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Five Steps to Help You Get Out of Debt

29 January, 2013 / by Bryan Jaskolka

If you’re heavily in debt, there are a lot of good tools you can use and steps you can take to help yourself get out of it, such as the debt consolidation loans we talked about this morning. But if you’re looking for just a few things you can do in your daily life to really cut back on your spending, and amp up your debt repayment efforts, here are five small steps you can take.

Still shop
Yes, we know. Typically the #1 tip in any list of ways to cut back your spending is of course, to stop shopping. But so often people want to shop so badly that when they force themselves to stop, they’ll eventually start back up again. And they’ll go hardcore when they do! So, when you’re saving your dollars for debt, still go shopping but know what to shop and where to shop. Only look for online freebies (Facebook is a great tool for this!) and search for the best free finds around you. You’ll still get the rush of snagging the best deal, but you won’t go broke doing it.

Cut back on little ways, every day
Here it is – stop spending! That $2 latte, that $5 lunch, that $20 cab fare, whatever it is that you constantly spend on, stop! In order to help you, take out a cash budget at the beginning of every week, keeping in mind only the expenses that you absolutley need. Make sure that’s all you spend during that week and that you never dip into your savings, or your debt repayment funds.

Say good-bye to high interest
Whether it’s a personal loan or high-interest credit cards, call the company and speak to the manager in charge. Explain your situation, how you’d like to pay off the debt, but you just can’t do it at the rate of that high interest. Ask them to lower it and, when they say no, ask them again. Likely they won’t cave on the first attempt, but persistence is key here. Tell them that because you can’t pay off the debt at the high interest, you’ll be forced to declare bankruptcy. Knowing that the alternative is to not see any money from you at all, they’ll likely negotiate a better deal at that point.

Cut up y our credit
There are tons of ways to “wisely” use your credit card, such as paying off more than the minimum balance every month. But if you’re already in debt, the only really wise thing to do with your credit is to cut it up. Then start paying it off as fast as you can.

Start saving
You might think that you have to wait until all your debt is paid off before you can start building savings for yourself, but this isn’t true. Even when you’re in the thickest brush of debt, you should be putting money away for that rainy day. Whether it’s a savings account, an RRSP, or some other type of saving vehicle, it’s important to put money away. Even when you’re in debt.