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Getting Out of Debt:
28 Things You Should Know




Are you desperately trying to get out of debt? If you are, you will want to take a look at this list to find out the things that you can do to get out of debt.

Beginning Steps for Change

1. Change how you think about money. Determine how much money you make per hour, and think about any new purchases you are planning to make in terms of how many hours you have to work for that thing. Is that product or service really worth that many hours of your work?

2. Stop spending more money! Stop going deeper into debt! Stop now! Seriously! Stop spending your money. Most of the things you think you need you really don’t. You’re just making your home more cluttered with stuff that keeps accumulating, and which you don’t use, while going deeper into debt. That money you spend on stuff you don’t need would be better spent on paying down your debts.

3. Start spending less than you make. If you are making $1500 per month, start spending less than $1000 per month. This is the biggest problem with most people. They keep spending more money than they make in income, and it causes them, or you, to go deeper into debt.

4. Write down your spending and categorize it. If you do most of your spending through your bank card, it becomes easy to record where you are doing your spending. By taking this approach, you can realize how much money your are spending in different categories. Perhaps you notice you are spending $800 per month on dining out when you should only be spending $300. Perhaps you are going to the movies too often. Perhaps you noticed how much money you spend on car maintenance and realize you could save that amount by doing things yourself. Perhaps you are spending a lot on your utilities, and you could save money by making a few changes in how you use those utilities. Whatever the case is, write down your expenses and categorize them to find out where you are overspending and need to cut back.

5. Make a list of all the debts you owe. Make a detailed list of every debt that you owe, including the amount, monthly payment, and interest rates. Keep track of how much your minimum monthly payments have to be each month to be able to add that to your expenses, or budget.

6. Create a budget. Once you’ve figured out how much you spend, categorized it, and made a list of every debt that you owe, then next thing that you need to do it to create your own budget. Figure out how much you need to spend in different areas – mortgage payment, traveling expenses, food, utilities, and so forth, and stick with that budget. Don’t go over your budget – if your budget says $500 is allotted to food and dining, then stay within that $500; don’t spend $600 or $700. Be disciplined and stay in your budget. By the way, make sure you make your budget reasonable and not impossible to stick to. Any money left over your budget items is money that you use to pay down your debt.

7. Create a debt pay-down schedule and stick to it. Create goals. Figure out how much money you want to have paid off by in 3 months, 6 months, and a year from now, and make sure that it is reasonable. You will use these goals as you are paying off your debts.

8. Start paying off your debt. Pay off the debts with the highest interest rates first. Make sure to always make the minimum monthly payments on all of your debts, and make your payments on time so that you don’t have to pay late fees or extra interest. By using the part of your income that isn’t used for your monthly expenses budget to pay off your debts, you are helping yourself get out of a hole. By paying off your highest interest debts first, you can save yourself hundreds, or thousands, of dollars in interest, on the cost of your debts, and pay off your debts faster.

9. Use the “Debt-Snowball” approach. When you pay off a debt, use the money that was used to pay off that debt towards paying off another debt. By doing this, you can pay off your second debt even faster. Once you pay off that second debt, use the money that you used to pay off that debt, including the amount you used for the first debt, to pay off your third debt even faster. Keep using this approach until all of your debts are paid off.

10. Make sure that your significant other is on the same page as you. If you are trying hard to spend less, eat out less, and work more, in order to pay off your debts, but your significant other is spending like there is no tomorrow, all your efforts will be in vain. Get them on the same page as you.


Spend Less Money

11. Any money that you save should be used to help pay down your debts. Don’t spend it on other things, trivialities, and unneeded expenses – use it to pay down your debts.

12. You will want to spend less money, save money, to have more to pay down your debts. Be frugal! You will need to make some sacrifices in your life. There are many possible things to give up: shopping, dining out, going to movies, traveling and vacations, cable TV, gym membership, etc. Get rid of your home phone and stick with your cell phone. Reduce the coverage on your cell phone. Stop your newspaper subscription. Spend less money on heating and air conditioning to save in utility expenses. Whatever ways you can find, start spending less money.

13. Eat out less; eat food bought at grocery stores – always buy items that are on sale, or use coupons. In fact, start your own garden to save even more. These few ideas can allow you to save a lot on food expenses.

14. Consolidate your high-interest debts, if possible, to an account with a lower interest rate, as this will allow you to pay off your debts faster, and save lots of money that you would otherwise have to pay in interest costs. One of the best things you can do, if you can get it, is to have a line of credit with your bank, which offers a much lower interest rate than credit card debts, and transfer everything to that.

15. Refinance your mortgage at a lower rate. If you are paying $1500 per month on your mortgage, and you can refinance at a lower interest rate to pay only $900 per month, do so. In this example, you would have saved $7200 per year.

16. Do a balance transfer to a new card with a lower interest rate. Every time you get a chance to transfer your high interest rate credit cards to ones that have a lower interest rate, you can save yourself some money in interest, which you can then use to help you pay down your debt faster.

17. Pay your bill on time. Don’t be late! Set up automatic payment plans with companies so that you aren’t late in paying your bills.

18. Learn to do some things yourself rather than using a professional – learn how to fix your own plumbing repairs, learn how to install your own lighting fixtures, learn how to fix the dryer when it stops working, and definitely learn how to do your own car repairs. You could also learn to cut your own hair. If you are a woman, learn to do your own pedicures and manicures instead of getting it done professionally. There are many things you can do yourself that don’t really require you to use a professional service.

19. If you can find something for free, don’t pay money for it. For example: borrow books from the library instead of buying books you want to read.

20. Find ways to go out without needing to spend extra money – go to a park, take a walk, bring a picnic lunch, etc.

21. Use bartering to get the things you need without using money.

To find hundreds of ways to save money, check out our money-saving articles.

Make More Money

22. Work more! Work overtime at your work, if possible, to make more money. Change shifts to one that pays more. Work holidays if they offer double or triple-pay. Get side jobs to make extra income. If your spouse doesn’t work, ask them to start working to make extra income to help pay down your debts. Start your craft hobby and start selling those crafts at flea markets on weekends. These are just a few of the many ways available for you to earn extra income.

23. Find other ways to make extra money, including selling stuff. Put the extra money you earn towards paying off your debt. This includes: extra side income, yard sales, tax refund checks, extra money returned to you at the end of the year by your mortgage company, etc. All of this will help to pay down your debts faster.

24. Trade down to lower cost items. For example – you own an automobile that is still worth $15,000; sell it and use some of the money to buy a good-used automobile for $8,000, and use the rest of the money to help pay down your debt. If you can sell your home and move to a smaller house, you can cash out the equity you have in the larger home, get a smaller mortgage, and pay less for utilities, all of which could be great towards helping you pay off your debt.

25. Get help from loved ones if they are willing to help. Don’t be so proud that you are unwilling to accept help. Many people purposely allow themselves to be punished more than they need to because they won’t accept that financial gift from their father or uncle or friend, or whomever is willing to help you out.

After You’ve Become Debt Free:

26. Remember everything you learned. Have a budget and stick to it. Record your expenses. Keep your changed view of money. These are just a few of the things we mentioned above.

27. Don’t go back into debt! Once you pay off all your debts, do not go back into it. Stay out! Spend less than you make. Debt is nothing but financial slavery. Your life will be much better if you don’t have all the headaches that come with being in debt.

28. Create an emergency fund. After you pay off your debt, put the money that you were using to pay down your debt into a savings account that can pay for your living expenses for a minimum of 6 months, in case you lose your job. Also, the extra money in that emergency savings account can be used to pay for unexpected bills, like extensive car repairs or medical expenses. It is better to pay for these unexpected expenses out of a savings account rather than paying for it using credit and borrowing the money – you stay out of debt, and you pay less in interest costs.

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