How To Get Out Of Debt: 7 Best Ways (In 2019)

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This article has been reviewed and deemed factual by our content auditor with 8 years of banking experience.

Article Approved By Banking Expert

This article has been reviewed and deemed factual by our content auditor with 8 years of banking experience.

Ready to learn how to get out of debt?

We’ll be walking you through how to do it in a moment. But some truth first: you’re not alone, and don’t beat yourself up over it. Because over 80% of Americans are in debt. And facing down debt is one of the most stressful things you can do.

Yet here you are, reading this, being proactive. Courageous even. So good on you. Because confronting debt is the first–and most important–step towards paying it back and getting on the right track.

Getting out of debt is simple, but not easy.

Believe it or not, the main reason you’re probably in debt isn’t because of your spending; it’s because of your mindset.

So, if you change the way you view money, make some lifestyle adjustments and dial up the discipline. With that, and a plan, you’ll be out of debt before you know it.

Budget Effectively

Nobody wants to budget. Most people don’t even like the word budget. Getting everything you need throughout the week can seem hard enough as it is. Setting aside enough to save or invest is a whole other struggle entirely. But options exist to make it easier.

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Budgeting isn’t just about removing the excess. It’s about making hard choices now to help your future self.

Do you really need to fly out to your cousin’s graduation ceremony this spring? Or take that big vacation? Maybe put that off.

Is buying or adopting a dog right now the best idea? Is it necessary to go out to dinner once a week, or can you stay at home instead? Nobody ever said that budgeting was easy, but if you successfully curtail your monthly spending, you’ll have the resources you need to snuff out your debt fast.

Control Spending

As you budget, you’ll also need to control impulsive spending. Avoid decisions that put you in more debt.

While that new car looks irresistible, putting yourself in the hole to buy it will likely make a bad situation worse. So only spend what you have.

When you’re in debt, you have “negative” money to spend. Especially when your debt is greater than your net worth, so you need to act like you’re broke even if you’re taking in a substantial monthly income.

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Examine your spending behavior and eliminate the careless spending. If you have a habit of making impulse buys online while you watch TV at night, for example, keep your smartphone and tablet far away from you during this vulnerable time.

If you can’t help but stop at every shopping mall you come across, remember to stay on point and keep driving.

Impulse buys don’t have to be big to become a problem. Just because that gadget on Amazon costs $14.99 doesn’t mean you need it. Remember, it’s the willingness to buy without thinking that can get you into a deeper hole.

Prioritize Debt

If you’re struggling to pay back what you owe, it’s likely that you have more than one kind of debt. Consumer debt in the United States rose above $4 trillion in 2019, and over $1 trillion of that debt is credit card debt.

Dave Ramsey of financial advisory fame recommend paying off smaller debts first. He believes paying off these smaller debts acts as a psychological victory. And I can appreciate that. But leaving larger, higher interest debts outstanding while you pay off the small ones is backwards.

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Out of all the kinds of debt, credit card debt is the most pernicious. Credit card companies require that you pay a certain percentage of what you owe per month, but the rest of your debt continues to accumulate.

Unlike other types of loans, which typically charge 3-10 percent interest APY, credit cards charge anywhere between 15 and 25 percent interest APY. If you don’t pay off your credit card debt quickly, you could end up in a serious hole. So tackle those first.

Student debt and auto loans make up similarly substantial portions of overall consumer debt in the United States, and most people who are thinking about how to get out of debt have more than one type of debt.

When you’re in debt, it’s natural to want to pay it all off as quickly as you can. However, you may have to resign yourself to the realization that you’ll have to let your low-interest debt accumulate interest in the background as you pay off what you owe on your credit cards. While doing nothing with your other loans can feel disconcerting, you’ll need to tackle your credit card debt first if you want your debt repayment efforts to be effective.

Pay Extra

While credit card companies and other lenders usually require a certain payment per month, you don’t have to stop there. Making extra payments can actually improve your credit score, and taking this approach will get you out of debt faster.

Pay down high interest debt first, than attack smaller, lower interest debts.

Otherwise you’ll pay more long-term.

You can try making payments twice per month or paying twice your minimum payment every time you pay. The faster you pay off your debt, the less interest you’ll accumulate, and the sooner you’ll be able to breathe easy with your debt off your shoulders. Making extra payments, however, requires making extra money.

There are plenty of ways that you can get some extra cash in the short term. If you have a lot of high-value stuff that you don’t need, for instance, offload it on Craigslist or eBay. You can also check job boards for side jobs that you can do in your free time, or you might want to take on an easy part-time job to help make ends meet. Whatever you do, just don’t take on any more debt!

Make Extra Money

It’s easy to think that there’s nothing else you can do to improve your economic situation. After all, you’re a hard worker, and you have a good job. However, is that really all you can do?

History’s best entrepreneurs weren’t handed their success. They were average people who had extraordinary ideas. We’ve all had ideas that we think would sell, and the only difference between you and Jeff Bezos is that successful entrepreneurs had the courage to follow through with their ideas.

Online jobs are a great place to start if you want to make extra money.

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In the digital age, there are tons of ways that you can make money without leaving the house. If you’re good at writing, you can try your hand at being a copywriter or a content writer, and if you’re good at spurring people to try things, you can take a shot at being an Instagram influencer.

With cheap and comprehensive online tutorials, it’s relatively easy to learn how to code or build websites, and starting an online business is simpler than ever. If you have a great idea, you can sell it, and getting used to the constantly shifting cyber landscape will help you get ready to take your shot at success as an entrepreneur.

If all else fails, realize that there’s always a better job out there. Even if you have excellent job security, you should be prepared to be fired or laid off, and it’s important to recognize that you have it in you to make more money in a new position.

Consolidate Debts

There’s no limit to what you can do, so take your best shot at attaining the income that will help you get out of debt. As you start making more money, however, just make sure that your spending doesn’t get out of hand; bigger paychecks have a way of tricking you into spending more even though you still have a lot of debt.

If you have runaway credit card debt, you might want to consider the benefits of debt consolidation. With this financial trick, you can protect yourself from the high interest that credit card companies charge and get a head start on attaining financial solvency.

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First, you’ll need to take out a personal loan from a bank. If you have bad credit, this might be tough, but some banks are more lenient with lending when they know that you’re pursuing debt consolidation.

Then, use your new loan to pay off your credit card debt. For instance, if you have credit card debt totaling $10,000, take out a $10,000 loan and use that money to pay off all your credit cards in full.

If you’re lucky, your bank will offer you a personal loan with around 5 percent interest. Compared to the 18 percent interest you’ve been paying on your credit cards, the interest on your new loan is significantly decreased.

That $10,000 would have accrued $1,800 in interest if you’d left in your credit card, but it will only accrue $500 on your new personal loan. Just keep in mind that to receive a secured personal loan, which has less interest, you’ll need to put up high-value collateral like a house, boat, or car.

Set Clear Goals

The reason you’re dealing with debt is that you weren’t thinking in the long term when you made previous spending decisions. If you’d known that your impulsive purchases would have landed you in a debt hole, you wouldn’t have made them, and as you work to attain financial solvency, you’ll need to closely examine your financial goals.

It isn’t enough to simply want to be debt-free; you’ll need to methodically plot out how you’ll get there. Start with short-term goals; how much debt do you want to have in 30 days, 60 days, or 90 days?

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From there, visualize what it will be like to be debt-free. How will it feel, look, and sound when you no longer have debt weighing down your shoulders? Your goals must be practical to take effect. Don’t constrain yourself within a budget that will starve you and your family, and don’t set unrealistic repayment goals.

Most of all, clearly understand why you want to be out of debt. Is there a dream house that you’re dying to own? Do you want to be a better provider? Do you want to live worry-free and plan for your retirement?

Your goal must be profound and realistic to motivate you. Take plenty of time to understand your motivations and develop a clear and simple map that will take you directly to your long-term goals without any risky shortcuts.

Brian Roberts

Brian Roberts

Editor at CarefulCents
Featured in The Washington Post and published in Entrepreneur, Forbes, Business Insider, Time, Inc., CNBC and others.