How to Get Out of Debt Part III

Here is the finale on our series, Part III, of getting yourself out of debt. If you haven’t read the first two parts, click here to view How to Get Out of Debt Part I, How to Get Out of Debt Part II.

6. Time to make some phone calls. I’m not going to recommend that everyone cut up all of their credit cards unless they’re in serious trouble. If you’ve been keeping current on all of your payments while getting deeper into debt, you at least have a chance to help yourself out. Call all of your big credit card companies (Visa, Mastercard, Discover) and ask for a rate reduction. If you’ve kept up on payments, most of them will offer you a reduction, which can save you a lot of money in fees, and in some ways immediately reduce your payment amount.

Next, if you need a quick infusion of cash and have a car payment, call them and ask if you can delay payment for one month. Most auto loan companies will give owners upwards of 10 times during the life of a loan where they can delay payment a month, though you will pay a very small fee and your loan will be extended a month for each delay. Still, it’s a nice way to get a one month jump on some funds that might help you get over, or caught up, on some delinquencies.

7. Get a part time job. Yes, I know this one everyone hates. The thing is that there’s only so much one can hope to save while trying to cut expenses, and a nice part time job might add at least $200 to your cash flow during the month, often much more. Of course if you work a full time job with lots of overtime this might be hard to do, but for most people, that’s not a concern.

Here’s the thing. There are different kinds of part time jobs. If you can write, you might be able to find some freelance writing work that could earn you some nice pay and you won’t even have to leave the house. Maybe you can find something that fits a particular skill you have. In Loral Langemeyer’s book The Millionaire Maker, she often makes that a part of her recommendations for clients who work with her, and many of them have found that it turns into a better career than the one they’d been doing, makes more money, and they enjoy it more.

Following these tips will get you out of debt, though it’s not an easy process and could take awhile. However, alleviating the worries of whether or not you will ever be able to overcome your debt will be a big benefit to you once you see what you’re up against, and you’ll love the feeling of independence that you’ll end up giving yourself.

See more:
10 Steps to Overcoming Credit Card Debt

How to Negotiate A Credit Card Settlement

How do you plan to get ahead? Ways to Increase Your Income

How to Get Out of Debt Part II

Continuing with our miniseries on getting yourself out of debt, we tackle the concept of payment plans. Click here to read How to Get Out of Debt Part I.

5. Set up a payment plan; yes, the dreaded “budget” word. Luckily, you’re already partially there because you’ve listed all your debts. If you have one and know how to use it, list everything in a spreadsheet program because this will make it easy to track, or at least set everything up. Here’s what you want to do.

First, figure out which bills are due when. Base it off either your one week or two week payment schedule; if you get paid once a month, you can skip this part. Set up a schedule where you know when you’ll pay which bills for at least six months.

You’re probably wondering why. Earlier we figured out what your net income was for 26 weeks. However, most people budget for twice a month payments, which means you actually get two extra weeks of payments a year. So, what you’ll find is that, if you extend your budget for six months, you’ll gain a pay period, and thus earn yourself a little benefit and boost which you’d have never known about if you hadn’t budgeted.

Something else you’ll do with your payment plan concerns your credit card payments. There are three schools of thought on this one. The first says to tackle the card with the highest interest rate first. The second says to go after the cards with the highest balances first. The third says to go after the cards with the lowest balances first. Let’s take a look at each of these.

The cards with the highest interest rates add more to your balances on average than other cards. Going after these balances saves money because it saves on the amount of interest you’re getting charged for.

The cards with the highest balances are the ones that make you feel beaten up and overwhelmed. If you go after these balances first, as you see them coming down your stress level will decrease.

My favorite, however, is going after cards with low balances first. The principle behind this is that everyone works best when they can see successes. The quicker you can pay off a balance, the better you’ll feel, and you’ll be ready to tackle the next card.

Of course, the idea behind all three of these ideas is that, whichever one you select, you pay more than the minimum balance, at least 50% more if you can afford it, and stop using all of your cards except possibly one; we’ll come back to that concept. Then, when you pay off the low balance card, you take that payment and apply it to the next lowest card, and so forth.

The thing is, if you have a low balance with a high interest rate, this is a win-win. If your highest balance is also your highest interest rate, you’re heading towards trouble quicker, and you just might have to go after that one first, bringing the balance down to a safer level before going after one of your other cards.

Why do I recommend you keep one card going? The reality is that if you can use one of your credit cards for small purchases, what you’ll have to pay the next month is relatively low compared to having to pay cash for everything. You don’t use it for everything in a month, just a couple of things. If you put gas in your car weekly, maybe throw one of those weeks onto your credit card. Maybe one week in the month use your credit card for the purchases. This is extreme, but if you have the space on the card it might help for a quick fix, though we’re weaning you away from credit cards eventually.

See more:
How to Get Out of Debt Part III

75 Painless Ways to Save Money

8 Simple Ways to Save Money

7 Days of Money Saving Tips

How to Get Out of Debt Part I

Many times, when people are looking for ways to reduce their debt, they go looking to find someone else to help them with their problems. The truth of the matter is that every person is capable of figuring their way out of debt if they have a job and are bringing in some kind of money. Below are some tips to employ to help you gradually, or quickly, work your way out of debt.

1. Write down all your debts. This is always the first step, because, as Dr. Phil might say, you can’t address what you won’t acknowledge. Take one month’s worth of bills and write down what each is, as well as what the amount is that you’re expected to pay. As it pertains to credit cards, also write down the annual percentage rate. Also, write down how much you estimate you spend on things such as food, gas, entertainment, etc.

2. Calculate your monthly net income. Net income means how much you actually bring home, or have deposited into the bank. Hopefully, it’s the same amount every pay period; if not, then it’s going to be a total estimate. There’s a few ways of doing this. One, if it’s the same amount, multiply that by either 52 if you get paid weekly, 26 if you get paid bi-weekly, or 12 if you get paid monthly.

After you’ve done the first two things, see what the difference is between what you’re bringing home and what your monthly bills come to is. Hopefully, you’re on the positive side as far as income goes. If you’re close either way, there’s still hope. If you’re in the ditch, and your expenses outweigh your income, you’re in trouble, but there’s still hope for you.

3. Take a look at the bills you’re paying to see what may be there that you either don’t really need, or can reduce. For instance, if you have cable and have all the premium channels, you could probably get rid of some of those to reduce your bill. Maybe with your cell phone you can eliminate the internet for awhile, or reduce your text message plan somewhat. These are luxuries, not necessities, and you might miss them, but your wallet will thank you. Most people will find that if they really take a good look at things like this, they can save anywhere from $100 to $300 a month, depending on how much they were spoiling themselves.

4. Take a better look at expenses that aren’t monthly bills. You’re probably not going to be able to reduce your gas consumption because you’re not really going to save all that much money taking the bus to work unless you drive long distances, in which case taking the bus might make a lot of sense. However, reducing your entertainment budget might be a big deal, especially if you’re eating out twice a week, or every day for lunch. It’s almost better to increase your food bill a little bit to get things so you can take a lunch with you, and maybe eat out once every two weeks, at a less expensive restaurant, instead of weekly. If you’re really in trouble, extra spending to make yourself feel better will only hurt you.

See more:
How to Get Out of Debt Part II

How to Get Out of Debt Part III

Dr. Phil’s Tips to Eliminate Debt

The 12-step Get Out of Debt Program

Quickly Reduce Debt

With so many of us in debt in our society today, who isn’t looking for ways to reduce their debt quickly? Quick doesn’t mean easy, and reducing your debt usually will take hard work. This article should give you some ideas on how to save hundreds of dollars every month that could be spent paying off your debts. The goal should be to pay off, or significantly pay down, one of your debts each month. Once that debt is paid off, switch to another and work to reduce that outstanding balance. When you’ve finally made that final payment to your last creditor, you should find yourself sitting debt free. Here are some ideas on how to save a few hundred dollars monthly. Sometimes you can save even more than this depending on your determination and will to go through with the necessary steps to pay off your debts.

• Eat Out Less Often – Fast food and traditional restaurants can be expensive when frequented often. Eating fast food for lunch each day can easily cost as much as $25 or more each week. Taking the family to a restaurant once a week quickly adds up, or should I say quickly deducts from your disposable income. Cutting out these expenses can save you at least $100 – $200 a month.
• Doing Without Cable – With today’s cable fees, often including phone and Internet access, monthly costs for these services are usually well over $100 a month. If you can do without your cable and maybe your Internet access, maybe even cutting out your home phone and only using a cell phone, you can save yourself a good amount of money. If you can’t live without cable, cut back on some of your cable add-ons, i.e. movie channels and sports packages.
• Drink Your Coffee at Home – With the price of a double-shot espresso somewhere in the range of $3 to $7 at the likes of Starbucks, Dunken Donuts, etc., you would save a large sum of money by simply drinking, or at least preparing, your coffee at home. You could save as much as $100 per month by drinking coffee at home.
• Kick the Habit – Quitting smoking can save you a good chunk of money, not to mention add years to your life. The average price of cigarettes in nearing $8 a pack, a pack a day can cost a whopping $240 per month, this one seems like a no brainer.
• Help the Environment – Carpooling or riding public transportation can save you a good deal of money on gasoline. Average gas prices are in the $3 range, and depending on how far your commute to work is each day, you may be able to save as much as $50 – $100 monthly.

These are just a few of the countless money saving ideas that many, if not all, of us can implement into our daily routines. Try some of these suggestions out for yourself and start saving today. Or, brainstorm on some more money saving ideas and share them with our readers. The important thing is that you take the initiative and start taking the necessary steps to reduce your debt and work towards becoming financial free.

Money Saving Tips for Debt Relief

With the economy as it currently is, many people are starting to find themselves getting deeper in debt by the day. Many are finding that they have much less disposable income and are having to go without certain items, including cutting back on their favorite hobbies and interests. Rising credit card debt and interest rate hikes have also prevented many from turning to their credit cards.

Before you get too deep into debt, you may have to start considering whether to declare bankruptcy, which will harm your credit report, or take out a debt consolidation loan, which may end up costing more money in the long run.  Another option is to take out a home equity loan, or home equity line of credit. A problem with this is that you risk losing your home if you default on the loan. The best advice is to try to develop a system to start saving extra money each month.

Below are a few ideas on how to save extra money that can be used to pay off some of your outstanding debt, while reducing your carbon footprint at the same time.

Saving extra money while reducing the harm done to the planet might give you more motivation to actually continue with these practices. Most are simple changes that can be made to our everyday lives and schedules. Some are a little harder to implement. Remember that saving money and reducing your debt is hard work and is a goal that must be taken seriously to achieve the most reward.

• Carpool – Gas prices fluctuate, but they have one thing in common, they continue to rise over time. Carpooling or taking public transit will save money on gas while reducing the amount of exhaust fumes released into the atmosphere.
• Timers – Placing timers on water heaters and thermostats reduces the amount of electricity used and therefore will save you money on your utility bill. The less electricity you use, the lower the demand on the resources necessary to produce that electricity.
• Recycle – While this won’t always save you money unless you actually collect the deposits on bottles or scrap metals, it drastically cuts back on the power and natural resources needed to produce these items. Recycle kitchen towels rather than buy paper-towels and look for other reusable items over disposable ones.

These are just a few ideas on how you can make a difference relating to your bills and the harm done to the planet. There are many ways to lower your impact and save money at the same time. Use these or others that you think of. The important thing is that you do something.

See more:

How Does Recycling Save Money?

Money Saving Ideas for Frugal Moms