Two Things You Need To Do To Get Out Of Debt

by Chloe Muller on March 29, 2021

Credit cards. Student loan payments. Mortgages. Car payments. These financial liabilities can seem like a frightening financial nightmare. Perhaps you think it’s an impossible task to pay everyone off, and still have enough money to survive. But there is hope. Getting out of debt is possible, with some planning, organization and self-discipline. The plan involves three main elements: halting the crushing avalanche of debt you’ve accrued, revamping your spending habits and starting to put some money towards paying off your debt while accumulating savings. Most likely you already have the assets you need to eliminate your debt.  The two things you need to do are very simple—just simply pay of your debt and spend less.  You need to do both.  Not one or the other.  Both.  If you are not committed to doing both, you will not succeed at getting out of debt.  It seems simple and “on-the-nose” but many people fail at these doing this and therefore accrue more debt instead of paying it off.

Pay Off Your Debt

If you want to get out of debt, it makes absolutely no sense to continue amassing more debt. The elimination of credit cards is the first step in paying off your debt.  Credit cards are a dangerous snare and an unnecessary evil—if you are in debt. Those little pieces of plastic may as well be a noose around your neck, so stop using them. Now. And snip them to pieces.  You might think that you might need your credit card one day for emergencies.  That is what an emergency fund is for.  But if you do not have enough of an emergency fund, then you  then keep one card, the wone with the most balance available.  Store it somewhere safe that is not your wallet.  Cut the rest up.  But as soon as you have a fairly sufficient emergency fund, cut your remaining card up—as long as you are still in debt.  Emergency funds are not optional—you should only have one—you need one.

Another thing you can do to help with paying off debt is to contact your credit card companies to see if they can give you a better interest rate.   Also, look for balance transfers as it may help you to consolidate your debt.  Be careful with balance transfers though as there are fees attached to balance transfers.

The “debt snowball” is a term used to describe the process by which you begin to chip away at your debt. Seeing short term progress in your long term plan to get out of debt will give you psychological as well as financial rewards. Believe me, the first time you pay off even the lowest balance credit card you’ll feel like a million bucks. But, you don’t actually have a million bucks, so celebrate responsibly.

In order to achieve a successful snowball, you must be relentless in your debt pay off. Reasonably decide how much you need to and can afford to pay off each month. Start with the lowest balance, while you continue to pay the minimum to your other debtors. Now, every spare penny goes toward that one debt until it is obliterated. Once that one is gone, start on the next, spending the same amount per month on getting out of debt. As you pay off more of the balance, your minimum payments will decrease, so that you can throw more of your preset monthly payments toward the totals.

Spend Less

This may seem very obvious, but it actually takes significant planning. You may ask, “How can I possibly spend less money? I already don’t have any.” Chances are you do. You just have to look for it.

As stated above, stop using credit cards. You don’t really own the money on them. It’s fake. You may as well crack open your old Monopoly game and try to go grocery shopping with the multicolored game cash. Look at the green in your wallet. That’s real money, and that’s all you have.

Then, look seriously at what, where, and how often you spend and start slashing. Think about how to save at every turn: groceries, entertainment, and transportation. Being frugal means going without the finer things. It may seem difficult, but is it worse than facing crushing debt for the rest of your days? Nope.  You can go back to the finer things in life once you are done paying off your debt. 

Many of those who have taken steps to get out of debt have used an actual written document or spreadsheet to monitor and control spending. Sometimes getting it in writing can be a wakeup call. Write down what you spend. You may be shocked and horrified at first, but it will help you to see if you are blowing $50 every time you go to the movies.

Write down what you make as well, and track expenses as well as income. You might even see some things on there that you’ve been buying for years but don’t really need, or that you can get for free.

You will still have bills, so make sure that you always pay on time. This will cut out any additional late fees and help you to have a clear vision of how much of your money is actually available for spending and saving.

Get creative. Start a pot luck dinner tradition with friends in the same boat. Organize a book swapping club in combination with the dinner. See if you can teach yourself how to do things around the house or with the car that you’re paying someone else to do now.

It also helps to consider how you can add more money in to your income. Perhaps a second job or a good look through the attic to see what you can sell on eBay?

Remember, these tips really work and have worked for countless others.  Paying off large amounts of debt take deligence and determination.   Take the time to follow the steps and you will get out of debt.  Remember, you

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