4 Tips to Help You Get Out of Debt

Getting into debt is a slippery slope. It starts with a single time when you need or want something that you cannot readily afford, so you charge it or otherwise finance the purchase. The next month, you have to make that new payment, and it stretches your budget thin. Before you know it, you charge or finance something else — and then you are stuck, or at least it feels that way. Luckily, being in debt — even drowning in debt — is not a life sentence. There are things you can do to help get back on your feet.

Stop Spending

The first thing you have to do to get your finances under control is stop spending. Adding more debt will slow down your progress towards getting back on your feet, but so will spending. Every amount that goes out is an amount that could be used to pay down your debt, so learn to conserve. Downgrade your cable service, sell clothing and household items you aren’t using on Craigslist, and cancel unused (and unnecessary) services like magazine subscriptions and weekly blowouts. That is money that can go towards your debt.

Pay More Than the Minimum

In other words, you need to make sure that you are paying more than the minimum. Whenever you pay the least amount possible on your credit card and loan payments, you are basically paying on the interest — so the principle on your account only goes down minimally. You’ll end up paying more in the long run, and it will cost a good bit more. In contrast, if you suck it up now and make those larger payments, you’ll save a bundle. Making even one extra payment a year or rounding up your payment amounts will make a real difference.

Be Strategic

Another thing you can do to get back on your feet is to be strategic about how you make those extra payments. Paying more across the board may seem like a good idea, but if you have a credit card with a 25 percent interest rate and a car payment with a 5 percent interest rate why would you pay them equally? You will get more bang for your buck by being strategic and putting more toward your higher interest balances first.

Focus on Debt, Not Saving or Investing

It may seem like a good idea to start investing a little bit to prepare for the future, but don’t do it. You will be better off paying down your credit card debt first. If you are paying 20 percent on your credit card balances, you would need to earn a return on your investment of over 20 percent in order for it to be worth more than paying off your debt. Likewise, don’t bother saving much while you are trying to pay off your debt. Remember, you can always access your available credit if you have an emergency — why not save yourself those interest costs?

Getting into debt happens, but it is possible to stop drowning in debt and get back on your feet. Just follow these simple steps, and reap the rewards.


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