10 Tips to Get Out of Debt

Spend less, save more. It’s the third most-common New Year’s resolution for a reason — millions of people around the world struggle with debt, but few know how to chip away at the credit card bills, car loans and other expenses that can leave you feeling overwhelmed. It is possible to dig yourself out from under what can seem like a mountain of debt using a few easy-to-incorporate strategies.

Get organized

#1 Make a list

Trying to deal with a lot of miscellaneous bills can make paying down debt a nightmare. The first step toward repayment is to get organized so you have a clear picture of where you stand. Make a list of exactly what you owe and to whom. By facing the facts and laying everything on the table, you are more likely to have a realistic idea of your situation and a better chance of making progress.

#2 Make a budget

Make a budget and stick to it! This is difficult for a lot of people — hence those broken New Year’s resolutions. Try a web service like Mint.com or BudgetTracker.com to help you organize your budget, and be honest about what you put down. Try to stick to it and see how good it feels to stay within your means each month.

#3: Refinance your debt

Try refinancing your credit card or other debt. You can apply for a personal loan that may have a much lower APR than many high-interest cards, and using this money to pay off credit debt can save you money on interest payments in the long run.

#4 Organize your spending

Categorize your spending. Organize things into must-have, should-have, and like-to-have. If you can do without something, you can put it on the “like to have” list and avoid spending money on it until you’re in clearer financial waters. Things like the gym membership you rarely use, new shoes, and movies are in this category. Make your main expense priority the payment of your debt — it becomes a “must have.”


Shrink your waistline — and your wallet

#5: Eliminate extras

Want to slash extra spending from your budget — and maybe shed a few pounds as well? Take a look at what “extras” you can eliminate from your budget. Things like dining out, fast food, and trips to the coffee shop can add up to not only a lot of extra spending but quite a few extra calories as well. Slash excess treats from your diet and you may end up cutting costs, too.

#6 Write down your expenses

Write down what you spend. Your debt is built up over time of many small purchases, and if you can track these items and manage to get them under control, you can have better and faster success of keeping your debt from increasing and an easier time paying it off.

#7 Stop spending

Stop spending! Cut your cards in half. Experts agree that you should have no more than one active credit card at a time. Get rid of department store cards and gas cards, and use your one card only for emergencies.

Tackle the worst first

#8 Pay off high interest debt first

Pay the most each month on the cards with the highest interest and the lowest amount on the cards with the lowest interest. Doing this will ensure you pay off the high-interest cards more quickly and save in the long run.

#9 Pay off debts with smallest balances first

Pay the debts with the smallest balance first and the minimum on other debts — this likely eliminates the smallest debt first, and gives you a much-needed boost of confidence.

#10 Don’t close the account

Once you’ve paid off a credit card, avoid the temptation to re-up your balance with more purchases — but avoid closing the account. Closing accounts could negatively affect your credit score.

What have you guys found to be most helpful to get ouf debt?

Let us know in the comments!