Being in a bad financial situation with significant debt can be overwhelming, but it’s not a life sentence.

No matter how deep you are in debt, there’s always a way out. However, that doesn’t mean the way out is easy, comfortable, or without consequences. You have to choose the path that’s right for you. Here are several helpful suggestions.

1) Create a spending plan

Everything starts with understanding your current financial situation and creating a realistic spending plan that aligns with your income and expenses. A spending plan, also known as a budget, allows you to allocate every dollar of your income toward specific expenses, no matter how large or small. The goal is to give every dollar a purpose – and to maximise the purpose of each dollar. ADVERTISEMENT

When you direct the flow of your finances, you’re much more aware of where you’re wasting money and where you’re using it intelligently. It allows you to make smart, objective decisions that position you well for the future.

2) Prioritise your debts

Not all debts are created equal. (That’s an important truth that you need to embrace.) Debts with high-interest rates, such as credit cards, should always be priority number one. If you don’t aggressively attack them, interest can accrue rather quickly and you’ll end up owing even more next month. By focusing on high-priority debts, you can make more progress toward your goal of being debt-free. ADVERTISEMENT

3) Work with professionals

Trying to get out of debt on your own is kind of like trying to get back on a boat with no ladder when you’re swimming in the middle of the ocean. You can get pretty close, but without a helping hand, it’s nearly impossible to get back in.

When it comes to debt, some professionals can help you in various capacities. The type of professional you work with will depend on your situation, circumstances, and goals. Examples include:

• Debt Counselors. A debt counsellor is someone who is trained to help people navigate debt and create smart plans for restructuring debt, paying off debt, negotiating with creditors, etc.

• Financial Coaches. A financial coach isn’t an official designation, but it usually refers to people who are skilled at personal finance and understand how to help others improve their finances (including escaping debt). You can often find local financial coaches in your community. There are also plenty available online.

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• Bankruptcy Attorneys. If you’re in a situation where no debt counsellor or financial coach can help you climb out, you may consider contacting an attorney to see if bankruptcy is a favourable option. As bankruptcy attorney Rowdy G. Williams says, “Being in debt is hard and getting out of debt is hard. You have to choose your hard. Bankruptcy, while not comfortable, is often the best way to hit the ‘refresh’ button and start over with your financial life.”

4) Be committed, yet patient

To truly break free from debt, you have to understand that this is not a sprint – it’s a marathon. It takes lots of time, effort, and persistence to see progress. That’s why it’s so important to set achievable goals and checkpoints that allow you to celebrate small victories along the way. Your goal should be to eat away at your debt balance every single week while adding no new debt.

Don’t forget about your income

While the first step in escaping debt is always to cut spending and be more disciplined with the resources that you have available to you, it’s not the only step. You can improve your results and escape debt much faster if you also spend time increasing your income. ADVERTISEMENT

Increasing your income while simultaneously reducing your expenses and strengthening your financial discipline is one of the best things you can do. It’s like pouring gasoline on a small fire – it takes off.

Increasing your income usually comes down to one of three options:

1. Look for raises and new opportunities within your current job/career
2. Add a side business or pick up extra side gigs
3. Find a new career with higher earning potential

When you combine the tips highlighted above with an action plan for increasing your income, you can escape debt much faster and put your family in a healthy financial situation!