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If you truly want to get out of debt you'll need to find ways to cut your spending dramatically so that you'll have money left over to pay down your debts. If you want to get those debts paid off even faster you will need to find ways to supplement your current income. One of the most popular – and easiest – ways to earn extra money is by getting a part-time job. If your work schedule doesn't permit this you could generate extra cash by selling stuff on eBay, becoming an affiliate marketer, tutoring, dog sitting, driving for Uber or Lyft or another of the many ways available these days to earn extra income.
Whichever of the two options you choose there’s one way to get out of debt relatively quickly and that’s by using the snowball method. This is where you put your debts in order from the one with the lowest balance down the one with the highest. You then focus all of your efforts on paying off that debt with the lowest balance, which should go very quickly. You'll then have more money available to begin paying down the debt with the second lowest balance and so on. People have used this method to pay off as much as $20,000 in debts in just two years. Of course, while you're doing this you must continue making at least the minimum payments on your other debts. This is a strategy developed by the financial wizard Dave Ramsey who says it’s helped thousands of American families achieve debt relief.
Once you’re debt free
When you become debt free it’s very easy to avoid piling on new debt. Just put away those credit cards. Or better yet, give them to someone to hold that you really trust. The point is that if you have no credit cards you can’t spend money you don’t have. Research has shown that people that don’t use credit cards buy fewer things. And when you buy fewer things you’ll have money left over that you could save, invest or tuck away for retirement.
How do you pay for things if you have no credit card? It’s simple. You use cash. Unfortunately, this is a payment option that a few people prefer. According to the statistics published by CreditCards.com, only 9% of consumers prefer to use cash for purchases - at least this is true in 2014. You need to start considering this payment method. Figure out how much cash you will need for the next week and then take that amount out of your friendly, neighborhood ATM. Of course, you’ll want to calculate very carefully how much cash you will need to get through the next week. Otherwise, you’ll run out before the end of the week and have to either go back to that ATM or pull out a credit card, which is about the last thing you want to do at this point.
If you find you have a problem managing that much cash you might try what’s called the “envelope method”. This is where you divide your cash into envelopes representing your discretionary categories such as eating out, skiing, dry cleaning, transportation and so forth. When you’re out of money in any envelope, that’s it – you can’t spend anymore in that category until you next get some cash. That’s a sort of tough love way to budget but has helped thousands of families get their finances under control.