Absolutely! You Can Get Out Of Debt

How to Get Out of Your Debt





Many people would love to pay down their debt or completely get rid of it altogether, but they aren’t quite sure of the best way to do it or where to get started. There really isn’t any one “best way” that works perfectly for everyone. So here are a proven suggestions to get you started. The more of these you can apply, the faster you will get out of debt.Getting out of debt isn’t easy, and that’s especially true when you don’t have a money tree growing in your backyard. Sometimes it takes all you have to keep up with monthly bills and save for a rainy day, let alone pay the minimum monthly payments on your credit cards and loansNot all of us make six figures which means paying off debt can be tough. But it’s not impossible.Paying off debt can be frustrating and confusing if you don’t have the right plan. Use these tips for getting out of debt to improve your financesIf you don't already have one, the first step of getting out of debt is to develop a budget—a plan for how to spend your money every month that takes into account how much you make and how much you earn.Write down the income from all your income sources. Record the fixed expenses that remain the same each month, such as your mortgage or car payment, along with the variable expenses that change each month, including dining and entertainment expensesSubtract your expenses from your income; whatever is left over is your discretionary allowance. Allocate a portion of this amount every month to pay down debt.If the amount is less than zero, you are spending more than you earn, so you first need to earn more or spend less to create the financial cushion in your budget needed to comfortably pay down debt while meeting other important financial obligations.You’ve probably heard this a lots, but are you doing it? You can save a lot of money just by showing a coupon to the cashier. Just be sure you’re using coupons for products you already buy, otherwise you could end up overspending on items you’ll never use.Make sure that you always pay more than your minimum payments on you credit cards, overdraft, or line of credit. If you only make your minimum credit card payments each month, it can literally take forever to pay off your balance. If you want to pay off your balance quickly, pay as much extra as you can afford. Try using a financial calculator to see how much you can save like this!If you’re paying more than the minimum payment, you can also try the debt snowball method for debt reduction. This debt repayment method asks you to make the minimum payment on all your debts except for the smallest one, which you’ll pay as much as you can toward. By “snowballing” payments toward your smallest debt, you’ll eliminate it quickly and move on to the next smallest debt while paying minimum payments on the rest.Over time, you’ll pay off each of your smallest debts until only a few are left. Eventually, all your debts will be gone..This is only for those people in debt. If you’re just looking for more money to invest or save, I don’t like to advise people to watch every pennies and never buy little things like donuts and softdrink on the way to work. But if you are in debt, emergency.So you’re going to have to watch those little purchases that add up. Go through the expenses in Mint. It’s this little stuff that can add up and that can be eliminated when you have a debt to pay off.If you want to pay off your debt quickly, then this next step is crucial. There are a few different ways you can manage your debt for a quick payoff plan.My wife and I used the Debt Snowball method where we listed all of our debt on one piece of paper from smallest to largest. Then we started paying minimum payments on everything except the smallest debt.If you were to use this method of debt organization, you’d take the surplus money you have after paying all your bills and throw that at your smallest debt. For instance, if you have a $100 surplus and the minimum payment on the first debt is $25, now you will pay $125 per month until that debt is gone.There are other methods of organizing your debt for payoff as well. You can pay it off in order of highest interest rate to lowest interest rate. Or, you can pay it off in order of smallest monthly payment to largest monthly payment.Everyone has a different opinion about which method of debt organization works best. Some choose the debt avalanche plan. This is the plan where you pay off the highest interest loans and cards first.One of the smartest strategies for getting out of debt is to make minimum payments on all of your debts and credit cards except for one. Chose the one debt that is charging you the most interest and focus all of your extra payments on paying off that one first.Once your first, most expensive debt is paid off, take all of that money that you were paying on that first debt and focus it on the next most expensive debt.Continue this method as you pay down each of your debts, and you will be left with your least expensive debt to pay down last. This strategy will get you out of debt quickly, and you will feel encouraged as you see your progress. There is also a different variation of this strategy that a lot of people find even more motivating. It's called the Snowball Method.Children grow out of clothes at the speed of light. It’s not worth it to go into debt for your 2 year old’s wardrobe. Check out consignment stores that sell pre-loved outfits in good condition. If you’d rather shop online, no problem.On this millennium, you can watch most of your favorite shows online. If you haven’t bitten the bullet yet, do it! Put that 100 bucks cable bill toward your debt each month and watch how quickly your debt snowball starts rolling.If you have student loans, you may be able to get a lower interest rate by refinancing. Earnest is a platform that uses technology to bring low-interest loans to high-potential people. They look at things like your investments, savings patterns, and career trajectory to give you the lower rate you deserve.If most or all of your debt is credit card debt, you know how hard it can be to ever make any progress when the interest rates are so high. Getting that interest rate down will save you money and enable you to get out of debt more quickly. There are some ways for getting your credit card interest rates lowered.The best way is a balance transfer credit card. You open a new credit card that has a period of 0% interest; some offer that rate for as long as 24 months. You transfer the balance from your current high-interest cards onto the new card. You have that period to pay only the balance on the card with no interest charges.You must pay off the entire balance before the 0% APR period ends though. If you don’t, the remainder will be subject to the new interest rate which could be higher than the price you were paying on the previous card.Not everyone will be approved for a balance transfer card but if you are, indeed buckle down and get that balance paid off.People lend you a lump sum that you can use to pay off your credit cards. A loan like this does have an interest rate (that’s how the lenders make a profit), but it will be far less than the interest rate on your credit card.If you’re not eligible for any of the above, call up your credit card companies and ask for a reduced interest rate. Be honest, tell them you’re struggling with the payments, but you have a plan to pay off your debts but could use some help in the way of a lower interest rate. Not all of them will agree, but you might get lucky, so it doesn’t hurt to ask.We get it. Going to a restaurant or hitting up the drive-thru is so much easier than cooking at home. But while you’re enjoying the freedom of not having to cook, your purse is in a pinch. For a creative way to socialize and share a meal, have friends over for taco night instead of meeting up at a restaurant.Make a list and stick to it. Do impulse items always end up in your cart? Try ordering your groceries online and then picking them up curbside at the store. Don’t ever shop on an empty stomach.If you don’t know where all your money is going each month, we’re pretty sure your favorite coffee shop can locate it for you. Brewing your own coffee at home is a simple way to save money fast.Do you really have $500 a month to spend on golf? But it’s not just the golfers out there who need to re-think their club dues. Do you spend a ton at craft stores but never get around to starting your project? Home improvement stores can also cost you several Dollars in one visit.You’ll never get out of debt until you stop making debt a way of life.When it comes to money, the children can be a worse guide than your stomach. Be open with them about what you do and don’t have room for in the budget. And remember: Never be afraid to use that magic word, “no.”Is what’s coming in more than what is going out? How much is left over at the end of each month? You’ll have at least that amount to start paying off debt. We want to make that number higher and we will, but it’s good to see we at least have some extra money after expenses.What if there is more going out than coming in? We’re going to fix that. That can happen when you start relying on credit cards and is probably at least part of the reason you’re in debt.Now we have all of the numbers we need to get started. We know how much we owe, what our expenses are, and what we have coming in. Now we need to keep track of your budget.For the time being, the only budget in the minimum payments on your debts, the amount you’ve already been paying. If you haven’t been paying even the minimums, budget those amounts in now.Also budget in some money for non-essentials like going out to dinner or a movie, a few drinks at happy hour.Your debt is an emergency, and if you were a robot, you would throw every dollar that wasn’t meant as an essential expense at it. Most humans can’t deprive themselves entirely for long stretches without going off the rails.If you are in debt and are really struggling to make any headway paying down your debt, start by speaking with a Credit Counsellor. Find out what programs are available to help you deal with your debts. A reputable Credit Counsellor will explain all of your options and help you choose the option that makes the most sense for you in your situation. Many people don’t know what they need to know about debt repayment programs at non-profit credit counselling organizations, but most are relieved they took the time to find out before it was too late. Speaking with a non-profit Credit Counsellor about your options is confidential, non-judgmental, and usually free.Assuming that your budget affords you enough discretionary spending, you can set up a debt payment plan. A good debt payment plan will help you to concentrate the money that you are currently paying on debt and speed up the time that it takes to eliminate all your debts.Start by compiling a list of the different types of debt you hold and your monthly payment on each, such as mortgage, car, and student loans, along with credit card debt. Add up the payments to figure the total amount you need to pay every month to stay current on your debt. If the amount is less than your discretionary spending amount, determine how much more money you can put toward debt each month; if you pay only the minimum amount, it will take a long time to pay off your debt.This will help you identify and prioritize paying down the largest sources of debt and also track your progress, which will motivate you to continue to get out of debt. As you make extra payments, familiarize yourself with your bank's extra payment policy so that you make the most of your extra payments each month.However, the amount you owe is more than your discretionary allowance, you'll need to cut spending or boost income to make larger or more frequent debt payments. Consider requesting a raise, taking on an extra job, or selling items you own to find money to spend on debt repayment.Finally, don’t forget that you’ll never get out of debt if you don’t change your spending habits. In other words, stop using credit cards to buy things you can’t afford, and stop borrowing money in other ways!To create a debt repayment plan that works, you need to stop adding to the pile. While you’re in debt payoff mode, consider switching to cash or debit instead of credit. And make sure you refrain from taking out new loans unless you absolutely have to.Learn to live within your means instead of constantly using credit as a crutch, and you’ll be a lot better off.List your debts from smallest to largest, regardless of interest rate.Attack the smallest debt with a vengeance, while making minimum payments on the rest of your debts. Repeat this method as you plow your way through debt.Next step takes a several months to finish for some people and a years for others. So if you’re on this step and focused on paying off that last debt, it’s possible the grind is starting to become a grind. Maybe you’re exhausted, and feel like it’s going to take forever to become debt-free.Hold that thought, this article will give you ideas on how to get out of debt fast.If you never allow any wiggle room for yourself, you can’t stick to the program. So let some money in your budget for non-essentials.We’re going to start finding extra money and making more money to get rid of that debt as fast as we can.Debt can be like this large dark cloud looming over your head. At least that is how we felt when we were in debt.It felt like we were just getting by. It was hard to see the light at the end of the tunnel. The large payments we made each month barely make a dent in our consumer debt. We were feeling very overwhelmed. We decided that we needed to get a handle on our finances and develop a plan to eliminate our debt.