5 Tips for Getting Out of Debt
F Feeling a little stuck? A little overwhelmed? Everyone’s been a little over their heads in debt before. Check out these tops tips inspired by Dave Ramsay to ease the process.
Make a budget
You have to start somewhere! On a piece of paper, write your monthly income down and every expenditure on paper. Stop living based on what you have in the bank and live on what you wrote in your budget instead.
You can save a ton of money by using coupons, buying used clothing and furniture instead of new, and cooking at home rather than going out to eat (that includes coffee!). Ditch the gym membership and workout at home, say no to expensive or unneccesary outings with friends- you can catch up by going for a walk or sharing lunch at home instead.
Use the debt snowball
List your debts from smallest to largest, regardless of interest. Pay the minimum on all the debts except the smallest. Squeeze everything you can out of your budget, and attack the smallest debt with all the extra money you can find. When you’ve paid off that one, take the money you were putting toward it and began paying the second smallest debt. Keep at it until you’re debt free!
Yep, you read that right. And yes, we even mean stop contributing to your 401(k). Right now, you want all your income going toward getting out of debt. Once you’re debt-free and have saved three to six months of expenses in an emergency fund, then you can resume your contributions. By then you’ll be in Baby Step 4 and can start putting 15% of your income toward retirement.