The majority of Americans are in debt. In fact, the average American owes nearly $40,000. Unfortunately, this doesn’t include a mortgage.
The problem is, most of us live beyond our means. We survive paycheck to paycheck, buying things we want on credit, rather than paying for them with money we actually have. We want what we want, and we hate waiting.
However, living this way creates a vicious cycle, keeping us forever indebted until we break out of it. That’s what this article is for. We’re here to help you learn how to get out of debt.
Take a look at our top tips on how to get debt-free and stay out of the vicious cycle for good.
How to Get out of Debt
Before you start reading, realize that getting out of debt requires a lot of sacrifices and self-discipline. You will likely have to change certain aspects of your life. However, if the alternative is staying in debt until the day you die, it seems like a small price to pay.
Additionally, once you’re debt-free and your money isn’t going towards high-interest bills, you may be surprised how much money you have left at the end of each month. At that point, the key is being wise with it and not restarting the debt cycle!
Now, take a look at how to get out of debt.
1. Downsize Your Home
We chose this option first because we really want it to resonate with you. While it seems out of the question, take a moment to consider it for a moment.
Most of us live in houses far too big for our needs. We have spare rooms and huge storage spaces. Even if those rooms are filled with stuff, is it stuff you really need?
Seriously consider downsizing your life, starting with your home. You could significantly drop your monthly payment, leaving you hundreds of dollars a month to throw at other debt.
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2. Downsize Your Car
The next big option is downsizing your car. This is a great solution for how to get out of debt, especially if you have a newer car.
We all like nice things, and whether we want to admit it or not, the car we drive sometimes serves as a status symbol. We want people to see us in nice new cars, so they’ll assume we’re successful.
However, the truth of the matter is, that nice new car is keeping you firmly rooted in debt. Selling a $25,000 car and getting a used car for $5,000 to $10,000 could save you tons of money on monthly payments. Additionally, you’ll pay it off much faster, avoiding paying thousands of dollars on interest over the years.
3. Debt Consolidation
Next, consider a debt consolidation loan. These provide a great solution for people who have various accounts with high-interest rates.
A debt consolidation loan absorbs all of your debt. It pays off all of your accounts, leaving you with one loan, one payment, and a much smaller interest rate. Your monthly payment will likely be much less than what you were paying for the multiple accounts combined.
These loans provide breathing room to help you learn how to get out of debt and can be just the edge you need to take back control.
4. Sell Possessions You Don’t Want or Need
Similarly to having too much house, most of us also have way too much stuff. We keep possessions just so they can collect dust in storage. We have wardrobes full of clothes we’ll never wear again.
Worse yet, we continue to buy more stuff!
Take a note from Marie Kondo, the famous organizing specialist, and start decluttering your home. If you don’t love it or need it, sell it!
5. Get a Side Hustle
Alternatively, one way you can learn how to get out of debt is by working your way out. Look into getting a side hustle going. This can be anything from finding a part-time job to doing favors for people around the neighborhood.
Here are some options for you:
- Apply for a freelance remote writing job
- Rent your stuff out (lawnmower, bicycle, four-wheeler, etc.)
- Offer to do yardwork for people in your neighborhood
- Offer to go grocery shopping for people who are too busy
- Babysit or dogsit
- Start driving for Uber
6. Cut Out Unnecessary Purchases
Learning how to pay off debt means learning how to be more conservative with your finances. For example, you need to start ditching frivolous shopping habits.
Too many of us spend money like it’s going out of style. We see something that catches our eye and convince ourselves that we need it. Then, we use that item for a couple of weeks and forget about it once the novelty has worn off.
If you don’t need it, don’t buy it.
7. Stop Eating Out
Eating out is a huge waste of money. While we can all enjoy going out with friends for dinner and drinks, keep it to a minimum.
As far as coffee is concerned, make it at home! Studies show that between coffee and lunch at work, we spend close to $3,000 a year.
Instead, brew your own java and pack your lunch. Combined with making dinners at home, this tip could save ridiculous amounts of money.
8. Cancel Unnecessary Subscriptions/Services/Memberships
Speaking of saving money, when was the last time you went to the gym you’re paying for every month? If you go every week, it’s a justified expense. However, if your workout day is tomorrow multiplied by infinity, ditch the gym membership.
Additionally, cancel magazine subscriptions, mystery box subscriptions, tanning salon memberships, and so on. Most of us don’t even know what we’re paying for anymore.
9. Make a Budget and Stick to It
This brings us to our last point. If you want to learn how to get out of debt, you have to learn where you’re money is going.
Make a budget for yourself. How much are you bringing in each month after taxes? What are your expenses?
Once you have a list of all of your expenses (bills, debts, food, gas, dining out, memberships, etc.), you can see exactly where you stand financially. This is also a good time to see where you can start making cuts.
Give yourself a budget that you commit to sticking to every month. Allow yourself amounts for groceries, fun time, etc.
Start Getting out of Debt Today
When learning how to get out of debt, sooner is always better than later. Start taking steps today toward becoming debt-free!
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