Getting out of debt is simple, at least in theory. In the most basic of ways there are simply three ways you get become debt free. Although the explanations are simple, I realize the journey is much harder. That’s like me saying all you have to do in order to lose 100 pounds is run a lot. Doesn’t quite make the process any easier simply by telling you how.
In any case, the ways to get out of debt are:
1. Earn more – If you begin to earn more (assuming you hold your expenses to their current level) and begin paying off your debt with your increase in income, you’ll be able to eventually become debt free. This is also assuming you’re able to pay enough to meet more than just interest payments. For more idea on earning more check out the article on 101 ways to make extra money.
2. Spend Less – Spending less is the equivalent of earning more in terms of gaining disposable income. The excess income you’re not longer spending can be transferred to paying down your debts, which will decrease the time it takes to become debt free. In order to spend less consider creating a budget so you know where your dollars are going, and finding ways to save money by cutting out unnecessary expenses such as eating out, excess entertainment, or any unused subscriptions such as magazines, gym memberships, or cable TV.
3. Negotiate with your debtor – This is in many ways the same as spending less since you’re reducing your expenses, but many debtors, including hospitals, will negotiate your bill in order to reduce the debt you owe them. By negotiating your bills you may save yourself hundreds, or even thousands of dollars. Depending on who’s holding your debt you may also be able to partake in a payment plan with decreased interest rates. This of course changes situation by situation, but it never hurts to ask for a reduced amount on your bill. If you get a reduction it’s like gaining free money.
Each of these ways will eventually get out of debt, but if you can combine all three you’ll be in even better shape. Ideally the best thing to do is live within your means (or even below it) and avoiding getting yourself into debt in the first place.