If you’re struggling with bills, credit cards or loans, you’re not alone — and there is a way out. Personal finance expert Ramit Sethi, author of “I Will Teach You To Be Rich,” offers actionable advice for anyone overwhelmed by debt.

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Here’s a breakdown of the four essential steps he recommends if you’re drowning in debt .

Cut Back on Non-Essential Spending and Redirect That Money Into Savings

The first step in tackling debt is to get a clear picture of where your money is going and find areas to cut back. This doesn’t mean you have to give up everything you enjoy, but identifying and reducing unnecessary expenses can free up cash to put toward your financial goals.

Start by tracking your spending for a month to see what’s truly essential–like rent, utilities, groceries–and what’s discretionary, such as dining out, subscriptions, or impulsive purchases. Then, consciously reduce spending in those discretionary categories. Even small cuts add up over time.

Instead of letting that freed-up money disappear, redirect it into a basic emergency fund. Sethi suggests starting with just $1,000. This might sound small, but it’s a critical safety net that can prevent you from going deeper into debt when unexpected expenses arise.

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Call Your Lenders and Negotiate Better Terms

Many people feel intimidated by the idea of calling their lenders, but it’s a crucial step that can make a real difference. Reaching out to your credit card companies, student loans or other creditors can lead to lower interest rates , temporary hardship plans or debt consolidation options.

When you call, be honest about your situation and ask what programs or accommodations they offer. Lenders often prefer working with you rather than risking default. You might be surprised at how willing they are to help if you simply ask.

Sethi emphasizes being aggressive and proactive here. Don’t wait for your debt to spiral out of control. Take charge by negotiating better terms that make your payments more manageable and reduce the total interest you pay over time.

Build a Mini Emergency Fund

If you don’t have any emergency savings, building an emergency fund should be a top priority. With what money?

Well, use the cash flow you’ve recovered by reducing your spending and decreasing your debt interest payments to build a mini emergency fund. This fund isn’t a full six-month cushion but rather just enough to cover three months of your essential expenses like groceries, utilities and phone bills.

Why is this important? Because having this safety net stops the financial bleeding and gives you breathing room to focus on paying down debt without constantly worrying about unexpected costs.

Aim to build this fund within 60 days by using the extra cash flow you’ve created from cutting expenses and negotiating better terms. It might require discipline and sacrifice, but having this buffer will protect you from falling back into debt during emergencies .

Increase Your Income

Finally, while cutting costs and managing debt are crucial, increasing your income is often the fastest way to accelerate your progress.

Sethi encourages you to take a hard look at your earning potential and find the best way to earn more money. For some, this might mean negotiating a raise at your current job , and for others it may be better to explore better-paying jobs.

This step won’t be easy. It often requires stepping outside your comfort zone, working harder, or learning new skills. But the payoff can be huge. Even an additional $500 per month can transform your financial situation. Over the course of a year, that’s $6,000 that can be directed entirely toward savings or debt repayment.

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