The older I get, the more I realize how important it is to stay away from debt. Nobody wants to be living in what amounts to economic servitude to another person!
Yes, it’s better to work toward taking care of our true needs first, rather than make someone else rich. Also, we can instead focus on things we want. Personally, I think that financial freedom is a good goal. But hey, whatever it is you aspire to, it has to be more fun than spending money on paying down debt!
Along those lines, I’ve already written about how to avoid debt. There are a number of things we can do with our financial lives that can help us prevent getting into debt in the first place. When it comes to managing debt, I think that’s the first and best step: not getting into it!
But what if you or someone you know is already in debt? Maybe the aforementioned tips for preventing debt can work in the future, but there need to be steps taken today. To help with that, I’ve assembled with tips on how to get out of debt:
- Think about your aspirations for your life. Realize that it will be hard to achieve many of these while being stuck paying debt, so use this to fuel your motivation.
- Know your debt. Fully document all the debt you have – how much you owe, and how your payments are scheduled going forward.
- Analyze your expenses. Knowing how you spend your money can help you understand where you can spend less going forward
- Pay off debt based on interest rate. If you have debt that’s at a high rate, pay it off sooner.
- Move to lower interest rate cards. Don’t make this a habit of course, but it’s one way to take advantage of lower rates to get some short-term benefits.
- Negotiate certain bills or rates. Actually, this could be done other times than when in debt, as some expenses can be lowered by bargaining (potentially even certain health care bills from what I understand).
- Make a budget – and follow it. Discipline is key.
- Eat at home. It’s generally cheaper, saves money in the short-term and might save money in the long-term in terms of health
- Keep healthy. Speaking of health, it can get expensive to be sick – so do what you can to keep good habits with fitness and sleep, beyond what I mentioned in #8 above.
- Make it automatic. Not everyone will agree with this, but making automatic payments to reduce debt can take out the temptation to spend excessively and limit available funds
- Earn side income. Start a side hustle, it just might provide you with some extra funds that could accelerate the repayment of your debt.
- Have a documented plan. Set a deadline or goal for having your debt paid, and create milestones along the way – and put in writing for yourself in order to keep accountable.
Readers, do you have any thoughts on these tips? Any others to add? What worked for you in terms of paying off debt – if you had any?