Tips for Getting Out of Debt

Tips for Getting Out of Debt

These ideas can help you win the biggest fight of your financial life.

You’ve finally seen the light — you realize that debt has made a slave of you, and you’re ready to start fighting your way back to freedom. But getting out of debt can be so intimidating. How do you possible begin to chip away at those giant balances?

To get out of debt quickly, within the course of a few years, you’re going to need to take some drastic steps.

Getting out of debt can feel like a monumental task, especially if you owe tens of thousands (or even hundreds of thousands) of dollars to various lenders. Making minimum payments is no way to go — it will take many years if you go that slowly. To get out of debt quickly, within the course of a few years, you’re going to need to take some drastic steps.

If you have already stopped borrowing money, freedom from debt is within reach. These five tips will help you reach that victory more quickly.

1) Make a budget and stick to it.

Many people get into debt unintentionally — they don’t keep track of their money and slowly end up spending more than they make. They use credit cards to make up the shortfall. After a few years, this kind of practice leaves them with thousands of dollars in debt that they never intended to have.

The solution is to make a budget — a detailed plan that accounts for all the money that comes into your household every month and allocates it to pay for your expenses. Good budgets can show you exactly how much money you can use to pay down debts each month. Budgets also show you if there are lifestyle areas that you can trim to speed up your debt pay-off.

2) Grow your income.

The bigger your income, the more ammunition you have in your fight against debt. So if you want to get out of debt quickly, it’s worth asking if there are ways to grow the income that you get from your primary job.

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Are you working at your full potential or languishing in a job that doesn’t take advantage of all your skills and training? Changing jobs or careers is a lot of work, but it can be worthwhile if it brings a big bump in pay. And you may not have to change jobs to grow your income. Ask for a raise, volunteer for overtime or take on additional assignments and responsibilities that come with extra pay. If you’re in the midst of a fierce fight with debt, you need to do whatever it takes to win.

Eeven a few hundred dollars a month will go a long way to getting you out of debt quickly.

3) Get a second job.

If you’re in a deep debt hole and have a limited income at your main job, you may need to get a second job in order to have more money to pay your debts. You can wait tables, take on side projects or mow lawns. Try babysitting, cleaning houses, or driving for Uber. You probably won’t make as much at this work as you do in your regular job, but even a few hundred dollars a month will go a long way to getting you out of debt quickly.

This is going to eat into your downtime, your nights and weekends, and your time with your family. But making these small sacrifices in the short term will help you achieve long-term freedom.

4) Break bad habits.

Our bad habits often cost us huge amounts of money. Some of these are obvious — smoking, drinking, gambling, etc. — but others aren’t. If you have a daily habit of going out for lunch or swinging through the Starbucks drive-through, those expenses add up quickly.

Whatever your habit, decide to break it now. It will likely save you hundreds or thousands of dollars each year, money that you can apply directly to your debt pay-off.

5) Sell stuff and downgrade.

Sometimes the things that get us into bad financial situations are life’s big purchases — things like cars and houses. If you bought more house than you could really afford, your big mortgage payment may be putting too much pressure on your budget. And if you bought a new car on credit, that loan may represent a large chunk of your debt.

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If you’re really radical about getting out of debt, you need to consider selling those items and getting out from under their debt burdens. Sell the car, pay off the loan, and buy an inexpensive vehicle with cash. Sell the house and buy a smaller home in a less prestigious neighborhood. You can always upgrade your home or car once you get out of debt.

Getting out of debt may be one of the biggest struggles you ever walk through in life. If you sacrifice and persevere, though, it can also be one of the biggest victories you ever win.

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  One thought on “Tips for Getting Out of Debt

  1. October 14, 2013 at 1:51 am

    How many people actually checked that there was a debt that you owed before you “paid” that debt?

    The sad thing today is that almost all “debt” is not your debt at all. As the USA is bankrupt (since 1933) you cannot accrue any debt… only a liability. This includes credit cards, loans, student loans etc. When you apply (legal def’ to beg) for a loan you actually create the “money” that the bank then lends back to you. Most people haven’t got a clue what money is or how it is created. Your application IS the money that you then gift to the bank. Learn what money is and you will soon see that you are all very very rich indeed and have NO debts at all.

    If you were to ask the bank to prove that they DID lend you something… you would make a much bigger step to getting debt free than saying no to trips or going out with friends etc.

    Have you ever asked yourself “If i’m borrowing some money, why does the bank only extend to me credit?” The very sad thing is that people don’t know the difference between money and credit. If you asked for apples and got oranges would you just accept that?

    If you simply stop paying “your debt” and let a debt collector buy the debt, you are instantly debt free and for free! The debt collector would have paid the debt off for you and the original creditor (the bank) will have discharged the debt… this means no more debt owed. You then just need to ask the debt collector to show you were you agreed to pay them for paying the debt off for you. Works every time!

    Think about it. If I paid all the debt off for every person who visits this site would those people be liable to me or not? Of course not, we never agreed that they would pay me back a single cent BEFORE I paid their debts for them.

    We should stop putting so much into the “credit score”. It is only a measure of how good you are at being fooled into thinking you owe money to somebody. The higher your credit score the more ignorant (without knowledge) you are in your financial matters. So if you need an apartment and your credit score is low… get a guarantor. Need a job and your credit score is low… find a job that employs you not your credit score.

  2. Jon
    November 26, 2013 at 6:44 pm

    Filing personal bankruptcy is a difficult and stressful process that should be avoided at all costs. These are some really wonderful tips that I think people will find helpful in getting out of debt. Breaking bad habits is probably the most difficult part.

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