10 Tips to Getting Out of Debt
Posted by Todd Smith
Prefer to Listen? Play Audio Version
Was one of your New Year’s resolutions to get out of debt?
Here are ten tips that will help you get out of debt:
1. Get motivated. The only way you will get out of debt is if getting out of debt is important to you. Make a list of the reasons you want to get out of debt. Ideas might include: it’s putting pressure on your marriage; it’s putting stress on your body; you want to live a financially-responsible life; you want to be able to put your children through college; you want to save for retirement.
2. Understand your debts. Identify and list all your debts showing the total due, the interest rate, finance charges, late fees, and over-the-limit charges. Then total all your debt, finance charges, and fees. By understanding your debt and associated fees, you will be able to make better decisions.
3. Create a budget. Putting together and living by a household budget is critical to getting out of debt. Furthermore, it is part of living a financially-responsible life. If you don’t know how to put together a budget, click the link above and/or seek help from a respected friend or family member.
4. Log every penny you spend. Carry a small notebook you can put into your pocket or purse or use your mobile device to log everything you buy, even if it is a $.50 candy bar. As you spend money, ask yourself “Is this absolutely necessary?” or “Is there a less expensive option?” At the end of the month, go over your expenditures and look for things you can eliminate the following month.
5. Negotiate with your creditors. Call your creditors, explain your situation, and ask for their help. I have heard countless stories from people I know who have been successful in negotiating lower interest rates, having late fees reversed, skipping payments, and lowering monthly payments. You will often be amazed at what creditors will do to help you if you just ask.
6. Increase your income. If you are working less than 40 hours a week, consider all options available to increase your hours. If you are already working 40 hours a week, consider a part-time job or side business. Above all, focus on increasing the value you bring to the market. As you build your value, your income will follow.
7. Use cash instead of credit cards. Keep one card and use it only for emergencies or major necessities, such as your furnace or air conditioner breaking down. Put your credit card in a safe place and make a commitment not to use it for everyday purchases. Do not accept credit increases or cards from other credit card companies.
8. Change your habits. Take a minute and consider some of your expensive habits, such as eating out, having an afternoon latte, drinking a diet soda every day, browsing through stores, or drinking with your friends after work. These little expenditures add up to big dollars.
9. Pay off your debt with the highest interest rate first. Select the bill with the highest interest rate and pay it first. When it is paid off, close the account so you are not tempted to use it again. Continue this process, one account at a time, until all your accounts are paid in full. When using this method, measure your progress by watching your overall debt decrease.
There are other methods, such as the Debt-snowball Method, but paying your debts with the highest interest rates first is the smartest.
10. Shop smarter. Stop paying retail prices for anything you buy. Start shopping at discount stores, thrift stores, and resale shops. Use shopping comparison websites such as Biz Rate, Price Grabber and Shop Zilla and make sure you are getting the best price for what you are buying.
If you are in debt, I challenge you to make the decision right now that you are going to put together a plan to eliminate your debt. Let today be the day you say, “Enough is enough, I am going to take control of my finances and get out of debt.”
If you are married or living with someone, let me encourage you to go through this process together. It is critical that you are both equally committed to ridding yourself of your debt. As you begin implementing your plan, you must hold yourself accountable and not allow exceptions.
If you are overwhelmed and not sure what to do, seek the help of a trained professional. Ask a respected friend, family member, or your accountant for a referral.
Do you have some practical ideas that can help people reduce their debt? What creative things have you been able to do to reduce your debt? Please share your insights in the comment section below this post.
You can’t control your life if you can’t control how you spend your money.
Load Disqus Comments
Top 20 Most Popular Posts
- 36 Ways to Make a Positive Impression in Less Than 10 Seconds
- Personal Accountability—A Requirement for Life Advancement
- The Power of Showing Your Appreciation
- Carefully Select the People Who Influence Your Life
- 10 Ways To Be A Good Listener
- 25 Unexpected Ways to Make Someone’s Day
- Your Words Reflect Your Character
- The Damaging Effects of Sarcasm
- The Importance of Being On Time
- Becoming a Disciplined Person
- 33 Ways to Reduce and Prevent Stress
- 10 Simple Ways to Show Your Sincere Interest in Others
- Don’t Worry About What You Can’t Control
- 49 Simple Ways to Make Your Life Better Right Now!
- Beware of the Green-eyed Monster
- Believe That You Can
- 10 Life-guiding Decisions
- The Uncomfortable Path to Success
- Give the Gift of Encouragement
- 130 Time-management Tips
Most Recent Posts
Connect with Little Things Matter
Little Things Matter
Improve Your Life One Thing At A Time
SUCCESS BOOKS ® is proud to Announce the Release of Todd Smiths New 280-page Hardcover Book and AudioBook