Getting into debt is so easy, the real problem though is getting out of debt and being completely debt free. As soon as you start borrowing money you are not looking at paying back the original amount, you are looking at interest and other finance charges too. Very often you will land up paying back double the amount that you originally loaned.
The clothes you bought on credit will long be worn out, the furniture you purchased on credit will be needing replacing and any luxuries you bought will be long forgotten while you are busy paying off your debt.
Getting debt free takes time, commitment and some hard work.
Here are some ways to get out of debt, if you can apply all of these then you will find you can get out of debt so much faster than just paying your minimum monthly balances.
1 Make a Decision to Stop Borrowing Money
The first thing you need to do is make a decision (and stick to it) to not borrow any more money and once your debt has been settled to close as many accounts as possible as soon as they are paid off.
Borrowing money is what got you into debt in the first place and there is no point in getting debt free just to go into the same cycle again.
2 Pay More Than The Minimum Monthly Balance
The amount of interest you are paying every month on your debt is most likely monstrous. You will probably find that at least 50% of the money you repay every month is going towards interest and other finance charges and only a small portion is actually chipping away at the amount owing.
Paying as much extra as you possibly can will save you a huge amount of money in the long term. Just check your contracts and see if there are any prepayment penalties!
3 Use The Snowball Method
This method is hugely popular for paying off debt. The Debt Snowball Method involves listing all your debts from the smallest amount to the largest. You then pay the minimum amount due on all the amounts and pay as much extra as you can towards the smallest amount.
Your smaller debts will then be paid off quicker and you will have more available finances to tackle the biggest amounts.
4 Do Something to Earn Extra Income From Home
Every little bit counts. Start thinking of ways you can earn some extra income from home. There are always ways to earn a little extra if you are creative enough.
You can make things to sell from home such as tasty bakes, home cooked meals for singles or the elderly, sandwiches for offices. There are always moms looking for cupcakes for birthday parties. You can even get your kids involved with helping you to bake cookies and selling them in your neighborhood.
You could offer services from home such as mending clothing or doing laundry.
If you are a stay at home mom you could even offer to look after some other children after school in your home.
Perhaps you have some experience writing content, graphic design or other skills that you can market online. There are loads of websites where you can offer your skills.
Take all the extra money you earn and put it all towards your debt payments.
5 Take On A Part Time Job
Take on a part time job that you can fit around your family responsibilities and your full time job if you have one. Even taking on one waitressing shift in a week will make a huge difference to your debt repayments at the end of the month.
6 Live On A Shoestring Budget
Assess your expenses and see what is an absolute essential and what expenses you can cut out. You will most likely be very surprised at how much you can save each month.
Put all the extra money you would have spent on unnecessary things towards paying off your debt faster.
7 Have A Garage Sale
Have a look around your home and see how many things you have that you never use and chances are never will again. You will be very surprised how many things you have that are collecting dust.
Sell everything you don’t need and put that money towards paying off your debt.
8 Negotiate A Better Deal With Your Debtors
Chat to all the companies that you owe money to and see if you can arrange a better interest rate. You can also ask them if they will arrange a settlement discount if you pay one amount in full. They may say no, but there is always a chance that they might offer you something that will save you money.
9 Put Any Extra Money Towards Your Debt
Make sure that you put all extra money towards your debt. So any tax refunds, year end bonuses, salary increases or inheritance put towards your debt repayments.
10 Drop All Luxuries and Expensive Habits Until Your Debt is Paid
Along with your shoestring budget it may be a good idea for you to evaluate how you spend money on luxuries and what expensive habits you have developed. Cutting out luxuries and expensive habits can make a massive amount of income available each month.
If you are so deep in debt that there is just no way to keep your head above water and even pay the minimum amounts due on your debt and also pay your monthly living expenses you might want to consider looking at bill consolidation loans.
Once you have a smaller repayment amount with only one company to pay it can be a lot more manageable to then apply these 10 tips for getting debt free to your debt consolidation loan.