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Looking for ways on how to get debt free?
It’s important to know what kind of debt you have and how much you owe.
This is when you face your debt, and this is how you do it:
- Make a list of money owed (including balance and interest)
- Track Your Spending
- Make 2 lists: need to spend and want to spend
Make a List of Money Owed
This is when you sit down with your debt, figuring out how much you we, including the balance and interest.
To stay organized, write all this information down.
This will include:
- Credit cards
- Personal loans
- Student loans
- Auto loans
- Any other type of debt you might have
Tracking Your Spending
Do this for 30 days to fully understand how much money is going into your account and how much is leaving your account.
Why is this important?
Most people don’t know how much money is coming into their account.
They might know their salary but they don’t actually know how much money is entering into their bank account and most importantly, they are clueless to how they spend their money.
You might think that your $5 Starbucks coffee this morning and your $15 lunch out with your coworkers last week won’t amount to much, but all those little charges do add up and they can hit your budget hard, catching you off guard in the worst way.
Then, there you are the week before your rent is due, trying to figure out where your money is, and wondering how to make money in one day.
When I was working my full-time 9 to 5, I did this every month, like clockwork, tracking spending.
I tracked my income and I tracked my monthly expenses.
I put everything on a calendar so I knew when my bills were due and when I could pay those debts, according to when I got my biweekly paycheck.
When I became self-employed, everything in my life became more flexible, and so did my financial habits.
Soon after, I put myself back on track with this financial plan and now, I’m back to tracking my spending.
Tools to help you track your spending:
Making Your “Need to Spend” List
These are your bare necessities like:
When creating this list, keep in mind that these are items that you need to survive.
Making Your “Want to Spend” List
This list includes your wants in life, like:
- Going to dinner with friends
- Shopping for a new outfit
- Going on vacation at the end of the year
Once you’ve gone through all this, it’s time to move onto creating your debt-free plan!
Before you do though, it’s important to know the purpose of your “Want to Spend” list.
The purpose is to identify your purchases that you want to do so you can acknowledge them, then, banish them for good.
If you want to become debt free, then you’ll be abandoning the items on the list, at least temporarily.
Creating a Debt-Free Plan
Once you make the decision to become debt-free, you’ve got to make a plan.
First, make your debt-free plan.
Then, put it into action.
Planning is easier than you might think.
You create goals and put them on paper (or on the computer).
- Consider how quickly you want to pay off debt
- Put some major and minor goals down
- Reward yourself for milestones hit along the way in your debt payoff journey
- Check in often
- Hold yourself accountable
- Become debt-free with a buddy
20 Ways On How To Get Debt Free
Check out these tips to help you get debt free starting today!
1. Stop Using Credit
The first thing you want to do is stop putting yourself in debt.
- Stop using your credit cards
- Stop drawing from your line of credit accounts
- Stop renewing your loans for cash back
You want to halt all debt usage activity, period.
There are some perks to using credit, specifically credit cards, like:
- Gaining rewards
- Gaining airline miles
- Getting cash back
- Getting discounts on gas and other goods
- Getting free stuff
There are even these dozen crazy ways to get credit card points.
If you can manage to use credit cards for perks AND pay off the amount you charge to avoid carrying the balance, feel free.
Some of the perks might be worth it and there are opportunities where using credit is more rewarding than not.
Aside from this though, avoid using debt.
You don’t want to go backwards in your debt payoff journey.
How to Pay Off Credit Card Debt?
To pay off your credit card debt fast, take a look at these tips to help you shrink this debt:
- Pay more than the minimum payment requirement
- Stop using credit cards
- Pay your credit card bill on time
- Call the creditor and negotiate a lower interest rate
Paying More Than the Minimum Payment
This is crucial in paying off your credit card debt quickly.
You can take two approaches to this:
- Debt snowball or,
- Debt avalanche
The debt snowball method involves paying off your debts in order of smallest balance to largest balance.
Why pay off your debts this way?
You can eliminate more credit account balances faster, usually.
And, while you are doing this, it’s gratifying.
You are paying off small accounts and watching those accounts hit a zero balance and then moving onto the next largest bill.
It gives you motivation to continue on in your debt payoff plan.
So, if you have 3 credit cards: $200 balance, $1,000 balance, $5,000 balance, you would pay off the $200 balance card first, then move onto the $1,000 balance account, and lastly the $5,000 account.
The debt avalanche method works in a different way.
You pay off your debts in order of largest interest rate first.
The thinking behind this is that you will be saving the most interest overall by tackling your highest interest debt first.
And, this makes sense.
It’s a completely different mindset than the debt snowball method but both are very effective.
3 credit cards: $200 balance with 6% APR, $1,000 balance with 20% APR, $5,000 balance with 10% APR,
you would pay off the high interest 20% APR $1,000 balance first, then the 10% APR $5,000 balance, and lastly the 6% APR $200 balance.
Adopt one of these approaches when paying off your credit card debt.
Stop Using Your Cards
You want to move forward and not backwards so, stop using your credit cards.
Paying Credit Cards on Time
The top reason for not paying credit cards on time is due to forgetfulness.
Yes, you read that right.
People just forget.
Cope with this by putting yourself on an automated payment plan to pay your bills on time or consider setting a reminder.
If you pay your credit cards on time, you get to enjoy:
- Avoiding late fees
- Preventing your credit score from declining (payments 30 days or more late get reported delinquent to the credit agencies)
- Preventing your interest rate from rising (since some creditors will increase your interest rate due to derogatory payments)
Helpful resources to check out:
- 10 Ways to Come Up With Rent Money Fast Before Month’s End
- 10 Unusual Ways to Make Money This Month
- 10 Survey Sites That Will Make You $300/Month Or More
Recommended reading: 7 best tips for using credit cards & avoiding costly mistakes
2. Stop Being an Impulse Buyer
Are you guilty of this?
Can’t resist a sale?
Feel like shopping every week?
This bad habit will keep you in debt!
How to avoid impulse purchases?
- Get on a budget
- Get rid of FOMO (fear of missing out)
- Stay away from opportunities to buy
- Don’t visit shopping websites
- Clear your email inbox of shopping offers.
3. Stop Eating Out
Eating out can get you in debt.
It’s a costly lifestyle habit that too many people do.
This can impact your financial and physical health.
Do these things instead:
- Cook at home
- Eat more fruits and vegetables
- Meal prep
- Practice minimalism
- Batch cook
- Pack lunches for the entire family
- Make drinks at home
Cooking and Making Drinks at Home
Cooking at home is nutritious and saves so much money.
You can prepare healthy meals and drinks at home, cutting out expensive fast food and drinks on the go.
Eating More Fruits and Veggies
Fruits and vegetables are actually cheaper than processed foods and they are so much better for you.
Embrace this way of eating more and save money in the process!
Meal prep is a huge time saver that I have personally benefited from.
Sunday is the day for me to meal prep for the entire week.
I can spend a few hours making meals for the entire week, storing them in the fridge and leftovers in the freezer.
Then, our family has food and meals prepared and ready to eat all week long.
A time saver and a budget saver!
If you are minimalist, you are naturally saving money.
You don’t spend money on unnecessary things like takeout meals, fast food, and restaurant meals out.
Learn about these 10 ways to stock a minimalist kitchen.
Batch cooking goes along with meal prep.
You make meals in huge batches, for the current period (like for the week) and for the future (freeze these).
Packing Lunches for the Entire Family
Make a prepped lunch a no-brainer by packing lunches in advance and making them easily attainable all throughout the week.
This way you aren’t tempted to grab for food on the go.
4. Stop Trying to Keep Up With The Joneses
Stop trying to keep up appearances.
You don’t have to compete with others.
If you can’t afford a lavish lifestyle, that’s ok!
What does living beyond on your means look like?
- You buy things you can’t afford
- You are materialistic and buy luxury goods
- You try to one-up your friends
- You try to impress people with things
Avoid this and shift your mindset so you can start living within your means.
5. Start A Budget
Start a budget easily and save money instantly.
How to get started?
- Get a budget app
- Track your spending and purchases
- Reward yourself
Download a Budget App
Getting a budgeting app from your phone or tablet.
It’s one of the easiest ways to start budgeting.
Enjoy these perks:
- Track your spending and uncover spending behavior
- Categorizes your purchases
- Get a picture of your financial health
- And, more!
Check this out: 16 best budget apps to save you money
Tracking Your Spending
Tracking your spending is super important and can be done easily, with the help of a budget app.
You want to know how you’re spending money.
This helps you avoid overspending and uncovers purchase trends that you might want to eliminate, like spending $100/month on Starbucks ( I have done this before) or spending an extra $50/month at the gas station for odds and ends (I have done this, too).
A couple bucks here and there.
It adds up.
A budgeting app can help with this too.
I do this all the time, with just about everything.
If there’s a task I don’t want to do, I create a reward on the end of it, giving myself a perk for completing the task.
For example, on Saturdays once a month I do a deep clean in the house.
The reward for doing the deep clean is renting a movie from Amazon for $5 or enjoying a glass of wine at home.
A rewards system will help keep you motivated and get in gear to meet your goals.
Give this a try!
6. Stop Spending More Than You Earn
Again, it’s about living within your means.
You can actually spend more than you earn and survive, on debt and credit cards.
You do not want to do this.
If you are in situation where you struggling, pick up a side gig.
Ideas to Make More Money:
- 25 Survey Sites to Earn $600+ Per Month in Extra Income
- 5 Best Call Center Jobs from Home: Earn Up to $19 Per Hour
Ideas to Lower Your Monthly Expenses:
- Cut the cable and switch to streaming services
- Stop eating out
- Get roommates or move in with family
- Get rid of your car and take public transportation
7. Make Payments On Time
Making payments on time helps you get on the good side of your creditors, which is great because you’ll be more likely to:
- Keep a lower interest rate
- Get more credit line increases
- And, many more benefits
It also helps to keep your credit standing strong, avoiding delinquent marks, from being 30 days or more past due.
How are payments made late?
- You forget (most common reason)
- You don’t have enough money to pay on time
You Forget to Pay
This is one of the most common reasons payments are not made on time.
Fix this by setting a reminder.
You can set a reminder on your cell phone.
You can also put your bills on autopilot with automated payments.
You Don’t Have Enough Money to Make Payments on Time
If this is you, there is a solution.
Increase your income!
- Get a Second job
- Ask for Overtime
- Start a business
- Gig work
- Side hustle
Get Second Job
Work after your main job or on weekends.
Overtime at Work
Asking for overtime at work is easy.
If there is overtime available, you can take advantage and quickly boost your earnings from your job.
Starting a Business
Starting a business was my start into the world of entrepreneurship.
It allowed me to leave my 9 to 5 and six years later, I’m still working as an entrepreneur!
There are small businesses you can start with no money, like:
- A number of service-based business like furniture assembly, blinds assembly, pet washing, tutoring, etc.
- Freelance-based businesses like virtual assistance, video editing, and related
- Tech businesses like computer programming
- Design businesses like graphic design, logo creation, and related
Learn more about starting a business with no money.
Gig Work Jobs
The gig economy is growing year after year.
Working a gig job will afford you perks like these:
- Weekly and/or daily pay
- On-demand work
- Casual attire
- Comfortable and relaxed work environment
- Flexible schedule
- Freedom to work on your own
Recommended reading: 35 work from home gigs that pay weekly or daily.
Side hustles are an easy, quick, and rewarding way to start earning money.
They usually require basic skills that most people have, like:
- Basic computer skills
- Communication skills
- The ability to work well independently and in teams
- Disciplined and diligent
Take a look at these:
- 16 Easy to Start Side Hustles for Introverts
- These 10 Online Side Hustles Will Make You Money Fast
- 10 Extra Money Ideas That Make A Great Side Hustle
8. Staying on Top of Your Credit Report
You are allowed one free credit report per year.
Take advantage of this!
Checking your credit report allows you to check for errors:
- Incorrect name and address
- Incorrect accounts, balances, and payment history
- Mistakes in derogatory payment information like charge-offs, foreclosures, collections, and bankruptcies
If you do find an error, you can then take the steps to correct it and restore your credit.
Learn more about credit report errors, why they happen and how to fix them
9. Save Money on the Things You Buy
Saving money on the things you buy means you’ll have more money leftover to throw towards your debt.
Here are some ways to save money on everyday purchases:
- Use cash back apps
- Coupon for grocery purchases
- Buy used instead of new
- Cut back on spending, in general
- Shop less often, for bigger hauls at the grocery store
You can earn up to 20% cash back on select purchases through cashback apps and website.
They work like this:
Sign up to the cashback app or website for free then, purchase from your favorite retailers like normal.
Earn cashback on your purchase, after you checkout!
For some of the cashback apps, they require you to link a debit and/or credit card and you earn cash back when you buy, using that card.
Here are some cashback apps and sites to review:
Couponing at Grocery Stores
Start couponing by clipping physical coupons and using digital coupons.
Are you a beginner?
Check these helpful articles for guidance on getting started:
- 15 Couponing Tips for Beginners That Will Save You Money
- Coupons.com Review
- 14 Dollar General Couponing Tips and Tricks
Buying Used Instead of New
Should you buy new or used?
You get a lot of value for your money and you can buy so many things at a huge discount used, instead of new, like:
- Used cars
- Used houses
- Used electronics
- Used clothes on consignment
Cutting Back on Spending
Avoid spending and shopping in general, to save.
Take yourself out of situations where you will have to spend money.
Embrace free activities for entertainment like trips to the library, strolls in the park, walks in the neighborhood, bike riding, hiking, watching free movies at home, etc.
Shop Less Often for a Bigger Haul at Grocery Stores
Yes, you can save money buying more food, less often.
Instead of your once a week grocery trip, try a once a month grocery trip, saving you time and money.
I made this switch and could not be happier.
First of all, I hate grocery shopping.
So, if there’s a chance for me to cut back on grocery trips, for no other reason than saving me time in the store, I am all for it.
But, you can save time and save money.
Make a huge list for the entire month, menu plan, meal prep, feed yourself before you shop, grab your coupons, use apps and hit your grocery store once a month!
10. Stop Paying Off Your Debt with More Debt
I did this as a struggling college student.
It was a time that was not long-lived but I was living paycheck to paycheck and living off credit cards for part of my expenses.
How did I get out?
I got another job and enjoyed a more balanced lifestyle, stopped struggling, and had more money to pay my bills!
Paying your debt with more debt is not the way to go.
If you’re doing this, stop!
If not by choice, make a change so you don’t have to live in this money spiral.
Get a job, take on a side hustle or gig work.
Or, make some big changes to your lifestyle to cut back on your expenses.
Taking on More Work for More Money
More work means more money.
Don’t be overwhelmed by this.
Many people take on a second job or side hustle for extra money.
And, it can be temporary.
It doesn’t have to be forever.
Lowering Your Expenses
Cut back on monthly spending by lowering your expenses.
Here are some ways you can achieve this:
- Lower your utility bill: turn off appliances when not in use, turn off lights when you leave a room, fix a leaky toilet or faucet, keep rooms closed
- Refinance: call your auto loan and student loan companies and try to refinance for a lower interest rate
- Embrace these 26 frugal grocery shopping tips
- Lower your household expenses (rent or mortgage) by getting roommates, subletting, or doing AirBNB
- Lower your car expenses by carpooling or letting go of your auto in lieu of public transportation
The most important step in the direction of being debt-free is to have a budget. I’ve said this repeatedly throughout my posts but I cannot stress this enough. Putting all your income and expenses down on paper (or in a software program) enables you to clearly see what is exactly happening with your money.
Once you have been monitoring your money for a while, you’ll see where you can trim back. Use the money saved from this towards your current debt. Pay the smallest debt off first, then apply that amount to the next smallest debt and so on until they are paid off.
Once you start paying those credit cards off, start canceling them. You only should need one credit card for emergencies. Those department store cards, gas cards, and any extra cards should be canceled and cut up.
The next step is to “Pay yourself first”. I don’t mean go out and treat yourself to something special. I mean when you get your paycheck and before any money goes out – put some money into a savings account.
We get that idea backwards – pay everything off first and then what’s left will go to savings and usually there’s nothing left to invest. It doesn’t have to be much either, a simple $40 a week becomes $1,450 a year (1.75% interest), and that’s $7,525 in 5 years.
As an extra boost, any monies left after all the bills are paid at the end of the month should go towards your savings as well. Dave Ramsey, a well-known financial advisor says we should have an “Emergency Fund” of at least 3 to 6 months of your income to cover any sudden costs that happen.
Switch all your bill payments to online and automatic payments if possible.
Automating your bills will have several outcomes:
- Better budget – the same amount is paid every month
- Improved credit score – you’re showing a consistent payment.
- No debt pileup – forgetting a payment adds to more debt.
Do this for your savings account as well, a steady automatic weekly transfer will grow that emergency fund.
14. Use Cash
For the other budget categories that cannot be paid online such as groceries and gas, eating out, and entertainment — use cash. Withdraw just enough to cover these expenses for the week and stick to your budget. If you run out of cash in that category, you’re done spending until the next budget “payout”.
15. Eliminate Old Debts
Do some research and check all your credit reports for any errors as well as old debts. Research the statutes of limitations in your state and find debts that fall under this.
Some states don’t allow debt collectors to collect after a period of time, while others don’t allow lawsuits after a period of time. If the time has passed, you can likely forgo repayment without worrying about financial, legal or credit consequences plaguing you.
16. Transfer You Cards
If you have several high-interest credit cards, one major thing you can do to help reduce your debt quickly is to transfer them to a 0% interest card. This step alone can save you a lot of money in interest payments.
Let’s say you have 3 credit cards:
- Card 1 is $3,000 with 18.9% rate & minimum payment of $120 = $4,810 total debt
- Card 2 is $5,500 with 16% rate & minimum payment of $220 = $8,146 total debt
- Card 3 is $400 with 24% rate & minimum payment of $16 = $575 total debt
You transfer these cards to a card that has 0% interest for six months, so now the balance is $8,900.
You pay $350 a month for 6 months, now your balance is $6,800 and now the interest becomes 18% but you keep paying the same $350 a month on it.
The total debt is now only $8,098 instead of the $13,531! That’s $5,433 in savings!
17. Cut Back
Now that you’ve got the money part down, it’s now time for another important and hard step towards being debt-free – getting frugal. If you look closely at your budget you might see you have a lot of amenities and extras.
Do I need:
- 300+ channels on my cable? Or can I get by with 100? Or should I switch to Netflix and Hulu?
- Premium Gym membership? Can I get by working out at the Y or at home?
- That specialty coffee? Can I make a copycat version at home instead?
- That Nail Salon visit? Can I do it at home? Why not have a Manicure party with your girlfriends?
- All those subscriptions? Magazines, newspapers, and subscription menu boxes?
- And the list goes on….
18. Attitude Adjustment
In order to succeed at being debt-free, we need to change our mindsets about “needs vs. wants”. Today’s society is so set on wanting the next newest thing that comes along. We’re spending money on the newest model car, newest upgraded phone, a bigger TV and other things like that. We do this because “it’s there” and we’ll look good.
We need to change this thinking to one of only replacing things when they break (and unrepairable). The attitude of wanting it because it looks good isn’t going to help your wallet at all.
19. Reward Yourself
Now, getting out of debt shouldn’t be all doom and gloom. You should plan for some rewards for yourself too. Reward yourself with a dinner out after a major credit card debt is paid off. Buy a small coffee at the end of the month for making your savings goal that month.
20. More Money
A fast way to get debt-free is to get more money. Get a better job, a second job, a side hustle, or start selling off things you don’t need. This extra money should be used to pay off your debts, build your savings, and ease that tight budget a bit (in that order). Don’t be tempted into thinking that now you have more money you can spend more, that will come later.
As you pay off your major debts, it’s now time to add more categories to your budget to cover the small stuff as well as emergencies – Dental visits, car repairs, new appliances, medical emergencies and other small family things like haircuts, clothes, supplies.
The money in these categories can be built up slowly and when the situation calls for it, you’ll have that cash ready. By this time, you should have only one good credit card (with a zero balance) for those major emergencies that doesn’t have the cash reserves to cover it.
This should only be the absolute last thing to consider when trying to be debt-free. This should only be done when you have undeniably mucked up your finances so bad that there’s no way out or there is no income left.
There are two types of bankruptcies:
- Chapter 7 – You have little to no income. They’ll liquidate some of your assets to cover some of your debts.
- Chapter 13 – You get a re-payment plan established to pay off your debts over the next three years.
You’ll need to check with your state on the qualifications for either of those bankruptcies.
Just remember that after this is completed that your credit score will plummet, the bankruptcy stays on your credit report for up to ten years, and you may still have some uncovered debts to repay as well.
BONUS: Build An Emergency Fund
Building an emergency fund can help you if an unexpected expense were to arise, while providing you peace of mind.
Unexpected expenses that could arise:
- Insect or rodent infestation
- Car or house repair
- Medical or dental expenses
- Unexpected high bill
Start building your emergency savings now.
Yes, it’ll take hard work, patience and sacrifice to reach your goals. But the relief you’ll feel when you realize you don’t have as many bills to pay anymore can be exciting.
You will then have enough cash to budget for things you finally want – that vacation, that kitchen remodeling, a new TV.
It is possible to live debt-free and live the life you want.
Do you have any other ideas on how to get debt free? Let us know in the comments below.