Six Tips to Get Out of Debt

Getting in debt today is as easy as 1-2-3. Getting out of it is another story. How can you get out of debt and avoid falling back into it?

Here are six tips to help you find your way to a debt-free life.


Of course, the first step is to budget. Why? Because your budget helps you see where your money goes and where you can save. There are different types of budgets that work in different ways, helping you control your spending, pay off your debts, and save at the same time. Some allocate a certain percentage of their income to various expenses. Others use envelopes to separate bills and expenses, and stop spending when the envelope is empty. Explore the types of budgets available and find the one that fits your lifestyle.


Once your budget is established, find ways to save. Are there non-vital expenses that you can sacrifice until your debts are paid? Can you skip the coffee shop on your way to work? Can you live without cable for a while? Instead of buying brand name products, have you tried generic brands?

When you come home, put any loose change in a jar. Try the 52-week challenge; saving $1 the first week, $2 the second week and so on until you get to $52 on the 52nd week. In a year, you can save $1378!

Pay Your Debts

Now that you’ve established a plan to save, start paying off your debts. You need to make more than the minimum payment to pay them off faster. Use the money you save to make those extra payments.

Start by paying off the debt with the highest interest rate, this way you can save the most money. You may also opt to pay the smallest debt first and work your way to the largest. It’s also encouraging to eliminate one source of debt from your list.

Debt consolidation loans are also a great solution to eradicating debt, paying off all your debts and leaving you with one loan, one smaller payment, and lower interest rates.

Reward Yourself

If you find paying your debts too oppressive, you won’t keep it up. Set yourself small financial goals and reward yourself when you reach them. It doesn’t have to be an expensive reward, perhaps a cappuccino, a book, a movie, whatever works for you. Some even get into the habit of saving the same amount they used to reward themselves. If you buy a $10 book, for example, you put $10 in your savings account. It’s another way to save and still enjoy life.

Don’t Fall Back into Debt

Once a credit card is paid off, cancel it or lower your limit. If you keep a small credit card active, don’t spend until you’ve reached its limit. Only use it if you have the means to pay it right away, or in case of an emergency.

If an emergency arises, and you aren’t prepared, you may need a payday loan to pay off a sudden expense. This type of loan is not recommended, however, paying back a payday loan is possible if the payment is included in your budget.

Build Your Credit

Work on building a good credit score. Continue paying off your debts, and pay all your bills on time. Using a small credit card responsibly is an excellent way to show that you can manage your finances. A good credit score allows you to get loans at low interest rates from your bank. It opens doors to possibilities you can’t even imagine.

Start Today

Keep these tips in mind, it’s easier than you think. Don’t put it off, start today! Before you know it, you’ll be debt free and living a full life.