8 Proven Tools to Help You Get Out of Debt

get out of debt

A mountain of debt is nothing to scoff at. It’s a huge financial burden to have a 30-year mortgage, car payments, and loans demanding your attention every month.

 
If there was ever anything that made you feel like you never see your paycheck, it’s paying off debts.
 
For that reason, many people are looking to dig themselves out of their mountain of debt so they can breathe again. The following are 7 proven tools you can use to get yourself out of debt and start a new debt-free life.
 

#1: Pay More Than the Minimum Payment Each Month

If you can afford it, pay more than the minimum payment each month on your debts. Every extra penny you put toward paying off your loans brings the end of your debt a little closer.
 
For a short-term loan, you can decrease the term of the loan by a month or two by making larger monthly payments. For a mortgage, you could reduce the term by a year or two.
 
Increasing your monthly payments can take considerable effort and budget planning, but if you work through the following tips, you could make it happen.

#2: Make More Money

Easier said than done right?
 
Digging out of a sticky situation is never easy though. It requires effort.
 
The best thing about this tip though is that increasing your monthly income will improve your overall financial situation for when you do dig yourself out.
 
You can make more money by seeking a raise, promotion, a second job, or starting your own business. There are lots of side job opportunities out there, like driving for Uber or Lyft. You could also take up freelance work, an evening delivery job, or find some contracted work you can do on the weekends.

#3: Spend Less Money

Figure out how to spend less in your day-to-day life.
 
Reduce your food expenses by cooking at home instead of eating out. Reduce your grocery bills by planning meals around coupons. Cut down on your vehicle maintenance payments with carpooling, public transportation, or selling your second car if you can manage to live without it. Sharing gas, using public vehicles, or getting rid of an extra car each come with significant financial gains to your budget. You spend more every month on driving yourself to work every day than you’d expect.
 

“The safest way to double your money is to fold it over and put it in your pocket.”

—Kin Hubbard

Almost every budget has categories that can be diminished to save more money and spend more on debt payments. Find those parts of your budget where you can save extra money, replace expensive parts of your budget for cheaper alternatives, or save all the money from that part of the budget by cutting something out completely. You’ll save a ton of money that you could put toward debt payments this way.

#4: Don’t Get Into More Debt

Avoid replacing your debt with more debt.
 
Taking out a second loan to pay off your first one just puts you in a deeper financial hole. More debt is not a long term solution for the debts you have, though this solution could be tempting to some. Deny the temptation and use other solutions instead, like selling something, or finding a weekend job.
 
Working 2 jobs might seem like an awful idea, but it would only be for a little while until you’re able to get your debts under control.

#5: Refinance Your Loans

When possible, you can try refinancing your loan.
 
After a long period of good behavior, you can approach your lender for some leniency. They can take a look at your loan again to reevaluate the situation. If you meet their requirements, you can get your interest rate reduced.
 
In terms of a mortgage, that could mean you’ll owe the bank several thousand dollars less. Every scoop your lender can dig off for you is a win. So seek a refinance when it’s possible.

#6: Build Your Savings Account

Even though you’re paying down debts, it’s still important to put a little away every month into a savings account.
 
Even $20 a month will go a long way in a year. Every little bit helps. Put away money as a buffer for upcoming payments and as a safeguard for you or your family.
 
For instance, if you lose your job, a savings account will allow you to continue making on-time payments for your debts while you work on getting your next job.
 
When you have lots of debt payments to make each month, it can also be difficult for your budget to have room for unexpected or emergency expenses. A savings account will provide the funds you need when monetary needs outside your budget come up.

#7: Make a Budget

If you have a budget already, reevaluate it.
 
Once you have a budget, don’t spend a penny more than what you have planned and outlined in your budget. Your budget should be a law that you live by.
 
If you do this, you can keep your spending to a predictable amount, allowing you to save more money to pay off your bills.

#8: Consolidate Multiple Debts

If you have multiple debts or loans, you can possibly consolidate them into one loan.
 
By putting all your debts into one loan, you can lower your interest rate and pay less extra money on the loan in the long run. Having just one single payment each month can also help simplify your budget to include fewer variables.

 

As you apply these seven principles, you’ll be able to chip away a bit more at your mountain of debt. Become proactive in your debt management. The sooner you do, the sooner you can declare yourself financially independent. Once you reach that point, you can finally reap the benefits of a healthy paycheck.


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