How Do I Get Out Of Debt

12 Secret Tips To Getting Out of Debt

Debt keeps you down and makes it hard to live a fulfilling life. When your bank balance teeters on empty, your credit cards are maxed out and debt collectors keep calling, it’s natural to feel discouraged and want to give up and stop trying.

Related article: Wages Garnished? Here’s What to Do Next

If you’re tired of dragging around the albatross of debt but think you’ve tried it all when it comes to unshackling yourself, read on for secret debt reduction tips.

1. Daydreaming Can Help You Get Out Of Debt

How to get out of debt quick?

When it comes to debt, daydreaming is good for you. Of course you don’t want to spend all of your time fantasizing, but taking a few minutes once or twice a day to visualize your credit card balances at zero does wonders for your chances of success.

Mindful meditation lowers your blood pressure and puts you in a positive mindset regarding paying off your debt, which will help you take positive actions.

2. Have Your Family Commit to a Budget

How to pay off Debt?

When you all vow to get out of debt, it’s easier to stick to a budget. If you start to waiver in the face of a new purchase, your significant other or another family member can be the voice of reason and stop you from digging yourself deeper into debt.

3. Get Out Of Debt By Seeking Out a Better Credit Card Deal

Credit Card Debt

No doubt you’ve heard the warning to avoid taking out further credit. While this is true in practice, it’s important to look at how much money is flushed away each month in interest. If you have a credit card with an interest rate higher than 13.99% percent, ask your credit card company to lower the interest rate. If it’s already lower than that, lowering it might be difficult.

If the credit card company won’t lower your rate, apply for a balance transfer credit card with a 0% interest rate and use it to pay off your former card. When you do this, if you think you might be tempted to use the paid off credit card, cut it up.

Use a debt repayment calculator, such as the one on CreditKarma, to see how much you’ll save each month by switching cards.

4. Avoid Late Charges – Increase Your Chances Of Getting Out Of Debt

Tip to get out of debt quick - Late Charges Fees

The amount of money that goes into late charges can cripple your efforts to pay off your debt. Whenever possible, avoid paying late fees. If keeping track of when your bills are due is difficult for you, consider using an app like Check that reminds you when it’s time to pay.

Related article: How can you avoid late fees on your credit card?

5. Check All Your Balances Daily

Tips for getting out of debt quickly

Sound like overkill? It’s not. Constant reminders are your best bet for getting out of debt. If you only look at your balances once a month when you pay your bills, after a couple of days the reality of your debt starts to fade in your mind. Then when a spending opportunity presents itself, you’re more likely to bite and get yourself into even more debt.

Every morning when you wake up take a look at your debt situation. Seeing it in black and white will encourage you to stick to your budget, and watching your debt being paid off keeps you encouraged throughout the day.

6. Announce Your Get Out of Debt Plans

Tips to getting out of student debt

Forget the taboo on talking about money and let your friends and family know your plans for whittling down your debt and getting rid of it. Encourage them to regularly inquire about your debt. Not wanting to tell Aunt Millie that you slipped up and splurged will encourage you to stay on track with your budget.

7. Try Debt Consolidation

Debt Consolidation

If you can’t seem to budget and pay off debt on your own, consider a debt consolidation program. This would consolidate your debt into one monthly loan payment. Such a plan usually also means paying a lower interest rate.

8. Consider Student Loan Forbearance

How to get out of student loan debt

If student loans are making it difficult to dig out of debt regarding your other bills, you may qualify for a forbearance, which is a temporary halt to payments or a reduction in the amount you pay for up to a year. This allows you to funnel your money towards your other debt.

Related: 7 Lesser-Known Ways to Repay Student Loans

9. Never Pay Retail

Secret of getting out of debt

Make it your mantra until you get out of debt to never pay full price. Always seek out a bargain for your purchases, and if you can’t find a deal on brand names, use generics.

You can save a great deal of money that can be directed to paying off debt by shopping sales, requesting price matching and store coupons that can be found online or through smartphone apps, such as RetailMeNot.

10. Keep Accounts at Two Separate Banks

How do I get out of debt fast?

Dividing and conquering works like magic when it comes to paying off debt. Put into your everyday living checking account just enough to cover daily and monthly expenses. Direct your debt payoff money into another account, such as an online bank.

Don’t carry the debit card for the debt payoff account with you, so you won’t be tempted to use the money for everyday purchases or worse, splurges. Pay off your debt and only your debt from that account.

11. Secret Tip To Getting Out Of Debt : Banish Guilt

Easy way to get out of debt

No doubt you kick yourself every time you look at your credit card bills or you hit ignore on your cellphone when a debt collector calls with the nasty reminder of how you overspent. You didn’t get into debt on purpose, so lighten up on yourself. It will be a lot easier to stay clearheaded and move forward and pay off your debt if you say no to guilt.

12. Celebrate Often

Getting out of debt - Quick tip

More than anything, sticking to your debt payoff program requires that you keep a positive mindset. Once you start slipping into negative thinking and tell yourself you’ll never climb out, you start making poor choices with money. Set aside a small amount of money to reward yourself at the end of every week for sticking to your budget.

Living in the negative when it comes to your finances is definitely a downer, but using these tips will help you climb out of debt so you can enjoy financial freedom.

Contributors : Julie Bawden Davis.

President Obama recently provided some potential relief to student loan borrowers. Introduced this past June, the plan caps student loan repayments at a more comfortable 10 percent of a borrower’s monthly discretionary income. Then after 20 years in what’s known as the Pay As You Earn program, any remaining student loan debt is forgiven.

Crippling student loan debt reaches $1.2 trillion

Currently, student loan debt is at $1.2 trillion and surpasses credit card and auto loan debt. The average amount owed by a graduate is a hefty $29,400.

A survey by Black Book Market Research found that since 2008, 94 percent of working college graduates report that their student loan repayments are unmanageable due to the size of the debt. Not to mention that many graduates are not earning as much as they thought they would be after college. This makes repayment based on discretionary income particularly attractive. (US News)

This new plan, which is scheduled to take effect at the end of 2015, is an expansion of a 2010 law that capped monthly repayments on new federal student loans. The current Pay As You Earn repayment option, which started December 2012, doesn’t apply to older loans or to people who haven’t borrowed since October 2011. The expanded plan will help those students who took out loans before October 2007 or stopped borrowing by October 2011. It does not apply to parent loans. The government estimates the amount of people who fit this category to be 5 million.

How much could you save with the new program?

How much you might save if you sign up with this Pay As You Earn program will vary, depending on the amount of your student loan debt and your income now and in the future. Individuals with high student loan balances who make a relatively low income for an extended period of time will save the most. This may be counterproductive for many people, whose goal it is to earn more over time.

To determine how much you could save with this program calculate your savings with the Federal Student Aid Repayment Estimator.

Drawbacks to Pay As You Earn

Look carefully at the details of becoming involved in the Pay As You Earn plan, as there are some definite downsides, including the following:

  • You must complete reevaluation paperwork for the program annually.
  • Remaining debt is forgiven after 20 years, but for most borrowers, the balance is subject to federal income tax.
  • You may end up paying more interest in the long run. If your earnings climb as your career progresses during the 20 years until forgiveness of the loan, you’ll have to pay higher and higher payments, and as a result you’ll pay more interest than if you did standard repayment. You would only come out ahead if your income remains modest until the 20 years is up.

Marriage changes things. If you tie the knot, you and your spouse will take on each other’s student loan debts and your household income will increase. That means that your payments and interest are also likely to increase.

Is Obama’s Move To Ease Student Loan Burdens Enough?

Student loan assistance proponents argue that the Pay As You Earn program will not help the estimated 5 million borrowers that it’s supposed to. This is because of the various drawbacks, and the fact that many borrowers aren’t aware of the program or are too confused to enroll. To solve the latter problem, the Smarter Borrowing Act was proposed in 2013. It aims at lowering student default rates and would teach graduates about their various repayment options.

While student loan assistance programs do help, the bottom line is the $1.2 trillion in debt weighing down millions of graduates. A bill was introduced that would allow borrowers to refinance their student loans, but it was blocked in the Senate last June, taking the reform off of the table. Considering the ever increasing student loan debt and the inevitable defaults, it’s a pretty sure bet that refinancing student loans will come up again in the not too distant future.

Brandhyze profile

Have you ever wanted to make a change to do better, but just didn’t think you were ready enough to begin?

I’m not talking about starting a new workout plan or vowing to network more, though those are changes that take a concerted effort and some dedication on your part. But rather, I’m talking about a change of a slightly different nature, one that could not only affect you, but also your children, and your children’s children.

I’m referring to making the decision to get out of debt. It took me 11 months to pay off $13,369 of a credit card mountain (or what seemed like one at the time) on an irregular income. See instead, it was “I” who had to do the changing – mentally that is. But how was I supposed to do it when there seemed to be so much more month, than income?

I had read countless stories from individuals with “regular” 9 to 5 jobs with steady paychecks on which they could depend, managing to pay off debt; but what about the freelancer who faces irregularity as a way of life? Well, I’m happy to report that I eventually found my way. While I’m a little nervous to do so, I want to share my story (please be gentle) in the hopes of inspiring someone else. So, here we go…

How I Got Into Debt

Like most people, I got my first credit card during those first few days of college. My parents wanted to ensure I had something, at least with a small limit, in case of emergencies. But, over the next 4 years while I focused on completing my Business Degree, emergencies became more frequent. A textbook here, gas there, and by graduation, 1 card had turned into 4. From there, I immediately moved to New York City, and boy was I in for a rude awakening of what everything would cost.

What Made It Click For Me


You see, I had majored in Accounting (I know, I know… of all people not to have a sound financial footing), but with moving I deviated from the seemingly safer plan – opting to do what I always wanted to do – and pursued acting instead. Meanwhile, I was taking low-paying internships to learn the business, and juggling freelance jobs of performing, writing, and teaching on the side.

As you can probably guess, I was living paycheck to paycheck. But as the years progressed, so did my desire to become better at my craft; I opted to invest in myself and enroll in a 2-year conservatory to sharpen my skills, not knowing where I’d get the money but hoping for the best. Once completed, this experience – which wound up costing about $10,000 – while life changing, taught me one very important lesson. It made me pontificate the notion that “if I could manage to save up this much money to pay someone else, I could do it for myself. Couldn’t I?”

It was also during this time at school that I met and became close friends with a girl named, Erin, a friend with whom we’d mutually share things like our aspirations, successes, and sometimes even our frustrations (which often centered around our classwork and money). But when we spoke about money, I naively assumed she and I were in the same proverbial boat: scrounging to make ends meet. However, I came to realize that Erin was somewhere else with her money, and our definitions of “broke” starkly contrasted one another.

Mine meant I’d have to get crafty with my meals until my next paycheck, whereas hers meant just her checking account was low. Because years ago she had managed to pay off ALL her debt AND amass several thousands of dollars in savings. Needless to say, I was blown away. She shared her story with me and introduced me to Dave Ramsey’s “Total Money Makeover,” and from there I was hooked.

I began to go gangbusters and wanted listen to anything I could get my hands on to aid me in my financial pursuits, adding other audiobooks like “The Millionaire Next Door,” “Think and Grow Rich” and “The Richest Man in Babylon” to my already budding iTunes library. Once I had the fuel on my fire, I was in serious need of a plan to get the ball rolling.

Related article: 28 Inspiring Must-Read Audiobooks 

So, This Is How I Got Out Of Debt


1. Started Paying Cash

Using my credit cards is what got me in this predicament in the first place, so the first order of business was to forget I even had them. I’ll admit that things did come up along the way that set me back – like I had to buy a pull out sectional that would double as my bed – but it helped me to get in the mindset that I could only buy what I could pay for NOW. Otherwise, I would have to learn to save up for it.

2. Downsized My Life

Not too long before all of this I decided that if I was ever going to get anywhere financially, I was going to have to downsize. Now, for you this may mean driving a more affordable car, but for me it meant I needed to live some place altogether cheaper since my paycheck hadn’t gotten any bigger. After all, at the time I was forking over nearly $1,300 for a 700 sq. foot 1-bedroom apartment, deep in Brooklyn.

So I happened to apply to a lottery (i.e. an affordable housing waiting list for applicants who are artists), got selected, sold/gave away a great deal of my furniture (including my entire bedroom set and bed), and moved into a 270 sq. foot studio.

Now, this may sound like a huge adjustment (which it was, don’t get me wrong), but it turned out to be such a huge blessing in disguise down the road. Not only did I wind up being in a much better neighborhood, but it also cut both my commute to the city, and my rent, in half.

3. Set Financial Goals

I couldn’t conceivably attack all of my debt at once, so I would pour all my extra resources into one, while paying the minimum on all the rest. That way, I had a feeling of accomplishment each time I would knock out a card. Once one was done, I would go after the next card with the lowest present balance…rinse and repeat.

4. Got Creative and Learn to Side Hustle

In addition to my other work, I found myself doing random gigs to generate extra cash, like helping a friend sell her new invention at a makeup convention, consigning designer clothes I had found for less than a $1/piece for a profit, pitching myself for new classes to teach, and becoming a personal stylist and shopper for friends and their referrals.

5. Designated and Forgot the Checks

Now I don’t mean literally forget about the checks. Who could do that? But, for example, I would take one of my more regular acting gigs which paid every 3-4 months (yes, sometimes it takes that long) and I would make up in my mind ahead of time where the check would go. When I did get a check from them for, say $1500-2000, I’d already know what it’d go toward.

Trust me, when you do get a paycheck, it feels like you’ve won the lottery and it gets tempting to go out and make all these purchases you’ve been wanting to. But I had to remember that I was on a mission and I had to do my best to stick to the plan.

I can’t stress enough that if I could do this, anyone can. If you’re deep in debt, unemployed or just feeling discouraged about your financial future, know that you’re not alone… And if you’re just starting the process, I guarantee you’ll surprise yourself by what you’re truly capable of–I surprised myself!

Remember, these are the steps that worked for me and everyone’s get-out-of-debt journey is unique. Tweak the steps and add new ones along the way in order to make them work towards reaching your personal finance goals. Thanks for reading, and happy debt crushing!

Image Credits – Brandhyze

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