How to Get Rid of Debt

Sometimes it just feels like you owe everyone money – the credit card company, car dealership, vet, furniture store, your in-laws, the hydro company; the list never ends.

Being in debt can be stressful and feel like a juggling act. It may have you looking for payday advances (don’t!! they are a huge money sucker!) or dodging calls from collection companies which is no fun either. In this article, we’ll break down some of the best money saving tips, and how to get out of the bottomless hole we call ‘debt’!

1. Check your figures.

Look at your bills and figure out exactly what you owe. This may seem scary (because it probably is) but it’s the first step in the right direction. After that, write it all down in one place like in a notebook or spreadsheet. This is also a good place to write down the minimum monthly payments you owe and will help you manage them better.

2. Balance a budget.

There are lots of websites with templates for budgets, find one that works for you. Make sure everything is accounted form including: pet supplies, entertainment, fixed costs like rent or the telephone bill, etc.

If you are in the red at the end of the month (i.e. spending more that what you’re making), then the budget doesn’t balance and you either need to make more money or spend less – plain and simple.

Many of these budget sites will also give you an idea of what a reasonable amount to spend on each area is (i.e. 35% of your income on transportation). Use those percentages as a guideline for helping to balance your budget. If they say 50% of your income should go towards housing and you’re spending 75%, that may be a good place to start cutting.

3. Write all spending down.

If you go for a drink after work with co-workers, write it down. If you go to the movies, write it down. Write down every penny you are spending because only in knowing your spending habits can you figure out where you can reasonably make cutbacks.

Tracking spending for one to three months can be very eye opening, and can even curb spending. If you have to write down that you spend $400 on shoes are they really worth it? You can do this in a spreadsheet, a notebook or there are even apps available for your phone to track spending.

4. Make a loan-paying budget.

Now that you’ve made a budget that you are able to stick to you need to see where cutbacks can be made. Spending $600/month on food because you eat out a lot? You should be able to cut some money from that number by planning your menu in advance and eating most meals at home and packing your own lunches.

Are your transportation costs getting deep into your pockets? Consider downsizing your car. A smaller car means less money on gas and potential savings on insurance costs as well. Another way to get money to put towards debts is by bringing in more money. Are you able to work more shifts at your current job? You might even want to consider taking on another job while you’re in debt to help pay down the debt faster.

Bank fees can also suck a lot of money from you. Try and choose an institute where you don’t have to pay for your day to day banking regardless of how many transactions you make or what your minimum balance is.

Got a lot of stuff? There are lots of ways to make a few bucks selling your good quality used stuff either on Facebook, Kijiji, Craig’s List, or by having a garage sale. One man’s junk is another treasure, and that can mean money in your wallet to pay down that debt.

5. Pay off high interest loans first.

Now that all of your debts are written out and accounted for and you have found spare money to put into your debts, you can pay them off. The best place to start is with the one that has the highest interest rate.

Even if that debt isn’t the most amount of money you owe, it’s wise to pay off higher interest loans first. Also, it never hurts to ask. Feel free to call creditors and ask if there is a way to reduce your interest rate.What’s the worst they can say – no? At best it can stop your debt from growing so quickly.

When figuring out a payment plan be sure to meet monthly minimum payments so that your account doesn’t go to collections. Getting hounded by collection agencies can make the whole process much more stressful than it already is.

6. Keep saving!

Some people think that all of their disposable income should go to paying their debts. This might seem smart at the time, but it can really come back to haunt you if there’s ever an emergency that you need extra funds for.

Things like being let go from your job, unforeseen house costs, or unexpected vet bills are just a few things you might have to worry about. Having about 3 months salary saved up is a good amount so that you don’t need to go into debt again or more debt if these emergency situations do arise.

7. Let the bank help.

If you are in way over your head and are feeling overwhelmed, then seeking professional help is a good idea.There are consolidation loans which can take all your bills and put them into one payment. Sometimes these offer a better interest rate this isn’t always the case. Be sure to know what you’re getting into before signing any official documents.

There is also the option of declaring bankruptcy if there’s no other fix for your problem. This is not normally recommended since it can really destroy your credit rating, but is certainly an option to look into if you are feeling smothered by debt.

Getting out of debt is not going to be the easiest thing you’ve even done. It will take time, dedication, and some hard work, but it’s well worth it. Once you’re debt free it will feel like a big weight has been lifted off your shoulders. Get on that spreadsheet, start balancing your books, and get on the path to financial freedom.

About the author

Nicole Harding


  • try saving 10% or more of your wages so you have extra money that can be at help. if your going to buy something make sure you still have enough money left over to pay your bills.

    the tips i just told you are for not to get into debt its more for staying out of debt. this is some good advice in future. this also good advice for young people who just left school and just started working.

  • I watched a Church program this past Sunday and just so happen it was about being in Debt. The Minister said to have a drawer empty and when you receive your bills, put them all in that drawer. Don’t look at it until all your bills has arrived (hoping you have just 3 to 4 bills outstanding he said). Okay, now pull out the one that is on the very top. This is the outstanding bill your will be paying and nothing else. Say you were paying $50 to $100 per bill, that is about $300 right there. Take that one bill and pay $300. Don’t look at the other bills anymore until you are done paying this One bill. It could take you up to 3 months not looking at the other bills. God will be there for you. Then now that you are done with this One bill, go to the top of the pile again and start paying off it. How true is it? I don’t know.

  • For help managing your loans and debt, consult with a professional financial advisor. They can examine your current loans and debts to tell you how you got there, and how you can get out. Usually, a long term financial plan is the best option to eventually eliminate loans and debt from your life, permanently.

  • Pay more than the minimum

    First, break the habit of paying only the minimum required each month. Paying the minimum — usually 2% to 3% of the outstanding balance — only prolongs the agony. Besides, it’s precisely what the banks want you to do. The longer you take to repay the charges, the more interest they make, and the less cash you have in your pocket. Don’t play their selfish game.

    Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. Examine your normal expenses — you can find the money. (For a gazillion ideas, check out our Living Below Your Means discussion board.) Skip eating out at lunch, and bring it from home instead. Eliminate desserts. Give up happy hour. We all have “luxuries,” and you know what yours are.

    Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you’ve dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each month.

    Now, this is just my 2 cents.

  • Spend less on things you don’t really need and use the money you save to start paying off your debts. Keep a tally of your spending for a month and see what you could save. If you spend £3 a day on your lunch at work, you could save £50 a month by making your own sandwiches. One cappuccino less a day could net you £450 in the space of a year.

  • Save before you borrow. The best time to charge is when you really could pay cash. Although that’s not always possible, it is possible to build a money reserve that can cover several months’ expenses if you run into financial problems.

  • Set up a minimum amount for yourself when you repay the money owed to credit card agencies. People usually get stuck in debts and carry balances due to the urge of paying only the minimum amount mentioned by them. However, you should try paying off as much as you can so that the debts are removed quickly.

  • You never know when it’s going to rain (financially speaking), so get in the habit of saving as much of your money as you can. At worst, you need to make sure you are saving at least ten per cent of your monthly salary. To help you do this, always give yourself 24-hours grace period before you decide to buy anything. If you still want to buy it, then go back and buy it. If it’s gone – you weren’t supposed to buy it in the first place!

  • Decide which debts take priority – like mortgage or rent – and which cost you most through penalties or higher interest rates and only agree to pay off debts at a rate that you can keep up – don’t offer more than you can afford!

  • Speak to a credit counseling service to help work out a plan: your “must pay” outgoings, arrange with creditors to freeze interest and accept a revised monthly payment. Warning: a reader informed me that using a credit counselor will show up on your credit report and adversely affects your FICO score — not as bad as a bankruptcy, but it is coded, and lenders can see it. Only exercise this option if you’re really in dire straits.

  • Live below your means. Many customer use credit cards to buy items they could not afford otherwise. This can become a habit far too easily. Remember: plastic is always more expensive than cash, so if you can’t afford to pay cash for an item, you really can’t afford to pay with a credit card.

  • One important aspect of debt that most people neglect is simple record keeping. You should have a file created in which you keep careful track of all debt you accumulate along with an idealized payoff plan. If you can simply do this you will have more control over your debt than the average consumer. Record keeping is the first step toward controlling your finances and it applies to debt as well as it does to investments.

  • Track your money. Know how much you have and how much income you can reasonably expect in the near future. Know what your monthly expenses are and what you have left to pay creditors.

  • Pay your debt obligations on time, every time. Send payments at least 2-3 days before the due date to ensure that your payment arrives on time.

  • Creditors generally have a 5-10 day grace period beyond the due date before charging late payment fees. But note that creditors are in the business to make money. So many are moving the grace period back. The best rule is to always pay your debt obligations 2-3 days prior to the due date.

  • Make it a priority to pay off “bad debt” first – that is, your borrowings for consumption (clothes, holidays) rather than investment (property, shares). That’s because interest on debt such as personal loans and credit card debt isn’t tax deductible, whereas the interest on loans for investment purposes can be claimed as an expense.

  • I totally agree with the bicycle part. You can even walk if you need to. Saving money while living longer is definitely the way to go, especially in these fuel-efficient times.

  • in the first place, make sure you don’t get any loan unless you really need it. i know people who gets loans just cause they got pre qualified. before they know it they’re neck high in debts.

  • Got this from a site….

    Make it a habit as fundamental as stopping for red lights. Realize once and for all that if you can’t pay for it today — you can’t afford it.

  • Prioritize highest interest rate debt first to pay off and then go from there. As an alternative you can hunt down a very low interest credit card and try to balance transfer all of the high interest credit card debt to this new credit card. Then after you do this cancel the old credit card.

    My sister and brother in law were paying 18.5% interest with a balance well in excess of $10,000. So when they moved to a lower interest card (Citibank Mastercard) they ended up saving about $150/month in interest payments that they then put towards the monthly payment, thus speeding up the time it takes them to pay off that debt.

  • Well certainly the first step is don’t accumulate a lot in the first place. A simple tactic is the 36% debt to earnings ratio. But managing your debts can be achieved by a simple debt calculator which can ensure that a relevant solution can be reached.

  • Being out of debt may not seem like such a big thing now. But when you
    want to retire and haven’t saved a dime, you’ll be wishing you had
    listened and followed Dave Ramsey’s advice. He definitely helped me
    re-prioritize my goals. I got hooked on him listening to him in the car
    on my way to work. Psychologically, it’s very freeing to not owe anyone.
    Who wants to live paycheck to paycheck. Not fun. Best Bankruptcy Attorney

  • There is no quick-fix solution to get out of debt, despite what solicitors or infomercials might have you believe. There are some tried-and-true methods for paying down debt. However, it’s staying committed to your financial goals, not necessarily how you go about it that really matters.

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