5 Awesome Tips on How to Get Out of Debt on a Budget

5 Awesome Tips on How to Get Out of Debt on a Budget

Many if not most of us will experience debt at some stage of our lives. Being in debt is tough and getting out of debt is even tougher, especially if you do not have much spare cash.

Monthly payments can increase and become impossible to pay. It’s disillusioning and can leave you feeling helpless and sometimes even depressed.

It is always better to get out of debt as soon as you can. If you don’t, interest will accrue, making it more difficult for you to pay off your debt in the long term.

If you have any spare money at all, it should ideally go towards paying off your debt.

Learn how to get out of debt on a budget with these five simple rules…

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#1 Create a Payment Plan

Write a list of all your liabilities. Include every single debt and bill you owe, even the small ones and the ones you routinely ignore!

Think about the urgency of each one and prioritize the most overdue debts and the ones amassing the most interest.

If you have debts with no interest then put these further down your list. Then, work out what you can feasibly pay each month.

Use a debt calculator which you can find on websites like Bankrate and CNN money.

Consider spreading the payment over a few different debts. Don’t forget you can always contact the lender and suggest a payment plan to them.

Send them a copy of your budget to indicate how much you can afford to pay and stay in control.

#2 Set up Automatic Deductions

List your income and expenditure each month and work out how much spare cash you have, if any. Use it to pay what you owe.

Do not even think about spending on holidays or buying a gift. Paying off your debt is your priority.

Set up Automatic Deductions

Arrange for the spare money to leave your account as an automatic payment. This way, you won’t be able to spend it nor will you be able to make up excuses for not paying your debt.

Check your account regularly as automatic payments can sometimes result in errors.

#3 Cut Costs

Think about all the ways you can reduce your spending. It’s amazing what you can think of when you try!

Can you postpone your gym membership, or take a payment holiday from your mortgage?

What about cancelling payments to charities and membership organizations?

You could even explain to friends and family that you will not be buying gifts this year. If you allocate the money you save to paying off your debt, you will start to see results quickly.

#4 Change Your Spending Habits

There is a reason why you are in debt. It is easy to believe you have more money to spend than you really do so STOP SPENDING and identify the areas of your life where you spend too much.

For example, you could be spending $36 per week on coffee – that’s the equivalent of just two regular takeout coffees per day.

Change Your Spending Habits

Think about the type of spender you are, and get to know your bad spending habits so you can break them.

Are you an impulsive spender with a number of credit cards? If so, stay away from the shops.

Are you an aspirational spender? Ask yourself honestly if you really need a bigger mortgage or car loan.

#5 Help is Out There

Debt is not something to be ashamed of and there is plenty of good help and advice out there. Many organisations can show you how to get out of debt on a budget.

Try the National Foundation for Credit Counseling or Debt.org

Should I Borrow More to Pay off my Debt?

Getting a loan just means getting into more debt and should be avoided at all costs. Why not see if a family member or friend is willing to give you an interest free loan instead?

If you really have to get a loan, try asking the bank to increase your overdraft before opting for a high-interest unsecured loan. Or, see if you are eligible for a credit card with a 12 month interest-free deal.

Remember, getting out of debt is tough and you are not alone. The average US college graduate has over $37,000 of debt.

Stay positive, face up to your fears, avoid procrastinating and you will get out of debt.

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10 comments on “5 Awesome Tips on How to Get Out of Debt on a Budget

  1. Hey Chris,
    great post. I know I haven’t always been the best when it comes to spending. Luckily, my debt is only student loans and I haven’t become addicted to my credit card. I do have to budget and I keep an eye on my spending a lot more these days.
    I know I can do more though. Like many others a like. However, the first step is always wanting to make a change. The next one is actually doing something. Thank you for providing a great starting point here.

    1. No I haven’t always been the best myself Sarah when it comes to saving the green! You learn more about money the older you get LOL. Great to see you here again – thanks for taking the time to read through our subject matter and leave this comment! 🙂

      Speak to ya soon!

  2. Nice article you got there!

    It is important for you to always keep an eye on your budget because you can lose all of it faster than you think.

    I totally agree with you on the different steps you wrote.
    The not so important things you should leave it out and I would say focus on your business first until it is stable 🙂

    Thank you for sharing your information with us!

    1. Well yes if indeed you own a business Winny – this article wasn’t only directed at business owners or similar (it’s targeted at EVERYONE!) 🙂

  3. Hey Chris,
    The tips you’ve provided to get of out debt is pretty spot on. As someone who has really struggled with having a debt, I know the how having a debt affects your mental state.

    I was able to get out of debt pretty much following the tips you’ve listed. I cut down on unnecessary expenses [movies, coffees, shopping] and found ways to save money. I tracked every little expense in my little notebook and by the end of the second week I was able to figure additional cuts that I could make in my spending.

    When I was done, I took the credit card out of my wallet and now only use it very rarely.

    1. Yeah I don’t even own a credit card Josh – hate the things! I borrow my partners if I need to sign up for something with one…

      I’ve always believed that if you don’t have money – you shouldn’t be allowed to spend it!!!!

  4. This article seems like it was made for me to read! I have been searching for ways to get out of debt and not go over my budget.
    I like how you break this down into 5 easy tips to follow. This article confirms that asking for help is key and I should not be afraid to ask for help with paying back debt

  5. HI Chris,

    Great and helpful article on getting out of debt. This would be great not only for the people who are in debt but also for anyone who has trouble managing their finance. Because prevention is better than cure, if you know how to manage your spending, it’s highly you would end up in debt in the first place…

    Another important thing is to stay calm and think rationally. I notice that people who are in debt will be emotionally unstable and feel lost. However, you should stay calm and analyse the situation instead of freaking out which would lead to greater stress and discomfort.


    1. Top point there Samuel – ‘Because prevention is better than cure’. Yes people tend to get very irrational when the sh#t hit’s the fan with funds but that’s part of it I’m afraid! Great comment and addition to our article 🙂

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