10 Different Ways To Get Out Of Debt
Being in debt can be a burden. You may be unable to do a lot of things that you want to because of the debt that you are in. It’s impossible to achieve financial independence if you’re carrying around debt. Fortunately, there are several things that you can do in order to get out of debt.
- Use Dave Ramsey’s Debt Snowball
Dave Ramsey’s Debt Snowball method is an excellent plan for getting out of debt. Write out your debts from smallest to largest, and then make more than the minimum payment on the smallest debt. Do everything you can to throw as much money as possible to knock out the first debt. Once it’s gone, move on to the next one. One of my favorite things about this method is the psychological benefit of achieving wins along the way. If you make minimum payments on everything, it’s going to take forever to knock out all of your debts, and you’ll end up paying a lot more in interest. Plus, it’s so much easier for you to lose interest. Every little win along the way is a psychological boost to keep you going. You can read more about Dave’s Debt Snowball here.
2. Get a Part-Time Job
If you have extra time on the weekends or in the evenings, then you may want to consider getting a part-time job or starting a side hustle. Do you have a skill set you use for work that your company would allow you to use on your own? Or do you have a hobby that you can use to make money? You can put the extra money toward paying off your debt. Be creative, and be willing to hustle. Sell things on Etsy. Consider delivering pizzas on nights and weekends. You might find that you love your new side-hustle or part-time job, but even if you don’t, it’s not forever. It’s just getting you where you want to be faster.
3. Sell Stuff You Don’t Need
I have a leather couch in my family room that no one sits on. Literally no one. It’s doing nothing but collecting dust and becoming a catch-all for stuff. It’s a nice couch. I like it, but it’s time to go. I’m by no means a minimalist, but I’m more and more intrigued by a less-is-more approach to life. It makes everything easier. Though I don’t agree with everything in this book, I still highly recommend The Life-Changing Magic of Tidying Up. Give it a read, and while you’re corralling everything that doesn’t spark joy for you, sell all of the stuff that might spark it for someone else. You can have a yard sale or utilize Facebook Market Place or Craigslist. You’ll have more money for getting out of debt and a cleaner house.
4. Use Your Tax Refund to pay Your Debt . . . and Then Change Your Withholdings
If you get a tax refund you should use it toward paying off your debt. But then make sure you adjust your withholdings properly. If you’re getting a tax refund, you’re likely giving the government too much money during the year. Speak with your accountant and then your HR department about adjusting your check; the goal is to break even. You don’t want to have to pay at the end of the year, but if you’re diligently seeking FI, then there’s a good chance you can manage money better than the government. Until you’re out of debt, throw every extra penny in your check toward it.
5. Cook Meals at Home
You can save hundreds of dollars a month by cooking meals at home and packing your lunch for work. You will not only have more money to put toward your debt, but you will also be healthier. This takes discipline and planning, but it’s so worth the money saved, not to mention the benefits to your health and the benefits of sitting around the table at home with your family. Stay tuned for more information and ideas for cooking healthy meals at home.
6. Perform a Service
If you don’t want to commit to a second job but want to make extra money, then you may want to consider performing a service for someone. People are always looking for someone to cut their grass, babysit their kids, pet sit, or clean their houses. You can pressure wash, blow leaves, shovel snow, or so much more. Look around your community for needs and try to figure out ways to fill them.
7. Shop With Cash or Your Debit Card
If you dive deep into the FI community, you’ll learn about travel hacking with credit cards. If you’re still trying to get out of debt, I recommend you cut up those cards and commit to cash or a debit card. If you use cash, get an envelope system. If you use a debit card, get a budgeting app like Swift Budget to help you set up digital envelopes and track your expenses. Stick to your budget, and whatever you do, do not add any new debt.
8. Use Coupons and Shop to the Sales
You can find coupons in newspapers, magazines, and online. Save money wherever you can, and use grocery sales to your advantage. Work your meal plans around items that are on sale to help you squeeze more out of your grocery budget.
9. Enjoy Free Entertainment
What are some of your favorite things to do that cost little or no money? You can go to the library for books and movies, enjoy free concerts in the summer, or take your kids to play at the park. If you live in an area with well-maintained parks and green spaces, they can be wonderful assets to both your budget and your health. Walk trails, go for hikes, or play sports as a family. Need a romantic date night? Pack an awesome picnic basket, grab a frisbee and a blanket, and head to a local park. You can also get with friends and plan game nights together. Taking advantage of free entertainment can help you save hundreds of dollars per year, and it can allow you to spend more quality time interacting and engaging with the people you love you the most.
10. Rent out a Room
House hacking is another thing you’ll hear a lot about in the FI community. Do you have an extra room, basement, or bonus space you can rent? If you have an extra room in your home, of if you are single, you might want to seriously consider adding a roommate. Renting out a room can bring in enough income to help you greatly reduce your debt.
Work Extra Hours
Working a few extra hours per week can make a major difference in your income. If you’re on an hourly income, talk to your boss about getting some more hours. For example, if you make $20 per hour, then working 10 extra hours can help you bring in over $200 per week. If you work more than 40 hours per week, then you can also get paid time and a half.
Getting out of debt can feel like a long, uphill battle, but it’s so worth it in the end. And a little extra creative problem solving can help you move the needle faster than you might be able to imagine. Keep going! You’ll get there.
What other ideas do you have? We’d love to hear in the comments ways you’ve cut expenses or made extra money to put toward debt.