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Effective Ways to Getting Out of Debt in 2019

Credit & Debt Counseling Services

Updated on Sep 5, 2019

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The results are staggering. According to a study by Clever Real Estate, nearly 1 in 2 Americans are troubled with credit card debt. 28% have missed monthly payments, 38% say that credit card debt prevented them from making major life purchases and 72% are carrying at least a debt of $1,000. It's not surprising that Americans rank credit card debt as the most stressful type of debt.

If you are one of the many who are stuck with debt that they can't pay off anymore, if you are missing payments or if your debt is becoming too burdensome that it has now affected your quality of life, the following steps will help you get out of debt.

Create a Budget

They say, one of the most effective ways to achieve a goal is to begin with the end in mind. A mountain climber will probably go astray, reach the peak at a slower pace or worse, climb the wrong mountain without a map.

Step 1 - Figure out where your money is going. Your debt may be a direct cause of an underlying personal problem. Check your statements, past purchases and spending habits. Do you spend too much on clothes? Or maybe you spend too much on leisure activities? If you use your card on groceries, did you strictly follow a grocery list? Do the math on your credit report to determine the main problem of your debt.

Step 2 - Calculate your debt and make a goal. Take a look how much money you bring in and how much you actually owe. How many months would it take for you to pay off debt with your current habits?  Do you plan to get out of debt in one, two or three years? In order to meet your goal, what measures are needed? Calculate how much budget you actually need to free up in order to meet your goal.

Step 3 - Plan your budget. A good method to use is the 50/30/20 rule. 50% of your income goes towards your needs, 30% on your wants and 20% to pay off debt. By making a budget, you will be able to see where your money is going, what sacrifices can be made and determine where you usually overspend.

Step 4 - Last and the most important of all, stick to your plan. Even when the going gets tough, financially, emotionally and mentally, do your best to follow through.

Pay More than the Minimum Payment

Whatever type of debt you are carrying, whether its credit card debt, student loans, or personal loans, the sure fire way to pay off your debt sooner is to pay more than the minimum monthly payment. Aside from speeding off the payoff process, you will also save on the interest of your loan.

Tip: Break down your payment into small, easy to save "micro payments" when trying to pay more than the minimum. For most people, it's easier to save up weekly payments or from one's day to day budget than getting a big chunk of your monthly salary. Let's say your goal is to pay $300 a month. That's saving $75 a week or $10 a day! A change in perspective makes a whole lot of difference.

Snowball Approach

Which debt should you pay off first? This approach is very useful for those with multiple loans and debts. The idea is to pay off your smallest debt first to give you a sense of accomplishment towards your goal.

How to do the Snowball Method. First, list all of your debts from least amount to the biggest. Pay the minimum on all your loans but put your excess funds on the one with the smallest balance. Once you have paid off your lowest debt, move on to the next smallest and so on.

Increase your Income

You can cut back on luxuries, get your budget right and do everything to keep down your expenses but if it's not enough, it really will not be enough. Finding a way to increase your income can help you generate additional cash toward your debt.

Sell your stuff. The easiest way you can gain extra money is to sell the things you don't need or you hardly ever get to use. It may not be a long term solution but it will give you that leap and change you most definitely need to pay off your debt.

Find a side job. Take on a part time job or maybe a side hustle that's related to your expertise. There are websites like or even craigslist that are easy to match qualifications and needs for some extra cash.

Get Professional Help

The reality nowadays is that people are drowned in debt so badly that even strict budgeting, cost cutting and lifestyle changes, will make little to no impact at all. These individuals may already be facing collections, levies or worst, foreclosure. The advice above may not be enough anymore for people who are in dire situations. In worst scenarios, do not hesitate to ask advice from debt relief companies. Legit and reputable firms usually give out a free consultation for people who need debt help. Even if you are not in the most troublesome circumstances, you can try talking to a counselor to check if debt relief is right for you. Usually, debt relief companies set up a special payment scheme according to your unique financial situation with the goal to free you from your existing debts in the least amount and time possible. When an amount is reached, the company negotiates with your creditors on your behalf for a discounted, lump sum payment. If accepted, you are finally free from your debt obligations at last.


Bottom Line

It might easier to continue living your life in debt but if you act upon it, you can gradually pull yourself out of the situation you are in. Instead of spending years paying the minimum amount, small yet actionable steps can be taken to improve not only your financial status but as well as your quality of life too.



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