20+ Ways to Get Rid of Your Debt for Good

1.Stop adding more debt: No kidding right? Well, if it's so simple why aren't you doing it? Think of your debt as a small hill of dirt in your back yard. To get rid of that dirt hill, you need to dig out a shovel at a time. Now imagine for every 2-3 shovels of dirt that you dig out, you toss 4 shovels back on. How long will it take to get rid of that little hill? Piling on more debt while you are trying to get out of it doesn’t make much sense either.

2.Get rid of your credit cards: One of the biggest down falls that most of us have is the reliance on credit cards. Unlike spending real cash, when you charge it to a card you don’t feel the burn. So if you cannot control how much you spend on your card, then cut up your cards, leave them locked up at home, freeze them or bury them until you are out of debt. (Note: Don’t close the accounts since that can result in reducing your credit score!)

When I was in college, I went a little wild with student credit cards. I learned the hard way that I needed some control, so I froze the cards in a large pan of water. If I wanted or needed something badly enough to wait for the cards to thaw out, then it was probably worth purchasing. If not, I saved the dough. My mom still laughs about this, but I saved thousands in forgone impulse purchases. -- Kelly Colucci, Cumming, Ga. - quote source: Kiplinger


3.Change your attitude: Like everything else in life, getting out of debt is heavily dependent on your attitude. Switch to a “Can Do” attitude. Stop giving into the victim mentality or self-doubts of whether you can do it. Start attacking debt and don’t stop until its all gone
 
4.Stay busy: An idle mind is a devil’s work shop and a retailer's dream. If you go to the mall just because you are bored, you are bound to end up buying stuff you likely don’t need. If you laze in front of the TV doing nothing, then the advertisers are bound to instill a yearning for something that you wouldn’t have wanted otherwise. Throwing away money to keep yourself entertained when you could be using that time a lot more productively just won’t cut it if you are serious about getting out of debt.

5.Change your spending habits: Do you always plan before you buy something or do you just pick things up? Do you ask yourself if you really “need” it, or justify your “wants” and keep indulging yourself? Do you spend an excessive amount of money on showing off to your friends? Take a long hard look at your spending habits and fix any short comings that you see.


6.Cut your spending: Can you still save some money after all of your bills are paid? For instance when you look at your groceries, can you replace some brands with generics so you can save some cash? Can you stock up during sales to save some money? How about making sure you use your utilities wisely to save on water, electricity and gas bill? Look at all aspects of your spending to pinch some more money out that you can throw at debt.


7.Embrace a simple, frugal lifestyle: We are in a land of excess. We believe that we need a lot of things to survive. But in reality we can get on by with very little. The more of the excesses you can trim out the sooner you will be out of debt. Yes, life will seem a bit drab without some of the indulgences you are used to. It’s your call which one you like more – temporary indulgences and sleepless nights worrying over debt, or a few sacrifices now to be free of debt issues for the rest of your life!


8.Always lookout to improve your current income: The more the money you make, the more you will have left over to throw at your debt. So always look for opportunities for picking up tasks with higher commission, or over time pay or something that will result in a bonus. Take your job seriously and work hard everyday, at some point it will pay off for you.
 
9.Create additional sources of income: Sometimes it is not easy to simply increase your current income at your day job. If that's the case, look at means to create additional sources of income. Do you have a hobby that you can monetize? Do you have skills (musician, carpenter, writer, etc.) that you can use to get some part time gigs? Do you have computer knowledge that you can use online? Creating additional sources of income not only helps you get out of debt but provides you with better cushion to survive through primary job loss.

10.Build an emergency fund: As you attack your debt, remember to put away a small amount for the rainy day. If something unexpected comes along or if you are forced to borrow money again, you will have a rough time getting out of debt. So stash away small amounts of money in an emergency fund, and make sure you use it – well, only for emergencies!


11.Avoid paying fees when possible: Get organized. Make sure you are paying your bills on time. There is no point in paying fees in addition to interest! Also, look out for other options where you can save on fees – for instance, going into a bank to withdraw money may seem like a hassle, but is it really worth spending $3 in ATM fees every time you withdraw money? Booking your movie tickets online may seem convenient, but is it really worth paying an extra dollar for the ticket?


12.Use balance transfers: Call up every single one of the credit card companies and ask them if they can lower your interest rate or offer you special interest on balance transfer. Repeat with all the credit cards you have, and consolidate your loans onto the cards that offer the best interest rate. Watch out for the “balance transfer fees” and make sure you are really coming out ahead. Again, do NOT close paid off credit cards because it will lower your credit score!

13.Make a budget: A budget is not really that difficult to make or follow. You don’t need fancy software or tools, just a simple notebook and pen, or a trusted spreadsheet program. List all your recurring bills like rent/mortgage, groceries, utilities, bills and put a limit on it. Then create a category for miscellaneous expenses to cover what you cannot plan for and an indulgence category. If you don’t have enough for paying towards debt, tweak and tune these categories, until you find enough.

14.Reuse and recycle: Reuse and recycle whatever you can. I never buy garbage bags. Instead I have small waste bins in my kitchen and bathrooms that I line with grocery bags. I don’t care if someone thinks that is cheap – it saves me money and is a small way to reduce my environmental footprint. So why should I bother about what snobs think. And since they are smaller waste bins, they get cleaned our more regularly, reducing the possibility of stench in the kitchen. You will be amazed at how many different places you can apply the reuse and recycle principle to save a few bucks!

15.Make your intentions public: When you start digging into your debt, make your intentions public. Say it out loud - maybe to your spouse or your family or friends. When people know that you are tackling debt, they will give you dirty looks and lectures when you slip up :) It may be an unsavory experience, but if it keeps you on track and gets you out the hole faster, why not? Maybe it will also stop them from enticing you to eat out or buy that new pair of pants!

16.Start a blog about your effort: If you are not comfortable about sharing it with the people you know, share it with strangers! The internet makes it so easy to have an anonymous public image! Use it! Create a blog and chart your progress. You can create free blogs using software like blogger - it is fairly easy and you don’t need to be tech-savvy to be able to do it. Nothing makes you obsessive about getting rid of your debt like encouragement from a bunch of strangers whom you have never met! Besides, depending on your success, you may be able to monetize your blog and make it an additional source of income. Here are a few blogs to get you started Blogging Away Debt, No Credit Needed, The Simple Dollar. A simple search for “blog debt” on Google will show you many more if you are interested.
17.Surround yourself with the right type of people: If you are surrounded by people who keep spending, then it is difficult to get out of the consumerist mentality and slip into the more sensible mentality of living within your means. This may mean changing friends or keeping your distance from those that influence you negatively. It is a very difficult tip to follow, but a necessary one, if you want to really get out of debt.

18.Move! Drastic times require drastic measures! If you are really deep into debt you might want to consider more drastic steps like moving to a city with lower cost of living, to a smaller house, to an apartment with lower rent etc.

19.If something is available for free, don’t pay for it. Throw the money at your debt instead! If you can take public transportation to get around, skip the driving. Better yet, ride your bike and get a little workout at the same time. At the end of the month you may have used one less tank of gas. Make sure you bump up your debt repayment by that amount. It may not seem like much, but over a course of time, this can add up beautifully to free you from debt a lot sooner.

20.Always pay more than the minimum payment toward your debt. If you only pay minimum payments, you will be old and gray before you pay off a the debt. Here is a calculator that shows the true cost of paying minimum. For example, if you only pay the minimum payment on a credit card loan of just $1000, at an APR of 18%, then it will take you around 13 years to pay off that debt. In that time you would have paid $1,115.41 in interest. That is more than the principal borrowed! Imagine how much worse it is with larger loans. So always try to make more than the minimum payments if you are serious about getting rid of debt.

21.Don’t hesitate to take help from loved ones: When you are down and battling with debt, if loved ones offer to help don’t hesitate to accept. This could be in cash or kind. For instance, can your mother baby sit your kids so you can save some money that is spent on daycare and apply it to your debt? Can your parents loan you some money at low or zero interest that will help you reduce the amount you pay in debt? If you are just starting out, can you move back with your parents for a few months and throw the rent money towards your debt? These may be very tough but they can save you several years of slaving to pay off your debt.

22.Make it automatic/manual: I know that’s ambiguous, but pick what works for you. If it hurts you every month to go over the bills and make the payments, then just set up automatic payments so that a fixed portion of your income goes towards paying debt. Your sole responsibility then is to make sure that your bank balance stays above the required amount and to avoid overdraft fees. On the other hand, if it gives you pleasure to watch your debt shrink and motivates you to keep at it, then make it manual. Pay your bills by yourself each month.

Ultimately, getting rid of debt is like going on a financial diet; it is not easy and the temptations to give in are high. There will be that tiny voice in your head that says, “what’s the point of money if you can’t enjoy life?” But if you are in debt, and constantly worrying about it, you are in fact enslaved to your financial miseries. Unless you make some sacrifices, it is unlikely that you will be able to get out of it. Not all of these tips will work for you, so pick what does and stick to it!

Things You Should Charge To Your Credit Card

If I had it my way, we should all use credit cards for everything (to earn rewards) as long as we pay our bills fully and do not spend frivolously. But some folks do not really like credit cards because they might cause them to overspend. Even if you think about it this way, I would say that there are certain things where it pays to use the plastic in your wallet. Here are the things I have in mind and why.






Things you should charge to your credit cards:



Jewelry and Antiques: Assuming that these purchases are bargain deals in the first place, purchasing items like jewelry and antiques on a credit card may give you an added amount of safety in delivery insurance or damage or loss protection. The worst thing is to realize you have bought a dud and could not replace it.



Vacations: If you have a rewards card that will earn points (like an airline credit card) or cash back, putting your vacation on your credit card can actually be something that you benefit from, depending on the rewards program. Don’t forget hotel stays even if you aren’t necessarily on vacation.



Airline Tickets: Besides the rewards that are earned from purchasing with a credit card, buying airline tickets on credit will usually include coverage by the travel insurance with the credit card company which can cover anything from flight cancellations to baggage loss. From my experience, the baggage insurance can really come in handy. Obviously, earning points or miles from an airline credit card does not hurt as well.



Hotels and Car Rentals – Most hotels require that you give a credit card number to make advance bookings. Frankly speaking, you really do not want to be using a debit card because if there is any mistake, you will have a more difficult time getting back your money whereas with a credit card, all you need to do is to lodge a dispute.



Some Car Rentals can simply make your life difficult if you do not have a credit card. They might require things like a recent utility bill to “prove” you can pay your bills and that you are credit worthy!



Sporting Events and Concerts: Earn rewards for your favorite sporting events and concerts when purchasing with your credit card, which can usually be redeemed for exclusive tickets in the future. The catch is to check with your credit card company to see which events are included. I have had trouble with companies scamming me before and having the expense charged to a credit card and being able to halt the charges sure came in handy.



Gasoline – Many of the better credit cards pay cash back on gasoline purchases. Very often, it is as high as 3% to 5%. With gas prices always fluctuating and more often than not increasing, earning those precious rebates is one smart way of saving money.



Supermarkets – The supermarket is one place where you definitely want to use your cash back credit card. When you stack up your manufacturers coupon with your store coupon, you will save lots of money. Earning cash rebates would then be icing on the cake. I call this the Triple Stack!



Online Shopping – Many cash back credit cards these days have new online shopping portals. Gone are the days where credit cards offered say 5% on gasoline spending the whole year round. Instead, what they offer now are online shopping portals. This is how it works. You log into account and go into their shopping portal. From there you go to the merchant partners site and as long as you shop with your credit card, you will earn extra rebates. For example, GAP.com may be a merchant partner. Rather than going to GAP.com through your browser, going there through your credit card’s shopping portal (it’s the same site and same products BTW), your purchases will be tracked differently for the purpose of earning you the rebates. Issuers like Discover and Chase all have shopping portals.



Expensive Appliances and Electronic Gadgets – Many of the better credit cards offer features such as purchase warranty and extended warranty features. A typical purchase protection feature means that if a product is accidentally broken and the retail store will not accept it, the purchase warranty protection kicks in and protects the buyer from monetary losses.



More importantly is the extended warranty protection. Many extended warranty feature extends the length of the manufacturer’s warranty for up to one year. This can save you money because you typically have to pay for an extended warranty protection from either the retail store or from the manufacturer themselves.



Parting Words – Even if you are not a credit card fan, there are times when using them really makes sense. Hopefully, these examples will convince you. Obviously, paying your credit card bills in full is a prerequisite.



The preceding was a guest post by AskMrCreditCard.