My debt was unbearable!
Almost two years ago, I was struggling with debt. My total debt was over $18,000 and I simply could not find a way to pay it off completely. I was in over my head and struggling. I knew that plenty of other people had faced similar situations and I knew I couldn't tackle all of the debt at once.
I began taking small steps to eliminate my debt. I knew what I could afford and what I could budget to pay off the debt so I worked my way through it in no time. Here is how I was able to do it successfully.
Cutting debt on your own
Video: With good advice and counseling, you CAN get out of debt!
If you're on a mission to cut debt quickly like I was, here are a few tips to help you get started.
Negotiate lower credit card rates
I tried to pay off my credit cards before dealing with other debt. It was mostly because my credit card rates were simply unbearable and made it too difficult to pay off the debt. So I took matters into my own hands and called my credit card companies to renegotiate my rates. I was surprised to find that many of them were willing to accommodate my request, even going as far as lowering my rates from 15% and more to under 10%. Some companies could not lower the rate, so I gladly thanked them for their time and then chose a new credit card to transfer my balance. I then cancelled the credit card I was using and continued on my quest to pay off my debt.
Use cash for all purchases
At the height of my debt, I was using my credit cards for nearly every purchase I made. In order to pay off my debt completely, I realized that I needed to stop using plastic for my purchases. Like many other Americans in today’s struggling economy, I made a conscious effort to start paying for everything using cash. I started to live my life by one simple rule: If I couldn’t purchase something using cash, I didn’t buy it. I put the credit cards I had into a large bowl of water and put it into the freezer. If I absolutely needed to use credit, I would have to work for it. This helped me immensely as I tried to reduce debt.
Start to “snowball” your debt
When I first started trying to pay off my debt, I didn’t know where to begin. Do I pay off the large amounts of credit card debt first? Or pay off my smaller debts first? Then I heard about debt snowball, an effective way to tactically attack your debt. Essentially I began by paying off the low balances on some of my credit cards first. I saved up any extra money I had—including any money I “saved” by buying discounted items at stores—and put it directly towards my debt. Whether it was $1 or $50, every last dollar started to make a real difference and reduce my debt. It was rewarding to start to see results and kept me motivated to do more. Debt snowball essentially meant that I was constantly paying off my debt in some way, large or small, and feeling good about doing it.
Establish a budget for yourself
Before I fell into debt, I wasn’t very concerned with where I was spending my money. I bought food freely, rented an apartment that, truthfully, I probably couldn’t afford and went out every other night with friends. Once I fell into debt, I learned about the importance of establishing a budget and sticking to it. By sitting down and really thinking about where I was spending my money, I was able to save in certain areas and put my “extra” money towards paying off my debt. Additionally, I opened up a savings account and started saving money, too.
How your budget helps!
Video: Create a budget now to have money to last a lifetime!
Budgeting your money to help pay down your debt is important. But as I found out, a budget can also help you save for later. This video explains how it helps.
Trim your monthly expenses
When I was trying to find other places to save, I began to look towards extra expenses that I accrued every month without even realizing it. Cable, telephone, the gym—these were all expenses I was taking on without actually being able to afford them! If I wanted to cut my debt, I knew I would have to lose some of them. So here’s what I cut:
- Satellite TV: Instead, I signed up for a cheap Netflix plan and basic cable. It saved me $230 over the course of just one year!
- Telephone: I already was paying for cell phone service, so why have a home phone, too? In all, I saved about $175 after one year by canceling my home plan.
- Gym membership: Truthfully, I was only hitting the gym once a week anyway. So I bought a used Bowflex machine from a friend and started saving almost $100 a month by canceling my membership.
- Fast food at lunch: I started bringing my lunch to work everyday and saved $5-10 every day by doing so!
- My morning coffee: I haven’t kicked my caffeine habit, but rather than stop at the deli and pay $2 for a cup every morning, I made a pot at home and brought it along. I saved almost $50 after just one month of doing so.
By making just a few changes in my lifestyle, I was able to save over $3000 per year, which could then be applied to paying off my debt!
What you'll get out of reducing debt
After just 22 months, I was able to stayed disciplined enough to pay off all my debt. It wasn’t always easy and there were times when I wanted to just quit and start spending again, but I stuck with it! As a result, I was able to not just pay off my debt but also to start a savings plan and set aside money. I now have more money than I had when I started plus I wiped out all my debt! I would recommend that anyone struggling with debt get themselves together and start fighting debt today. It certainly improves your quality of life and makes the money you earn that much more valuable.
Need help with your debt?
Not everyone can successfully eliminate debt by themselves. I was able to do it but I also understand that not everyone has the means to do it. For those who want to eliminate debt but might be struggling, I recommend calling these institutions to learn more about reducing debt in a timely fashion. I know you can do it. Here are just a few places to get started.
American Debt Control
(866) 861-8894
Board of Governors of the Federal Reserve System
(202) 452-3000
Debt Relief USA
(800) 936-6618
Federal Trade Commission
(877) 382-4357
Freedom Debt Relief
(800) 910-0065
InCharge
(877) 399-8536
National Credit Union Administration
(703) 518-6300