How to Get Rid of Debt Now
Do You Know How to Get Rid of Debt? – 10 Helpful Tips
Do you know anyone who is living a debt free life? Do you want to live without the stress of meeting loan obligations every month? Read on and see how to get rid of debt once and for all.
Debt-free individuals usually share the following ten similar characteristics that enables them to live below their means. There’s nothing here that is so highly technical that prevents anyone else from copying.
- Start paying attention to details – As an example, if you don’t review your monthly credit card statement closely, there may be charges on there that shouldn’t be. Debt free individuals monitor their personal finances very carefully.
They are careful not to waste money by paying fees for making a late payment. This also applies to overdraft fees on their checking account.
This is not rocket science and is easy to do. The key is to start now. Carefully review your monthly statements and monitor your spending. Make a budget so you can compare your income with the expenses. Look for areas where you can cut back, and do this several times during the year to stay on track.
- Understand your finances – An important characteristic that debt free individuals have is that they learn all about their financial activities. As an example, if they have an accountant prepare their taxes, they never sign the return without making a careful review.
In order to take control of your finances, you need to learn all that you can. An easy way to begin is to create a workable budget and keep track of your spending. It may seem a bit overwhelming at first, but once you are able to see where your money goes, you can cut out unnecessary spending and see how to get rid of debt.
- Assume you make less money than you do – This may seem strange to you, but you need to change your view of money. If you are starting to learn how to get rid of debt, this is important. Adjust your budget using an assumption that your income is 10%, or some higher amount, less than it is. This area is very hard to do for most individuals
See where cuts can be made to your spending to balance the budget. Apply that amount to your debt each month. As a general rule, people who are debt free live on less than they earn. As a result, they’re able to set money aside for their retirement, an emergency fund, or even buying a home.
- Think long term not short term – You can make much smarter decisions when you aren’t placing your focus on the “now”. What that means is you must eliminate those impulse purchases. If there is an item that you feel that you really need, save up the money first.
- Don’t be afraid to ask for help – If you don’t ask, you don’t get the old saying goes. As an example, ask your credit card issuer for a lower interest rate. If you make one payment late, ask for forgiveness of the late fee. In other words, don’t be meek when trying to take control of your finances.
- Save, save, and save – Always remember to pay yourself first. By that, it doesn’t mean to spend, it means to save. If you receive a bonus or some other financial windfall, put it in your savings account, or pay off debt if you still have some. You need to make a habit of using this extra cash wisely.
Individuals that are debt free usually set up an automatic deposit to their savings account because they know that those small amounts will add up to create more financial freedom later in life.
- Set financial goals – If you know what you are saving for specifically, it usually is much easier to save. It works well when saving to pay cash for a new car as an example. Saving for retirement, on the other hand, can be very difficult for young individuals because it is so far in the future.
Think about what you would like to do in retirement then working toward that goal helps. For example, if you want to travel, you can think about the places you want to visit, then that goal makes it a more specific one.
- Don’t be afraid to say no – This is a tough one. Often times, friends and co-workers ask you to join them for dinner or maybe a night out. Debt free individuals know that these small amounts add up and can amount to significant savings. Instead of going out to expensive restaurants, suggest a pot luck dinner. There are many inexpensive alternatives to expensive ones.
- Get the best bang for the buck – Individuals who are debt free know the value of cash. Using cash for a purchase instead of a credit card, makes the transaction much more real. You see your hard earned money leaving your hands, and you know it’s gone. This is how to get rid of debt.
When you use a credit card for a purchase, it really doesn’t sink in, at least until that monthly statement comes in. If you want to really change your perception of buying, try using cash for a while.
- They value experiences over stuff – Individuals with no debt were studied and the results found that they don’t focus on material things. They tend to value friends and family higher and also experiences.
Do your choices reflect that same ideology? Do you have to work those extra hours to pay for meals at expensive restaurants with your friends?
Wouldn’t it be better to stay at home and have a meal with your family?
If you want to learn how to get rid of debt and be debt free, you will need to change some of your current spending habits. As an inspiration, find some individual who is living a life free of debt, and if you can, ask them how they did it.
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You said it all; from my personal experience I found out that it is very important to monitor my spending and my personal finances. I would say I have spent a little bit more cash on late payments that could have been avoided if I didn’t procrastinate. I buy into this advice to look into my personal spending and see how to get rid of debt and to define what my needs are from my wants.
Thanks for your comment, Dave. The first thing to do is to create a budget and take control of your spending. It might surprise you how much you can save by doing that.
Debt is such a trap. Managing debt and getting rid of it is really important at any stage of life. Having a budget and understanding where you are financially is really important. I always under budget and assume I make less than I do, a tip you suggested yourself here. Thanks for sharing!
Yes, Tyler, debt can indeed be a trap. For some, it is a never ending cycle that eventually leads to bankruptcy. The key is to create a budget that emphasizes debt elimination. Credit cards can be a disaster for many because of the temptation involved. Then, making the minimum payment only keeps you on the hook for many years.
My wife and I have been debt free for several years now, and I can truly say that it’s a great feeling. It wasn’t easy at first, but we were committed to getting rid of all debt, including our mortgage. Any credit cards that are used are paid in full when the statement arrives.
Congratulations Eddie, on becoming debt free. That’s quite a testimony for others to read, and hopefully, will be an example for them to follow.
Thanks for your helpful tips. I graduated from college last year and didn’t get hit too hard with student loan debt. I got scholarships, worked a couple of part time jobs, and created a budget. I intend to put all that I can towards my debt and get rid of it in a few years.
Thanks for your comment Angela. I’m glad to see that you are serious about getting out of debt. Student loans can be a major problem for many graduates. Good luck, and look forward to the day when you’re debt free.
Last year my wife and I decided to get rid of debt. We had student loans, credit cards, car loans, and a mortgage. We knew it would not be an easy undertaking, but we were determined. The first thing we did was to create a budget using a program that emphasized putting every dollar to work. It’s almost a year now and it’s working great. Debt is going down substantially after eliminating a lot of unnecessary spending.
Congratulations Brett, taking that first step is usually the hardest. Once you budget for debt elimination, it starts to go down quickly. Keep up the good work.