Ways to Save Money

The Ultimate Guide to Getting Out of Debt: A Step-by-Step Plan

June 24, 2015
by Nicole Dieker
Contributor

If you’re like a lot of us, you have debt — and you’d like to be rid of it. Whether you’re carrying student loan debt, health-related debt or plain old credit card debt, getting out of debt can reduce your monthly expenses while freeing up your income to be used in more productive ways: savings, travel and other life experiences.

Laura Shin at Forbes recently shared The Ultimate Guide for Getting Out of Debt, which provides a straightforward plan to those of us who are dreaming of paying off our debt. Ready to jump-start your new debt-free life? Here are the steps to take:

Commit and Plan

What does Laura Shin think is the most important step in getting rid of your debt? Commit to becoming debt-free. If you think “I’ll pay off my debt when I have extra money,” you’ll always be in debt. Instead, say “I am going to pay off my debt,” and make it one of your top financial goals.

Once you are committed to paying off your debt, make a budget. Leave no dollar uncounted. If it’s not going to the necessities of life or to savings, it’s going to pay off your debt. Plain and simple.

Use spreadsheets to turn your plan into action. Calculate how much money you earn every month as well as all of your expenses, and figure out what’s left over. Then, use the avalanche method to pay off your highest-interest debt first as you make minimum payments towards lower-interest debts. Keep it up, and you’re on your way to living debt-free.

Spend Less and Earn More

A lot of us wish we could put more money towards our debt, but feel like we don’t have enough left over at the end of the month. There are two solutions to this problem: spend less and earn more.

Pack a sack lunch instead of going out to eat? That’s another $10 that can go to your debt. Take on a freelancing gig after work? That’s money that can go directly to your debt. The more you save and the more you earn, the faster that debt gets paid off.

If you are wondering how you can possibly cut back on expenses or earn more money, you’ve come to the right place! Take some time to read our archives and learn the best money-saving and earning tips we have to offer. We have guides to freelancing, reselling clothing, making money on eBay and more. We also have a whole section about how to save money on everyday expenses.

Are you ready to commit to paying off your debt? Decide today that you are going to live a debt-free life, and use Laura Shin’s guide to help you achieve your goal.

Want to learn more? Read the whole story at Forbes.

Your Turn: Are you working on paying off your debt? Share your plan in the comments!

Nicole Dieker is a freelance writer focusing on personal finance and personal stories. Her work has appeared in The Billfold, The Toast, Yearbook Office, The Write Life and Boing Boing.

 

by Nicole Dieker
Contributor for The Penny Hoarder

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