24 Tips To Become Debt Free
Having debts can hang over you, making stressed and miserable. If you owe money, whether it’s credit card debt, payday loans or debt from a divorce, finding your way out from under it can be difficult. Try these easy tips to work your way out of debt, with some extra budgeting and saving.
1. Take an audit of your finances. What’s your monthly income? Note your salary, any benefits
2. Work out exactly how much you owe. Having a whole number gives you a number to aim at, and can help you focus on saving. Create a timeline for paying it off, to keep you on track.
3. Get help with your debt. If you’re feeling overwhelmed and are struggling to meet payments, speak to a professional who can help you get your debt into a manageable state. There are lots of
4. Start earning some extra money by having a clear out. Go through all your things, and sort your belongings into categories of keep, sell and donate. With the items you want to sell, either list them on eBay, or hold a garage sale. You’ll get rid of clutter and can earn some extra money to put towards paying your debt.
5. Boost your income with a second job. If you have time, take on a second job, like an evening job at a bar or stacking shelves at your local supermarket. Join a site for dog walkers or pet sitters for some easy extra income. Use your skills to boost earnings, for example by selling WordPress templates online or baking cakes for special occasions. A side hustle can just be temporary to help you make a dent in your debt.
6. Create a budget. Living on a budget will help you maximise your savings, which can be put into paying down your debt. You don’t have to cut out everything you enjoy, but be realistic. Small changes can make a big difference, so try things like switching from branded products to supermarket own brands, making lunch at home instead of buying it at work, or cutting out takeaway coffees. Could you reduce your cable package or give up any streaming services you pay for? Unsubscribe from any emails from stores, so you don’t get temptation to spend landing in your inbox. Could you cancel your gym membership and take up jogging or exercise at home?
7. Pay on time. Late payment fees can really add up, and if you consistently miss payments, you could lose the option of paying in installments. Always try to make payments on time, but if you can’t, make sure you contact your lender immediately and explain. If you’re honest, they may be more willing to negotiate and arrange another payment date.
8. Cut the cost of essentials. Compare the cost of things like insurance and utilities, and see where you could save. Shop around and get quotes from different suppliers to see if you can find a cheaper option to save some costs.
9. Put your savings towards clearing debt. If you’ve overhauled your finances, you might have some more cash than usual. Don’t be tempted to treat yourself with it. Instead, put it straight towards your debt. Once you’ve cleared your debts, if you’re still in good financial habits, you can enjoy the extra money then.
10. Start couponing. Keep an eye out for deals on things you already buy, but be careful not to get lured into buying something just because it’s on offer or you’ll spend money you don’t need to. Save coupons for everyday essentials to save money on items you’d be buying anyway.
11. Shop at thrift stores. If you have children, they’re probably growing out of their clothes pretty quickly. Spending a lot on clothes that they won’t wear for very long is pointless, so pick up clothing for them in thrift shops to save a lot of cash. Toys can be a god thrift store purchase too, as kids will grow out of these too. For you, shop for clothes and items like books, instead of buying new.
12. Stop going out to eat. Dinner out is a luxury, so switch to cooking at home. You don’t have to become a hermit. Instead of going out, invite friends round for dinner. To keep costs low, ask them to bring wine or dessert, while you provide dinner. Host a potluck party, so everybody brings a dish. Be honest with your friends about your money troubles and they’re sure to be happy to have cheaper nights in to help you out.
13. Visit the library. If you spend a lot on DVDs or books, swap to taking these out from the library. You could save a huge amount of money by doing this.
14. Plan your grocery trips. Meal plan for the week, make a shopping list and stick to it. Don’t be lured into buying things you don’t need, even if they’re on offer. Resist the impulse buys and shop in a smarter way.
15. Think about what your hobbies cost you. Are you spending a lot on craft supplies every month, or paying an expensive membership to a tennis club? Find a way to enjoy your hobby for less, at least until you can clear your debt.
16. Find free forms of entertainment. Coughing up cash for weekend activities can soon add up. Instead of spending money on things like the cinema, bowling or concerts, find free things to do. Many communities host free events, so keep an eye on what’s around you to find free concerts or outdoor movie screenings. Go for a walk, take the kids to the park or go for a bike ride. You can still have fun without spending money.
17. Consider selling your car. You can make some extra money on the sale, and save the expense of running a car. Taking the bus, walking or lift sharing can all be much cheaper than keeping a car on the road.
18. Get rid of your credit cards. Credit cards are a temptation to run up more debt and spend more money than you can afford. Lose temptation by getting rid of the cards all together. If you need a card for emergencies, don’t keep it your wallet. Instead, hide it away somewhere safe, so you can get it in an emergency but aren’t tempted by it whenever you open your wallet.
19. Try using cash instead of cards. For many people, spending physical cash feels more real than spending on a card. Set a weekly budget, and withdraw that cash at the beginning of the week. You might think twice about purchases if you have to hand over actual cash.
20. Don’t try and keep up with friends with more money. Just because they’re spending money doesn’t mean you should. If they don’t understand and push you to spend more than you can afford, you need to be blunt and tell them no. Be strong, and remember that later on you’ll be debt free, which is more satisfying than spending cash you can’t afford on a night out.
21. Don’t get into a debt spiral. If you’re living above your means, it can be easy to get into a loop of borrowing. You’ve overspent, so can’t afford your outgoings and borrow to fill the gap. Paying that back leaves you short again, so you borrow more and get into a spiral. Don’t borrow more to get out of debt. Cut back on expenses to fill the spending gap instead.
22. Check your benefit entitlements. If you’re on a low income, have children or aren’t currently working, you might be entitled to some benefits that you don’t know about. Do some research and see what you can claim to bring in a little extra money.
23. Keep on top of your credit file. Check your credit history and rating, and make sure you remove anything that is incorrect. Use the credit file to spot any major problem areas that you need to correct and get onto solving the problem.
24. If you’re behind on your utility bills and have large arrears to pay off, speak to your supplier. They may have schemes in place to help people in your situation. They want their money, so it’s in their best interests to help you find a way to pay. Be honest and ask for help.
What are your tips to become debt free? Comment below!
[a contributed post]