.

This style of list would tackle your higher interest debts in order to avoid paying more interests than you would. I personally like this style of order.

3) The third way is determining the one with the least amount of time to pay off to the longest time it will take you to pay it off.

Now this method of ordering your debt can be done by dividing your debt with the minimum payment required every month or even the amount you intend to pay for each debt every month.

There’s a caveat of course that you should at least aim to pay the minimum required.

The resulting factor with the lowest number would be the one that you’ll prioritize and then on to the next factor higher and down the list goes.

In my opinion, I would use a combination of these methods. You can even combine all three. There’s no right or wrong way of doing it. The point is to have a definite plan on how to tackle your debt.

Accelerate your payment

Now here’s what will help you pay off your debt quickly. You’ll have to dig deeper into your pockets. By this I mean you’ll have to set aside a definite amount that’s above all your minimum payments combined that you’ll add to the debt that you’re prioritizing from your list.

For example, set aside $100 extra and add to the debt that’s on the top of your list.

In this step, you’ll have to tighten your belt a bit and figure out where you can find some extra money from your budget to add to your debt elimination plan.

It goes without saying that the more you can put into this the better. Also, the key is consistency. Once you’ve defined your payment accelerator amount (as I would call it), you’ll have stick to that amount from beginning to end.

Eliminate the next debt faster

As one debt gets eliminated, add the payment for that onto the next one. This is where you’ll truly see your debts getting tackled quicker and faster.

In closing

There you have it folks. Again I can’t overstate it enough that you’ll need discipline and consistency in tackling your bad debts aggressively.

The road to financial freedom is one without bad debt so it is very important that this be addressed in every person’s financial journey.

I hope this has been informative for you and I thank you for reading.

Finally, I’ll leave you with this thought, comment your thoughts below and let’s start the discussion rolling. I’d love to hear from you all. Cheers!





8 thoughts on “Debt elimination – How to get out of debt quickly”

  1. Megan

    A very good outline of good and bad debt and the “consumerism” society we live in today. The only debt I have, by your summation, are both bad debt, student debt and a mortgage. I am currently working on reducing both. In regards to the mortgage, I would classify mine as good debt. I look at it this way, I currently have a mortgage that is less than rent for equivalent homes in the area. I pay a substantial amount more each fortnight than the mortgage demands. The property is worth at least 4 times what I owe on it. instead of paying rent and paying down someone else’s investment, I have a property that has increased in value quite substantially since I bought it. When I do sell, if I choose wisely, I will have enough to buy a new property as well as the beginnings of an investment. Would you think in this case my mortgage is more good than bad?

    1. Mark

      Thanks for the feedback Megan. When it comes to mortgage it is very good that the property value of your home has 4x than what you owe on it. That is indeed remarkable and I do hope you pay it off completely soon enough. Just keep it up. You are more than welcome to classify it as a good debt for the reasons you mentioned. However, as I stated in my post my definition of a good debt or an asset is something that puts money in your pocket. If you are renting out your property or even a portion of it then that would fall within my definition and yes then I would agree with you that your mortgage has indeed turned into a good debt as it is earning you some income.

  2. Hello Mark, I had never heard of the idea of good debt and bad debt. I always thought that all debt was bad. It has definitely led me to open my mind about the subject. I think that the plan you have put forth to eliminate bad debt is solid, and if anyone follows it, then they will have success. Thank you for sharing this information with us.

    1. Mark

      You’re most definitely welcome Kevin and I am glad that I can help.


  3. Hi. This with an excellent post with great tips on how to get out of debt. Most people do get into debt in ways you stated above, but not everyone. Some people end up dipping into credit cards that they always used responsibly before when there is a job loss, illness, or emergency that they have not prepared for. It is always best to be prepared and have reserves, but not everyone does and as a result sometimes end up in debt. Sometimes its not extravagant impulse buying. Sometimes it medical bills of just food for the family. I am a good financial state now, but I remember years ago when I was a single mother and had a gap in employment. There was a time or two that if I hadn’t used my credit cards my kids would not have eaten. I do really like your strategy for getting out of debt. It is pretty much the strategy I used once my situation was better. Thank you for sharing this information. Many people really do need to get this information.

    1. Mark

      Thanks for sharing LaVerne. You are correct, unexpected life circumstances is a good example of how we can end up being in debt. And that also serves a reminder for myself that we also went thru this at one point in our life, where both me and my wife got laid off almost at the same time. It was a scary and anxious time for us, as we have two kids and bills to pay. We did have to go into a little debt during those times but thankfully we managed to tighten our belt and not get too deep in debt.

      I am glad that you are in a better situation now. Keep it up and yes we also need to build up on our emergency funds so that we won’t be forced to get into debt when unexpected things happen. You actually gave me another idea for a good write-up. I’ll try to write something about building emergency funds.


  4. Jacob Schilling

    Hey Mark. I agree with this assessment you have in debt. I am lucky enough to never have been in debt, but I cannot imagine the writhing uncomfortable feelings it would bring to be deep in debt. Your get out of debt guide is also in depth, I really enjoyed how clear and concise you were. Thank you for this post, I can see it being very useful for many people attempting to get out of debt.

    Like you say, consistency is key.

    1. admin

      Good for you Jacob! You’ve started off in the right foot of not getting into debt. Keep it up.

      Unfortunately and based on statistics majority of people start off with debt, which is quite sad and thus the reason for me writing this blog post.

      Thanks for the feedback and I do hope this helps people to get out of debt quickly.


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