If you are like most people today, you feel the burden of debt pushing down on you. It seems almost impossible to live without any type of debt today. The cost of everything is so high, it is almost impossible to afford cars and houses without going into debt for them. Because of this, some debt is necessary. That also means that not all debt is bad. However, too much debt is not a good thing, either. There needs to be a fine balance between having some good debt but not too much that you feel overwhelmed and chained to it.

It is not impossible to get out of debt, or at least have only good debt. It does take work and some sacrifices, but if you keep your goal in mind, you can have a debt free living. Continue reading to find out some tips on how to stay out of debt. 

Is All Debt Bad?

Now that I have scared with you the staggering amount of debt this country has, I am going to tell you that not all debt is bad. Just like all things, moderation is key. The trick is understanding debt and knowing how to use it properly. While it is admirable that you want to get out of debt, it may not be possible to become completely out of debt. You can, however, have debt that is manageable and useful. 

For example, a mortgage is considered useful debt. It is close to impossible for the average person to buy a house and pay cash for it. Houses are incredibly expensive. A mortgage allows you to have a home and pay for it each month instead of all at one time. When you have a mortgage, you also get a tax break so there are benefits for you at tax time. As you pay down the amount of money you owe on your mortgage, you begin to get equity in your house. This is the amount of the house that you own. 

Typically, any debt that works to your advantage is considered good debt. If it helps you gain more financial freedom and does not put you in a bad place financially, it may be a good debt. If it helps you attain a positive credit history, it may also be a good debt. If it allows you to gain something, such as a house or car immediately, while you pay for it over time, it may be good for you. 

I Feel Like I'm Drowning In Debt And Will Never Get Out

I think it is safe to say that you are not the only one that feels that way. Most of us come out of college drowning in debt. Then, we seem to spend the rest of our lives working to get out of debt. We often do make enough money to be able to live. The cost of things continues to rise while our paychecks seem to dwindle. It is a problem that plagues our entire country. Even with our high debt, we are still in a better position than many other countries. 

Don’t Lose Hope - You Can End Debt

It is understandable to dislike being surrounded by debt and want to get it. I can also understand that you feel like you can never get out of it. I am not going to lie to you, getting out of debt takes work. It takes patience and persistence. It also takes changing your mindset. You cannot continue to want to live like everyone else and be debt-free.

Fortunately, there are many financial tools available to you to help you find a way out. There are free websites with calculators and forms to help you make your way to a debt-free life. I am going to share with you some tips for reducing your debt and taking control of your finances. Honestly, some of them you probably already know. You just have to commit to taking some of these steps to working your way out of debt. 

This may be the most obvious tip I am point to give you to get out of debt. The number one tip I have for you is pay more than the minimum payment due on all of your bills. I am sure you know, or at least have noticed, when you make the minimum payment, especially on credit cards, you are not making any strides to reducing your debt.

When you get your next bill, you may notice that it is only about $20 less than the month before, even though your payment amount was higher than that. Paying the minimum amount gets you nowhere fast. If you are serious about getting out of debt, you need to make significant payments on your credit card balances. 

Pay off All of Your Debt

Even though I have referenced credit cards, you should always pay more than the minimum on all of your debt. This includes student loans, personal loans, and even your mortgage. It helps you get out of debt faster and you spend less money on interest. You can use a debt repayment calculator to highlight how long it takes you to pay off your debt when you only make the minimum payment. Sometimes seeing it in your face helps you understand just how much paying only the minimum hurts your goal. 

I am going to give an example of how long it may take you to pay off your credit card. If you have a balance around $15,000, with an APR of 15 percent, you have a minimum payment that is about $600. If you pay only the minimum amount, it takes you over 13 years to pay off that credit card. That means that you are not using that credit card at all while paying it off. 

This is another tip to get out of debt that focuses on not paying the minimum amount, sort of. The way this tip works is you look at all of your debt and put it in order by how much you owe, lowest to highest. You pay the minimum amount on all of your debt except the lowest one. You pay as much as possible each month on that particular debt until it is paid off.

I mean every single dime that you have to spare goes towards this debt. Once you pay it off, you apply the same process to the next debt, which is now your lowest amount. You continue that same process until all the debt is paid. 

Your Focus is on One Debt

This works on several levels. One you are aggressively paying off one debt at a time. It allows you to focus on one debt. This is much easier for the mind to process and handle than looking at multiple different debts. When you have all your debt lined up in front of you, it seems unmanageable. When you focus on only one, you can handle much more easily. All your other debt is being paid, just the minimum amount.

Also, once you pay off that first debt, you can count it as a win. You have paid off one of your debts and you feel good about it. That can motivate you to continue. When you are paying off the next debt, you have the money you were using to pay the minimum amount plus all the other money that was going towards your first debt. Each time you pay off a debt, it frees up a little more money to pay towards the next one. 

One the surface, this may seem like a difficult step to take. Who wouldn't love to increase their income, right? I am sure making more money at your current job may seem unreasonable, but there are many other options. First, have you asked for a raise at work? If not, maybe it is time to ask. You do not know, if you do not ask. Maybe there are not any opportunities for more money at your current job. Is it time to find employment elsewhere? Maybe it is time to consider a new job or a new field. 

However, a new job is not the only option. Have you considered getting a part-time job, or a side hustle as it is commonly referred to? You may be able to find part-time work that you can do from your home at a time that is convenient for you. You probably have skills you do not ever realize could make money for you. There are sites such as TaskRabbit that can help you find work to make extra cash on the side. 

There is another way to make money to get out of debt. You can sell your stuff. If you are like me, you probably have a ton of stuff sitting around your house that you do not want. You can sell that stuff and make money to pay off your debts. There are many sites set up for you to sell your stuff, there is no reason why you are not doing it. You do not even have to put much effort into it. You could easily make a decent amount of money that can go directly to your debt. 

This may be one that you have not heard of before as a way to get out of debt. If your goal is to get out of debt as quickly as possible, then you should take any available money and put it towards your debt. That means all money that is not going to a bill goes to paying off your debt. You should stop any investments that you make, including to a 401k, pension or another retirement fund. You stop the investment for a short time while you are working towards paying down your debt. 

Once you have paid off your debt, you can resume putting all money into your investments. You are able to put more money into your investments because you have freed up some extra money because you are no longer paying on all those debts. Before you resume your investments, you should have 3 to 6 months of your expenses saved into an emergency fund. Then, it is a good idea to restart all those investments. 

This is my favorite tip to get out of debt. I am a huge fan of creating a budget. No matter what you are trying to do in your life, you should not do it without a budget. You simply cannot make strides toward financial freedom and independence without a roadmap to get there. Your budget is your roadmap. It has your goals and the steps you take to get there. It allows you to be in control of your money. This is the opportunity to put yourself in the driver's seat and work towards your plan, no matter what it is.

Focus on Your Financial Goal

Before you can create a budget, you must start with the end in mind and create a goal. You can have long term goals and short term goals. You can have a series of small goals. It can be whatever you want it to be because it is yours. You must create it for yourself. You must make it reasonable and possible. If you do not, there is no hope for you sticking to it. 

Creating a budget is actually fairly simple. You make a list of all of your expenses in one column. It is important that you list all of them. Do not skip or overlook any. This is an important step. Then you add all of your expenses together to get a total. This is how much money you are spending each month. 

In the next column, you list all of your income. Hopefully, your expenses are less than your income. You subtract your total expenses from your income and this is how much money you have left each month. Many people have a negative number and are drowning in debt as a result. 

If you are one of those people that have a negative number each month, it is time to cut spending. You cannot get out of debt if you continue to spend more money than you bring home each month. Once you create your budget, you see in black and white how much money you have. There are some easy and some not so easy ways to cut spending.

Quit Things You Aren’t Using

Take a good look at your list of expenses. Is there anything listed that you do not actually use? Maybe you have a gym membership for which you are paying that you have not used in months, possibly years? Cancel it, right now, do not delay. Just cancel it already. Do you have any other subscription services that you are not using? Cancel them also. That is a quick way to save money. 

Quit Expensive Habits

Now, it gets a little harder. How often do you eat out? I mean all types of eating out, including those coffee runs. Cut down all instances of eating out to only a few times a week. Just by preparing food to take for lunch and drinking coffee at home, you save hundreds of dollars. It may seem like a difficult transition to make, especially if you eat out often, but it really can save you a lot of money. It may also be healthier for you. 

Now it gets a little harder. Do you have a habit that may be expensive and you considered quitting several times, but you just have not? It could be smoking or online betting or possibly shoe shopping. Now may be the time to at least limit the amount of time and money you spend on that habit. Maybe with the incentive of getting yourself out of debt, it can help you break that habit. Maybe you can go without cable and internet for a few months. If you eliminate these bills for a while, it could save you hundreds of dollars per month. You can use that money for your debt reduction. 

Another way to get out of debt is to negotiate your current bills. You can start by contacting your credit card companies and asking if they can give you a lower interest rate. If you are in good standing with the credit card company and you pay your bills on time, they may consider giving you a lower rate. This saves how much interest you pay per month which decreases your minimum payment and allows you to pay off more per month. 

If you decide that you absolutely cannot live without cable or internet, you can call the companies and see if you can get a better deal than the one you have now. Sometimes they have special deals or incentives that they can offer to you and it decreases your monthly payment. Be careful and ask questions because sometimes to get those special deals, you have to sign a contract.

Medical bills are often another bill that you may be able to negotiate how much you have to pay. If you are willing to make a payment right there over the phone, they often take a lesser amount than what you owe. They figure 70 percent of the money today is worth more than 100 percent of the money in five years. 

Should I Obtain a Loan?

Often times, people consider some type of debt financing to get out of debt. There are consolidation loans available. You could even obtain a personal loan to pay off your debt. Remember, just because you can does not mean you should. I go back to my earlier statement that debt is not bad, but it must be used in moderation.

Can You Afford a Loan?

When debt becomes out of control, it can be a bad thing. When your debt controls you, it is a bad thing. It is up to you to remain in control. If obtaining a loan and consolidating all of your debt into one payment is easiest for you to manage, then a loan might be a good option for you. If you can afford the repayment amount each month, you might want to consider it. 

If you cannot afford to repay the loan, do not get one. All you are doing at that point is putting yourself further into debt. If you know you cannot afford it, do not even consider it. Another point to consider is when you consolidate your debt into one payment, you are not reducing your debt. You are simply putting it together so you can make one payment. If this allows you to pay off your credit cards, do not use them. This is a slippery slope. They have a zero balance so it appears to you as though you have less debt, but in reality, you do not. Do not lose sight of that. You are still working to pay down your debt. You are just sending your payment to a different place. 

If you are interested to get a loan to finance your debt, maybe we can help you. We bring you some loan options to look into. Enter the necessary information and you may get a suggestion you like:

Can I Really be Debt Free?

Well, yes you can be debt free but it is really challenging to do so. You can get out of debt but it takes hard and consistent work. It is hard today to be completely debt free. That means you either have paid off the house in which you live or you rent. That also means that your car is paid off and you do not get another one unless you pay cash for it. I think it is more realistic to think in terms of get out of debt that is not manageable or meaningful. That is a better and more realistic approach to paying off your debt. You can use a debt tracker to help you determine which debt is meaningful. It can also show you how long before debts are paid in full. 

Conclusion

Debt is a tricky subject. It seems that everyone really wants to get out of debt but no one feels as though he or she is able to. That is a terrible way to feel. I urge you to change your thinking about debt. You should come to terms that some debt is good. You should understand what is good and what is bad debt. You should know that what may be good for someone else may not be good for you.

You cannot base your financial plans and goals on what someone else is doing. It should be personal to you for many reasons. One, it is your life and you should control it. Two, it should be something that you are invested in doing. Three, you should be doing it for yourself because it is good for you. When you think about how to get out of debt, remember there are several ways to approach it. Do what makes the most sense for you.