ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Debt & Bankruptcy

Tips and Tricks for Getting out of Debt

Updated on December 28, 2012

When you feel like your buried under a mountain of debt, it can seem like it’s impossible to dig yourself out. The process of getting out of debt and becoming financially stable can be a long and a times difficult road. But the rewards of being debt free far out way the temporary sacrifices. Here are a few steps and tips that can be very effective in getting and staying out of debt.

Resolve to live within your means.

This is one of the hardest things to do, and one of the most necessary; there is really no point of getting out of debt if you’re just going to get right back in it.


Take stock of where you are.

Now that you have resolved to get out and stay out of debt, you have to take stock of where you’re at so that you can create your plan of action to attack your debt and become financially stable. Find the most recent copy of each of your outstanding debts also get your copies of write down your monthly reoccurring bills. Write down or create a spreadsheet with the name of the bill, the total amount, minimum due, and if it is interest bearing the interest rate. I like to put all reoccurring bills; rent or mortgage, utilities, phone bill, car payment, insurance, memberships, etc. at the top since these are going to be fixed expenses you will need to take into consideration. Creating your list can be both disturbing and eye opening, most people don't realize exactly how much debt there in.

* a great thing to do now that you know where you stand and what your interest rates are is to contact your creditors with higher rates and ask for lower interest rates in exchange for payments.

Create a Budget

This is essential both for your long term financial future and for your short term debt elimination. Your budget should include all sources of incoming funds, allocations for your reoccurring, EMERGENCY FUND (more on this in the next section), other expenses, savings, and the amount you are committing to debt elimination. Be realistic in creating your budget. Don't do things like under budget or not budget for things like food, gas/transportation, and entertainment. Yes you could cut back on food and gas/transportation, but it’s not realistic to live without either. And yes you should cut back on your entertainment budget, but are you really going to only sit in the house and look at each other and the walls. It is really important to be realistic and not set yourself up for failure.

Build an Emergency Fund

Emergencies and unexpected things happen in life there's no getting around it. But what you can and have to do is plan for those situations to minimize the fall out. Creating an emergency fund with three to six months of living expenses is critical. That way unexpected job loss or medical bills don't derail your whole budget and plan to get out of debt. Some would say that they want to focus on getting out of debt and then think about saving. I would argue that saving and debt elimination go hand in hand for a healthy financial future. Once you have fully funded your emergency fund you can put the money you were putting toward it toward your debt elimination.

Increase your income

Now that you know what you have, what you owe, what you need to save; you may be looking at your budget and thinking that you don't have enough to put toward your debt to make a meaningful dent. To that I say two things anything towards building an emergency fund and paying off debt is better than nothing and you may want to at least temporarily create extra income. Some great ways to do this are get a part time job, sell things on amazon or eBay, sell/ donate plasma. (See my hub on extra income for more ideas)

Track your progress.

Remer that spread sheet you created listing your debt; well you’re also going to be used to track your progress by adding another column that shows the current amount due on each of those bills. So you can see where you were and how far you've come on each bills as well as current debt. The first few months this may not seem like much, but as time goes by and you see the amount of your outstanding debt drop it's going to feel great.

Set bench marks and celebrate.

This goes along with tracking your progress. Whether its percentage paid, dollar amount paid, or dollar amount left set bench marks and every time you hit one celebrate.

A few things to remember about getting out of debt.

It's going to be a long process, more than likely it's not going to happen overnight and it's probably not going to be as fun to get out of debt as it was to get into it. Don't get discouraged; you may need to take baby steps to get there, but getting out of debt is obtainable.


    0 of 8192 characters used
    Post Comment

    • iyoung03 profile image

      iyoung03 6 years ago from OH

      Thank you. And I agree with you on having a paper copy and backing up the information.

    • wheelinallover profile image

      Dennis Thorgesen 6 years ago from Central United States

      iyoung if your writing skills are rusty I had better go back to kindergarten. Your hub was well presented, easy to read, understand, and covered the subject well. You could add allocating funds to your tags.

      The only other thing I personally do different is have a paper copy of my spreadsheet. Computers do crash, I have had it happen here more than once in the past 10 years. With paper copies you just put your data back in and start up where you left off. I am sure a back up disk would do the same thing if you can replace the computer within a short amount of time. I think the key here would be back up your data.