If you're in debt right now, then read carefully below to learn some of my best strategies for how to get out of debt.
It's important to understand that there's two types of debt: good debt and bad debt.
Bad debt is credit card debt or any kind of consumer debt that is at a high interest rate. You want to avoid at all costs this type of debt, as it can be very challenging to get out of due to such high interest payments.
Good debt is debt that has a lower interest rate and the money is being leveraged to buy assets or investments that are bringing you are greater income than what you're paying in interest payments. For example, a mortgage can be considered good debt as the value of the property or the income it's generating for you can be greater than what you're paying in interest payments.
With that being said, this article and video is geared towards the bad debt and how to get out of it.
Watch the video below:
3 Tips For How To Get Out Of Debt
When I was in my early 20's, I had over $10,000 in credit card debt and it wasn't a fun place to be.
I had no idea how to manage money and unfortunately just neglected looking at my finances, which resulted in accumulating the debt.
It took immense sacrifice and hard work to get out of debt and get myself on track to being financially free. It wasn't easy or fun, but after going through it I was much better off financially. I had learned new money habits that have benefitted me today and also made a promise to myself I'll never forget: I'll NEVER get into credit card debt again.
Here are some of the tips that I used to get out of debt that can be helpful for you:
1. Be willing to make sacrifices.
If you're in credit card debt and want to be free of it, then be prepared to make some sacrifices. That means cutting back on expenses. It isn't fun, but part of the reason why you're in credit card debt is because you've been over-spending. The only way out is to earn more money to pay off the debt or to cut back on expenses.
When I was in credit card debt, I decided to make a big sacrifice: to move into my friends living room and live on his couch. I figured this would allow me to save a lot of money every month and it could help me to pay off my credit cards. And it worked.
I also gave up my car and started taking the bus everywhere. I worked part-time doing renovations and construction work, to help pay off my credit cards too. I had to be resourceful and make some sacrifices to get ahead.
2. Start managing your money weekly.
You need to get on top of your finances so that you NEVER get in debt again. This is one amazing gift that being in debt brought me, is it helped me to learn how to manage my finances weekly.
You don't need an elaborate software or anything – just use an Excel spreadsheet (or Google spreadsheet) for now and start tracking all the income you bring in every week, as well as record all of your expenses. You need to start to see what you're earning and what your expenses are, so you can make sure you don't over-spend and also make sure that you have money left over to pay off your debt.
This has to be a MUST for you if you want to get out of debt. All successful people are good money managers and you need to become one yourself.
3. Transfer Your Credit Card Debt To A Low Interest Credit Card
There's many credit cards out there that will give you a 0% or very low interest rate for 12 months if you transfer your credit card balance over to them. This is a great strategy to do, as you will be able to eliminate the high interest rate you're currently paying and get out of debt faster.
It's pretty easy and straightforward to do, too. Just do a Google search and you'll be able to find a few options in your location.
The final tip I have on how to get out of debt for you is to be patient. Execute your plan and take massive action. It takes time, but with patience you'll be out of debt and will be better off for it.