Debt. Ugh. We almost all have it and most of us struggle to get rid of it. The problem is that we don’t really know what to do about it. There are a lot of little things that you can do to start chipping away at your debt but it’s the big actions that will help you start getting rid of that debt right away. You need that momentum to gather the excitement and to deal with this tough problem.
Take these ten actions today to begin getting rid of your debt in a big way:
1. Track your spending and create a budget. The only way to get rid of debt is to earn more than you spend. Many people fail to do this because they don’t want to take a close look at their spending. You must track your spending and get it down below the amount that you earn to have the excess funds that you need to start paying down your debt.
2. Decrease what you are paying for rent or mortgage. The amount that you pay for your home is probably the biggest expense that you have. If you can find a way to decrease that amount then you can use the money to pay down your debt. One option is to move to a cheaper place. Another option is to rent out the extra space that you have in your home (a room, a parking spot, storage space, whatever you have available). Making this adjustment is tough but it saves you a lot of money.
3. Stop driving. How much money do you spend each month on your car? Think about the car payment, insurance costs, the cost of gas, and the cost of repairs/maintenance. It’s probably a lot of money. Give up your car and put that money towards paying off your debt. Get a cheap scooter, ride a bike, or take public transportation. If you can’t go that extreme, then downscale to a cheaper car or go from being a two-car family to a one-car home.
4. Consolidate your debt. This can be done through a formal debt consolidation program, a loan (such as a home equity loan), or transferring balances to a single credit card. Good debt consolidation can lower your monthly payment and decrease the interest rate that you’re paying. Make sure you read the fine print and consider the fees with the goal of spending less on debt in mind. Use the extra money to start paying off the total debt.
5. Pay off your highest interest debts first. If you decide not to consolidate your debt then you need to start paying off the debt with the highest interest rate first. Pay only the minimum amount on all of your other debts and put all of your extra money towards paying off that high-interest account.
6. Cancel all of your unnecessary subscriptions and memberships. Give up magazine subscriptions and read free articles online instead. Give up your gym membership and start exercising for free at home. Cancel cable TV and read a book from the library instead. Make a list of all of your monthly subscription fees and dare yourself to cancel them all. Use the money to pay off your existing debt.
7. Stop spending money on entertainment. There is a lot of free entertainment available out there. You can enjoy free activities in your hometown. You can enjoy free dates with your partner. Why are you paying a lot of money to go out and be entertained when you can exercise your creativity and enjoy free entertainment instead?
8. Educate yourself about money. The more that you understand money, the better you will be at making financial decisions that help you to get rid of debt. Many people think money is a big magical thing that they can’t possibly understand so they don’t even try. This simply isn’t true. Read about money regularly and ask questions whenever engaging in a financial transaction. Be smart about your money if you want to get out of debt.
9. Add income. Spend your time making money and you’ll have more money for getting rid of your debt. You’ll also waste less time spending money on things that you don’t need. Take on a part-time job. Start a cheap home-based business. Do odd jobs here and there. Embrace the opportunity to work whenever you can.
10. Make a list of your goals for being debt-free. Include both small goals and long-term goals. Post the list where you can see it. Regularly check in with this list to see if you are still working on those goals. Even better, establish a group of people who want to get rid of their debt and get together once a month to set, report on, and discuss these goals. This will help you through the long haul of getting out of debt.
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