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Becoming Debt Free: Top 10 Tips for Getting out of Debt
Thursday, 26 September 2019

Being in debt can put a damper on every aspect of your life. Here are ten must-have tips on becoming debt free everyone should know.

Becoming debt-free is the biggest financial consideration you need to make when planning for the future. That's right. It's even bigger than saving for retirement!

The effects of debt can sneak up on you. And once you start to feel them, it can be too late.

In the following article, we're going to show you how to get your debt under control and keep it that way. Let's start the calculations!
How Crushing Is Debt?
The term "crushing" might actually be a bit of understatement when it comes to being in debt. That's because it takes more than just a financial toll.
Financial difficulties often are cited as the number one reason for divorce. They also can lead to depression, problems at work, and the destruction of your self-esteem.
Worse, debt begets debt. In other words, piling up the debt leads to the creation of more debt for things that you should never have to go into debt for. Like groceries, for example.
If that hits too close to home, then it's time to do something about it. Here are 10 actions you can take today to escape it.
1. Increase the Amount You Pay Each Month
Perhaps the surest method for how to get out of debt is to simply pay more than you have to every month. You have to be careful here, though.
Minimum payments usually are set deceptively low. If all you're doing is making it or barely exceeding it, then your debt won't be going anywhere any time soon.
So you have to thread the needle here. Pay a significant amount more (four or five times) than the minimum payment without adding new debt each month.
2. Break the Debt Cycle
The key to reducing your debt is to find out how much new debt you are accruing each month. Are you making large credit card payments only to have to turn around and use the same or different cards for more purchases?
If that sounds like you, you're riding the debt cycle. Get off the bike, or things will never get better!
3. Start Putting Away Emergency Funds
Among the top debt reduction strategies is the emergency fund. Emergency funds are necessary because they give you the capital needed to tackle those unforeseen expenses without having to stack them on a high-interest credit card.
Unfortunately, many consumers never get started on their emergency funds because they feel overwhelmed. They are defeated by large purchases like needing new tires, replacing their brakes, or fixing something that goes wrong with their home outside of what a homeowner's insurance policy will cover.
What they don't realize is that starting an emergency fund now will help them be debt-free faster than they think, even if the fund can't make the purchase outright. That's because it gets them used to budgeting and breaking free of the debt cycle. And it means that what they do have to borrow will be less than it would be otherwise if not for the emergency fund to help defray some of those costs.
4. Get Clear of Just One Debt
It's hard to get motivated to tackle your debt when you pay on several debts each month and nothing changes. Simple fix.
Just make minimum payments on your debts for a few months while redirecting the bulk of your budget to knocking off one debt. That debt doesn't have to be the largest one you've got either.
It could be the one that's nearest to being paid off. Give yourself an early victory, and it will be easier to snowball it into another and another until the debts start dropping consistently.
5. Bargain for Lower Interest Rates
One surefire method for how to get out of debt, especially with no money and bad credit, is to ask for lower interest rates. To make it work, you've got to honor your end of the agreement, though. That means no missed payments and paying the agreed-upon amount.
6. Get the Cash Value from Your Life Insurance Policy
Say your job isn't going really well but you're insured with a whole life policy, the kind that builds cash value.
This is one asset you can depend on for how to pay off debt fast with low income. Simply check the amount you've accrued, and make a withdrawal.
A word of warning, though: Cash value accrues very slowly. It may not be worth it to you if you've only had the policy a few years.
Otherwise, it may be barely enough to cover one month's payment. We suggest this for when you have a nagging debt you need to ditch right now and the amount actually covers it.
7. Stay Home More Often
Going out with family and friends too often turns your whole life into a money pit. With $6 lattes, $30 family dinners, and $10 movie ticket prices, it's easy to see why.
Stop going out. And if you just can't quit it altogether, cut back to once or twice per month.
8. Generate More Income to Pay Your Debts
"Just make more money." Sounds like the worst advice in the world, doesn't it? Well, maybe that would have been the case 25 years ago, but we live in a different age.
Technology has made it possible to provide products and services to anyone from the people in your hometown to individuals halfway across the globe. Start a side gig to get some extra money.
If that's too entrepreneurial for your tastes, get a part-time or seasonal job. You'll only need to work it for as long as it takes you to pay the debt or gather a comfortable amount of momentum.
9. Seek Motivation
Psyche yourself up. One dependable way of doing that is to think about all the goals you haven't hit yet.
Keep a bucket list and make note of all the unfinished business impeded by debt. Then, get out there and fight for it!
10. Consider Debt Consolidation or Balance Transfers
Some recommend balance transfers, particularly those at a 0 percent interest rate. This can be a fine option, but watch those one-time balance transfer fees to make sure you're not just adding a year's worth of debt upfront. Also, make sure you can make those payments on time or the usual high-interest rate will kick in.
Debt consolidation loans are great options because they set the ground rules upfront and give you a clear end-date, usually at a much lower payment than what you're currently paying. They allow you peace-of-mind in knowing your debt is vanishing while enabling you to break free from the debt cycle once and for all.
Becoming Debt-Free Is Simple but Not Easy
Becoming debt-free isn't tough to figure out. But it's not so easy to implement as it takes discipline and sacrifice.
If you're ready to break the debt cycle and get out of debt altogether, take these 10 tips to heart. And check out more of our blog posts on wise financial decision-making before you leave.


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