Ten Top Tips to Get Out of Debt
How many boring, useless debt articles have you read that contain tips along the lines of, “Save more money” and “Live within your means”?
This information goes without saying, and for someone stuck in the seemingly never-ending void of debt, these tips are useless at best and patronizing at worst.
We know what debt feels like. It’s about looking at all available opportunities and exhausting most of them. It’s about not knowing what your options are, but diving into everything head-first and giving it your all if it means lowering your debt even just a fraction.
This is a guide to getting out of debt that contains advice you will actually find useful. You may still have exhausted a few of these options yourself and others may seem obvious, but we guarantee not to patronize, not to state the obvious, and to provide you with some advice you can actually use.
1. Fix Your Credit Score
Big debt leads to bad credit, and bad credit leads to more significant debts. The lower your credit score gets, the harder it will be for you to get good deals on everything from auto loans to credit cards.
You become a financial pariah of sorts. But when you have a good credit score it’s the opposite—companies are desperate for your business and will offer APRs and benefits that reflect that desperation.
For a quick and easy credit score fix, (844) 617-7486 For some other tips, keep reading:
- Check Your Score: As discussed in our Guide to Credit Repair nearly one-third of all Americans don’t know their score. Only by understanding where you are and why you’re there can you hope to move forward. A regular credit check will also guard you against fraud and mistakes.
- Dispute: You can dispute mistakes, defaults, and any other red marks on your credit score. You may not always be successful, but it can make a significant difference if you are so it’s worth the effort.
- Build Your Credit: No credit is just as limiting as bad credit. You need to prove yourself to potential lenders, and for that, you need to start borrowing, even if it’s just in the form of a secured credit card or an unsecured card that you pay off every month.
- Get Varied Credit Accounts: A significant portion of your credit score comes from credit cards, but 10% also comes from having multiple lines of credit so don’t put all of your eggs in one basket.
2. Credit Card Debt Relief
Debt relief programs are designed to nurse you through your financial difficulties, combining elements of debt management, debt advice, debt negotiation, debt consolidation and more. The goal is for you to have fewer outgoings every month and to ultimately pay your debts off quicker.
A debt relief program can help you to:
- Consolidate: By moving all of your debt to one card with a low-interest rate you can reduce the number of payments you need to make every month and the amount of money you need to spend.
- Negotiate: Lenders can be very reasonable, and it is possible to negotiate a better price. They want their money as quickly as possible, and with as little hassle as possible. If you can provide them with a solution that ticks those boxes and is also beneficial to you, it’s a win-win.
- Peace of Mind: Debt relief programs offer a peace of mind that debt rarely provides, giving a debtor someone who will fight their battles for them, someone who is on their side at a time when it feels like the world is against them.
3. Student Loan Relief
The US student loan debt is spiraling out of control, growing each year and leading to millions of defaults and countless financial hardship. It’s a debt that weighs heavy on the shoulders of every alumni, and one that could stay for years.
But there are student loan forgiveness programs, ways that your student loans can be wiped out, and other options for getting these loans cleared quickly.
- Forgiveness: If you are in the military then you may qualify for student loan forgiveness. Teachers, healthcare workers, and public service employees may also be eligible.
- Closing and Mis-Selling: If your school closes within 120 days of you graduating, or if you believe you were mis-sold your education, then you may qualify to have your student loan debt wiped clean.
- Disability: The Total and Permanent Disability Discharge program offers anyone with federal student loans an exemption from those loans if the disability has lasted, or will last, for at least five years.
- Consolidation: You can combine any number of student loans into one loan, reducing your repayments and your interest. This works with both private and federal loans and is very easy to setup via any bank. Compare interest rates and account benefits and don’t just jump into the first deal you’re offered.
- Refinancing: By refinancing your student loans you can reduce your monthly outgoings and pay off your debt quicker. Compare prices and negotiate with lenders to put their offers against one another and let them fight for your business.
4. Make Big Changes and Bigger Sacrifices
The vast majority of debtors are stuck in the cycle of debt because they are reluctant to make significant changes in their lives.
It’s understandable, because debt is depressing, and when you’re depressed you don’t have the willpower to change, let alone the desire. But by forcing yourself to make big changes and to sacrifice some of the things you enjoy, those debts will clear quicker, your mindset will improve, and your wellbeing will soon follow:
- Go Solar: Solar power requires an initial investment, but with rebates and tax credits, it’s not as expensive as it looks and this investment will start paying for itself within the decade.
- Alcohol and Cigarettes: These are vices that many Americans won’t give up. We often blind ourselves to the cost because we can’t bear to face the truth. And it’s not an easy truth to face, because even a casual drinker will spend at least $500 a year on alcohol, while a person smoking one pack of cigarettes a day will spend over $2,000.
- Gambling: The average gambler blows $400 a year. The house always wins, and gambling is no way to pay off your debts.
- Vacations: Two weeks in the sun could add two years to your debt, as the average American family spends 10% of their annual household income on vacations, with over a quarter spending more than 15%. For most families, that’s between $5,000 and $8,000 a year.
- Buy Less Food: We throw away a lot of food. According to the National Resources Defense Council, it amounts to over $165 billion a year, which is just under $530 per person. Buy what you need and consume what you have.
- Wait: We all want the latest video games, DVDs, and gadgets and we all rush out to buy them when they are released. But by waiting a few weeks or months, we could save anywhere from 10% to 50% on those initial retail prices. Patience is a virtue, and you can’t afford to live any other way if you want to clear those debts quickly.
- Memberships and Gift Cards: If you have a membership to the gym, use it or stop renewing it. If you have gift cards, use them or sell them. $2 billion worth of gift cards go to waste every year, and only 18% of gym memberships are used. That’s an inordinate amount of financial waste. And that’s without factoring in the loss from superfluous media subscriptions, rental services, and warranties.
5. Get Rid of Your Stuff
We all have a little tech we no longer need, some video games we no longer play and DVDs we no longer watch. We hang onto these things partly because we don’t want the hassle of selling them, but mainly because we don’t think we’ll get much for them.
But you would be surprised. If you use sites like Amazon Marketplace to sell video games after you complete them, you can get up to 70% of the price you paid. If you use eBay to sell brand new DVDs after you’ve watched them, you can get 50% of what you paid.
Just make sure you sell them quickly and keep them in excellent condition. Where you sell is also crucial. If you swap or sell on the high-street at stores like GameStop, you’ll get a fraction of the real value. The same goes for sites that let you send in your old games or tech. They make excuses, claiming the gear is in a poorer condition than it is, and then offer you very little for it, knowing that most customers will just accept.
Garage Sales, Facebook Groups and even Craigslist, are also great places to sell the bigger ticket items, but our mantra of sell sooner, sell better and make money applies here as well.
6. Reward Credit Cards: Sign up or Switch
Millions of Americans are still using credit cards with extortionate APRs and no cash back incentives, despite the vast number of reward cards on the market.
Some cards give you money to switch, some provide you with money to open new accounts, and others offer you cash back on everything from clothing and tech purchases to gas, groceries, and bills. The percentages are small, but it all adds up.
The average American spends $1,400 on gas and $3,500 on groceries. 5% cash back on these sums can secure an extra $245 a year on these two purchases alone. Add clothing, utilities, and gifts to the pot and that cash back could surpass $500 a year.
More money in your pocket can mean less debt, which in turn could mean less interest.
7. Save on Electricity
The average monthly electricity bill in the United States is between $83 and $143, depending on your state. This amount is growing all of the time, but there are many ways the average American household can bring these bills down:
- Washing: Wash full loads in the washing machine and put clothes on the washing line instead of in the dryer. If you do use the dryer, run an extra spin cycle in the washing machine first. Use cold water to wash when possible and operate it during the night for off-peak savings.
- Other Appliances: Check the seals of ovens and fridges to ensure they are not overworking because of escaped heat/cold. Keep them maintained and operational, check the temperature of the refrigerator, and use more efficient bakeware. Leave the oven door open after cooking during the winter to use recycled heat to warm your home.
- Turn Off: Don’t leave tech on standby as it still consumes energy. Turn it off. The extra time it takes to turn off on an evening and in the morning will save you money in the long-run.
- Energy Saving: Insulate your home, focusing on the garage door and other exposed areas; buy energy-saving light bulbs; and use energy saving appliances.
- Be Efficient: Turn off lights when you leave the room, use blankets instead of turning the thermostat up, use a fan instead of the AC—being in an energy saving mindset can save you tens of dollars a month.
8. Save on Water
Water conservation is not just an environmental issue. The average US water bill is $108 a month, and there are many ways you can reduce this, saving tens or even hundreds of dollars a year.
- Dishwasher Tips: Always operate with a full load—it will use the same water if you wash one plate as it will if you wash 20—and keep the filters clean, so it runs smoothly.
- Shower Heads: There are energy saving shower heads that offer just as much power and coverage (if not more) without using as much water. Short 5 minute showers will also use a third of the water as a bath.
- Low Flow Toilets: American households struggle to make the switch, but these toilets can save you a lot in the long-run. Don’t spend big to replace your current toilets, but if you’re buying/replacing anyway, make sure it’s low-flow.
- Check for Leaks: Billions of gallons of water go to waste because of leaky faucets every year. Don’t assume that a few drops won’t hurt—it adds up—and get those faucets fixed.
- Collect Water: Don’t water your lawn with fresh water. Collect rainwater with a water butt and water early in the morning so that it doesn’t instantly dry-up under the intense heat of the day.
9. Get Cash Back on Everything
It’s not just reward credit cards and store cards that will give you cash back on your purchases. You can also sign up for online services that will reward you with gift cards and cash back for spending money.
Rebate shopping sites earn money from the stores they promote, and they pass this money onto their customers in the form of cash back or gift cards. They include Ebates—which is owned by Rakuten—BeFrugal, ShopAtHome, and FatWallet.
10. Switch Your Accounts
Insurance, cable, broadband, phone, utilities—we all use them, but we also tend to stick with the same companies and the same contracts.
This indifference is precisely what those companies want because that’s how they make their money. They give you introductory prices to entice you, and then they pull those prices out from under you when you’re a full-fledged member.
You can save tens of dollars per month if you negotiate your rates with current providers or switch to alternative providers. Find out what you’re paying, what another company is offering and then use that information to negotiate a better deal. If they don’t give it to you, switch.