38 Tips to Eliminate Debt

debt_freedomAs I have been getting out of debt, many of my friends, colleagues and other financial gurus have chimed in on ways they have ditched debt.  Everyone has their own tips, tricks, and anecdotes.

I’ve compiled a list of (what I think are) good tips below. Hopefully they will inspire you the way they inspired me.

All of these tips may not work for you.  Find the ones that work best for you, and try them out.

Feel free to add your own tips in the comments!

  1. Spend less than you earn.
  2. Write down all of your debts. Put them in a spreadsheet, with monthly payments, interest amounts, balances, and a running grand total of all your balances. Update it monthly as you pay off debt, and watch the overall amount go down slowly. Use an app like Mint or Debt Payoff.
  3. Have only one credit card with a low limit, and only one loan (mortgage, etc.) with monthly payment not exceeding 25% of income.
  4. Build up an emergency fund first. If you come into extra money (tax returns, etc.), use it to build an emergency fund and pay off debt after that.  $1000 for an initial emergency fund, then 3-6 months of expenses after you pay off all debt.
  5. Cut up your credit cards.
  6. Stop using credit cards to make it to the next paycheck. Figure out a different way to get by, or cut your expenses.
  7. Avoid eating out. Cook your own meals, except on very special occasions.
  8. For entertainment, visit friends and be creative on how to entertain yourselves and your family without spending a dime.
  9. Look for expenses coming up in the future and plan for them, so you don’t have to go into debt when they come up.  Create extra savings accounts for these expenses.
  10. Create a budget.   Every dollar gets a name and has a job.
  11. Do the Debt Snowball Pay minimums on everything, attack the smallest balance with all the extra cash you can assemble, then move on to the next one.
  12. Be on the same page as your spouse or partner. This must occur in order for all of this to work!
  13. Read everything by Dave Ramsey. Also read “Your Money or Your Life”.
  14. Keep trying and don’t give up. Make a commitment, and if you aren’t getting out of debt slowly but surely, you need to revisit that commitment. Change is difficult and it takes major behavior modification to get out of debt. Anyone can do it – as long as you really want it.
  15. Stop spending!  You have to really, truly want to do this. Otherwise, deprivation leads to excess.
  16. Find the tools that work for you and stick to them. If the tools aren’t working, find new tools. There are plenty of tools and ideas out there that are free.
  17. Eliminate. Take a hard look at what’s truly necessary, and be willing to make compromises. Cable TV, satellite radio, and lunches out are not necessities. If you have a hard time letting go of these things, run your numbers through a debt calculator twice – once with your current budget, and once without payments for all this stuff. You’ll be amazed at how much of a difference those few extra dollars make.  Get inspired by the potential savings.
  18. Get creative. If there’s something you think you don’t have time to do more frugally, find a way around it. For example, cooking at home is much cheaper than eating out. If you don’t have time to cook, try investing in a slow cook crock pot.
  19. Be patient. Debt reduction is a long, slow process. Depending on the method you use, you may see no significant progress at first, but it will happen.
  20. Pay cash only.. By the time you’ve saved up the cash for something, it’s very likely you will have realized you don’t even need the item you were thinking about buying anyway. This happens all the time.
  21. Have a vision. Keep your eyes focused on where you will be five (or ten, or fifteen) years from now, because getting out of debt takes time.  See yourself debt free and loving it!
  22. Move into a smaller place. Forcing you to get rid of a lot of stuff that you’re probably still in debt for will show you just how little any of it matters.  I know this is drastic, but downsizing is not always a bad thing.
  23. Educate yourself on your alternatives. Sometimes we spend a lot on things because we assume there are no alternatives. Is cooking at home as bad as you think? What about ten-year-old cars? Roommates? Cheaper parts of town? Thrift stores? Libraries? Bicycling? Wearing a sweater and fuzzy slippers inside in the winter so you can turn down the heat? Ask questions, do some experimenting, do some research. Find your biggest expenditures and do some reading.
  24. Think about your goals. The author of The Tightwad Gazette was willing to work harder to save on food, clothing, and entertainment so she could spend more on housing, have more kids, and let one parent stay home with them. Quit spending money on stuff that is not aligned to your values.
  25. Pay attention to whether you’re buying stuff just because of societal norms or parental expectations or keeping up with the Joneses. Hang around people who are the way you want to be so that peer pressure is a non-issue.
  26. Pay more than the minimum payment.
  27. Think about wealth rather than debt. If you think “I’m going to get out of debt” you will keep thinking about debt. If you think “My financial situation will contribute to my overall wealth,” that thought can keep you going.
  28. Debt slavery. Realize that (almost any) debt = slavery. If you don’t mind debt, why get out of it?
  29. Read personal finance books, publications, blogs.
  30. Pay off your smallest debt first to get the momentum going. Some people go by the rule to pay the highest interest ones off first, but the math is not always what wins; it;s the emotion of paying something off that kept me going.
  31. Be willing to make sacrifices. Remember, you own things. They do not own you. I sold two of my cars and bought “beaters” but it was the best move I made. A car drives better without a payment.
  32. Put a note in your wallet with this text: “DO I REALLY NEED THIS?”
  33. See yourself as completely debt free. FREEDOM! What is that going feel like!?!?
  34. When you make your budget, be honest. Make sure you budget for gifts, entertainment and whatever other things we all spend too much money on and don’t like admitting.  Don’t forget yearly expenses that are inevitable.
  35. Find free or low-cost entertainment. Check the local newspaper, or look online and see what upcoming events are going on. Many towns have free concerts in local parks, the local libraries often have fee arts and crafts classes, get a state tourist guide and see what’s going on in your area, and be a tourist in your own town.
  36. Be crafty. Learn to paint or refinish hand-me-down furniture, sew, fix simple electrical items, and cook.
  37. Make more money. Sometimes you can only stretch your current income so far. But how can you start an online business, without spending a lot of money? And without your own product? Can you sell your stuff on eBay?
  38. Watch/Listen/Learn. Watch the PBS documentary about credit card companies. Get mad, really mad and start hating the credit industry. They are enabling you to do some terrible things to yourself. Cut up your cards and pledge to never use them again. It is a form of slavery.  Another movie to watch is called MaxedOut.  Listen to Dave Ramsey on the radio.  Subscribe to every blog imaginable (including this one, please!)


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