No matter how you acquired the debt, you can’t go back and change the past. But, you can implement a plan to win the debt reduction war and start spending your money the way you want, rather than scraping by to pay off your old creditors. It may be a long fight, but with a plan you can start by winning the small battles that will help you turn the tide and declare your financial freedom.

You can't win the fight against debt until you know what you're up against.

Know Where You Stand

It’s tempting to stick your head in the sand when it comes to debt, because that way you don’t have to face the facts. However, you can’t win a fight when you don’t know what you’re up against. As painful as it might be, pull out all the loan and credit card statements so you know where you stand. In addition, find out where you’re spending your money. Brian Frederick, a certified financial planner practicing in Scottsdale, Arizona, recommends that when you’re creating a plan, you pull your last 90 days of spending to see what you actually spent on different categories. “Use this spending history to get an idea of where you are currently versus where you want to be,” he advises.

Develop a Budget

Once you know where you stand with your debt, you can build a budget that helps you pay down your debts. The more money you can carve out each month to pay down your debt, the less interest you’ll pay overall and the sooner you can put that money to work in other ways. Giving up some unnecessary luxuries, such as eating out regularly, might be worth it to you to get the debt monkey off your back faster. If it helps, use a different word than “budget” to describe how you’re going to spend your money. “I don’t like using the term ‘budget,’ as — much like ‘diet’ — it has negative connotations,” says Frederick. Instead, he calls them “spending guidelines.”

Debt Reduction Strategies

Debt reduction strategies generally have you make the minimum payments on all of your debts except the one that you’ve chosen to prioritize, and for that one, you pay as much as you possibly can until you’ve eliminated it. When prioritizing, you can either start from smallest to largest or start with the debt charging highest interest rate. Going from small to large is beneficial if you want the mental boost of being able to eliminate more of your debts in the short-term. However, paying the loans with the highest interest rate will save you money overall because you’re getting rid of the most expensive debt first.

Build an Emergency Fund for the Future

Frederick recommends that once you’ve paid off your consumer debt, you should build an emergency fund with between three and six months’ worth of expenses. Many times it’s an unexpected expense, such as home or car repairs or medical expenses, that drag people into debt in the first place, so to keep yourself out of debt, build an emergency fund that you can use for unexpected expenses. That way, instead of having to carry a balance on your high-interest credit card or use a payday loan, you can tap your own savings and not have to pay exorbitant finance charges to take care of the problem.