8 Tips for Getting out of Debt ...

This is one of the most important tips for getting out of debt of all. You can’t pay your bills if you don’t know where to start or what you have. Write everything down. Get online and go the national student loan website if you have student loans, where you can find every single loan, what companies they are with, and how much you owe. Once again, write it down. Write down all your debt or put it in a spreadsheet on your computer. Don’t pass out like I almost did when you see the final number! This is important to give you a reality check and help you see what you have in front of you. Don’t plan yet, just write it down.

If you have student loan debt or credit card debt, consider consolidation as one option. Though the interest rate can be lower, the payout over time can be longer. If you make little money per week, however, or need some time before you think you can begin paying on loans, consolidation may be a good choice for you, and certainly was for me. Many student loans, like private loans, can’t be consolidated, and not all credit cards can. However, one alternate form of consolidating credit cards is to transfer the balance of one to the card with the lowest interest rate, which will save you money over time.

Instead of trying to tackle the biggest debt you have since it is hanging over your head the most, switch your focus to paying down the smallest debt first. Why so? It is eating up interest just like the larger debt, yet because it is a smaller bill, you’ll be able to pay it off quicker, freeing up some money per month, and freeing up an extra interest rate.

Determine how much you’ll owe in minimum payments across all loans. When prioritizing payments, focus on private loans first. Most private loans have variable interest rates, and private lenders aren’t obligated to work with you in financial duress. If you get hit with a financial emergency, having your private loans paid off will give you more flexibility. Private loans can also be more apt to take money out of your weekly paycheck, and this actually happened to me last year, without my control. I never thought companies could do that, and when I signed up for college, no one certainly told me that! Yet it does happen, so remember to focus on private loans which can’t be consolidated, and can be the hardest companies to work with.

Now that you have some direction in what needs to be paid first, it's time for the fun part. Make a budget! I advise getting someone with more financial experience, such as a parent or someone you trust, to help you with your budget. If you can afford an accountant, great! Most likely though, if you’re in debt this isn’t an option. If not, get someone who is good at paying their bills to help you make a budget. Create a separate email for all your bills so you can keep everything in place and organized. Set up online payments, and register your bills and loan accounts online. Get your budget organized. Budgeting is critical for a healthy financial life and, done right, it will give you the funds to pay down that debt. You can also try the 50/20/30 method, which means 50% of your take-home pay goes to your essentials which include rent, utilities, groceries and transportation, while 20% goes to your future, which is essentially debt payments, and 30% goes to your lifestyle (fun activities). I actually had so much debt I lowered my lifestyle to 5% and focused the other 25% to my debt payments so I could put in a total 45% towards debt. Find what works for you, but be consistent about paying on your debt.

You can pay forever on bills and never get anywhere if you just make the minimum payment. Try to pay at least 50% more than the minimum payment, if not double, on your bills. If you have any extra money, put it towards your bills. This will take more stress off of you than spending the money in one night at dinner and a movie. Consider what’s more worth it to you: knocking out an extra payment, or one night out on the town. Limit your lifestyle splurges to once or twice a month instead of once or twice a week.

One of the hardest thing to do when paying down debt is to avoid temptations that we face to spend our money. I have two weaknesses, which include shopping for clothes and groceries. Seriously, I could go haywire in Whole Foods and the mall. So, I actually avoid them both with the exception of Whole Foods once a month, as a treat. That’s my indulgence and it's just enough to satisfy my wants. My closet is already packed with clothes so I avoid the mall altogether. It isn’t hard, but it’s the only way I can avoid temptations that I face in the shopping arena, and I know it won't be forever. If you like online shopping, remember your debt is only growing, not getting smaller. Is that new pair of shoes or new electronic really worth it?

The best way to get out of debt is to have more money to pay towards your debt. If you have time, get a side job or, better yet, find ways to make money at home. Make money selling stuff, find an online freelance job, babysit for neighbors, consider dog-sitting, offer to do odd jobs for others, sell products online through Etsy.com or eBay.com, etc. If you are up to it, get a waitressing job or something similar. It may not be ideal, but coming from experience, second jobs can be a real blessing in making extra money.

I hate paying bills more than I hate the idea of not being able to go shopping, but I know if I work on paying off my debt, one day I’ll be able to shop freely with the money I make without worrying about bills I have due outside of daily essentials. What are your tips for getting out of debt?