Five Money Moves To Make Before You Pay Off Your Debt

by Hank Coleman

Can credit cards make you a millionaire?Getting out of debt is a long hard road, but there are several money moves that you can make before you even start to pay off your debt. Cleaning up your financial house a little bit before you start to pay off your debt will help to give you the greatest chance of success. It will not be easy, and it will definitely take some time. But, these money moves can help.

Find Out How Much You Owe Exactly

Believe it or not, many people do not even know exactly how much they are actually in debt and owe. I know that I was firmly in this camp when I graduated college. Collect all of your credit card statements, car loan documents, and other consumer loans and start to add up the balances. It might actually shock you to know that you really didn’t fully know how much you owed. This is a critical step that you should take before you start to pay off your debt.

Stop Adding To Your Debt

This may seem like a no brainer, but unfortunately it isn’t that obvious. It is one of the biggest reasons that people tend to fight to control their debt year after year. Some clean up their debt only to find themselves right back in it again afterwards. Cut up those credit cards if you are serious about getting out of debt. If you feel like you simply cannot cut the cord, put them in them in a block of ice in your freezer. It will take you forever to get them out, and hopefully you will not want what you were buying after your credit cards finally thaw out from the block of ice.

Sell Some Assets To Weed Out Debt

Do you have a car payment that you can’t manage? Then, maybe you should sell your car. Why not throw that car payment at your credit card and other consumer debt and drive a beater? Are you like me and have 400 DVDs and CDs? Sell them on sites like and start to weed out your collection. We spend our entire lives collecting things, and you would be surprised as to how much you could make by having a yard sale, selling items at a consignment shop, or selling things on the internet through eBay.

Consider Consolidating Your Debt

Do you have a lot of small credit cards and other debts that are hanging over your head? You may want to consider a credit card transfer moving some of the smaller balances together on one credit card. You can talk with a bankruptcy lawyer to discuss whether loan consolidation or other viable alternatives may provide a solution to managing your specific debt problems. While moving money to one credit card will not pay off your debt, it can help you to focus on your debt by reducing the total number of creditors that you owe money to. I recently did this so I could focus on just a couple large balances instead of a lot of little debts that you have to keep track.

Fund Your $1,000 Emergency Fund

The very first baby step in Dave Ramsey’s book and financial freedom program, The Total Money Makeover, is to get $1,000 in the bank by establishing an emergency fund. A $1,000 emergency fund will help you from falling back into the trap of adding to your debt while you are trying to pay off your debt. Think back to all of the “emergencies” that you have had that set you back. Almost all of them are relatively small, and having $1,000 in an emergency fund before you attack your debt will keep you from reaching back for your credit cards and adding to it.

Getting out of debt is a hard proposition that many people continue to struggle with over the years. Many find themselves getting out of debt only to not change their habits and wind right back up into debt again later in life down the road. One of the big reasons or this is because they do not take the best initial steps to set themselves up for success.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and is currently pursuing his Certified Financial Planner credentials. Email him directly at Hank[at]

Hank Coleman has written 546 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

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