Steps to get out of debt in 2025

COLUMBUS, Ohio (WCMH) -- As the holiday season comes to an end, chances are your wallet or bank account are feeling the impact.

According to WalletHub, the average credit card debt per U.S. household is $10,870. But when it comes to cleaning up your finances, there are several things you can do. Financial planner Matthew Kirby suggests getting financially organized first. He recommends creating a spreadsheet of all your existing debts. The next step is to develop a budget.

"There are certain things in a budget that you have to pay, whether it's your rent or whether it's childcare or food or gas," Kirby said. "Those are the things that are kind of non-optional." According to Kirby, tackling the highest interest debt first is key. "A lot of times that's typically credit cards, personal loans, those are all typically higher than kind of your more traditional debts, which would be a mortgage, car payments," Kirby said.

On top of seeking advice from an expert, utilizing web-based budgeting tools is a good place to start. "If you go to your bank website and you can look back at a year in review, a lot of times they will actually give you a breakdown of where your spending is and it'll categorize it for you," Kirby said.

Kirby said taking a look at your finances from the previous year is important in setting yourself up for a better financial future. "If there are things that you struggled with or things that were out of your control or things that you maybe didn't make the best decision financially, then at least there's an awareness so that if you're faced with that same decision in 2025, then you can adjust accordingly," Kirby said. 

Kirby said sometimes another source of income might be necessary in paying down debts. "We're seeing a lot of people getting side jobs, whether it's driving for a ride share or other kind of sources of income to try to overcome some of the inflationary issues that that we're seeing, mainly with housing, energy and food prices," Kirby said. 

Getting out of debt and managing your day-to-day cash flow is critical. Once you reach a place where you're comfortable with your spending, he encourages people to prioritize savings. "You need to be able to build up a savings account or an emergency fund that will help you maintain staying out of debt," Kirby said. "So instead of having $1,000 on a credit card for new tires on your car, having a savings account, that you don't have to put it on a credit card, but you can pay cash for it."

Kirby also suggests that if you're married or living with someone and sharing expenses, you have a conversation with that person to get a better sense of their financial priorities.