How to Get Out of Debt: 13 Expert-Backed Steps for Success
Dealing with debt can feel like a hopeless situation.
You try your best to make your payments, but interest charges eat up all your progress. The next month, you’re back to square one. Don’t worry: You don’t have to be stuck with debt forever. We reached out to several experts and got their best tips for how to get out of debt. Here’s what they had to say.
1. Find Your Motivation
Before you get into the nitty-gritty of debt payoff, start by figuring out the big reason why you want to be debt-free. This is crucial for keeping yourself motivated when things feel difficult.
Fo Alexander, founder of Mama & Money and author of “Dump Debt & Build Bank.”
2. See Where you Stand
Once you identify the motivation for paying off debt, it’s time to figure out where you currently stand and devise a basic budget.
"You need to know what goes in and out of your household and whether those expenses can be covered with your income."
Leslie H. Tayne, A Debt Solution Attorney
3. Identify Poor Spending Habits
Once you have a basic budget in place, take a look at your discretionary spending (AKA your “wants”) and look for opportunities to cut unnecessary spending. Don’t worry: You don’t have to live on a barebones budget forever. But if you want to get rid of your debt fast, it’s important to look for ways you might be wasting money and cut those expenses. “It’s easy to fall back into the debt trap if you don’t address the habits that caused you to get there in the first place.
4. Increase Your Income
You can only scrimp and save so much. In addition to cutting your spending, another way to pay your debt more aggressively is to earn more income. “It doesn’t have to be a part-time or full-time job, either.
5. Narrow Your Focus
People want to feel like they are making progress, so they spread their focus and resources across all of these goals. This may seem logical, but it is the exact opposite of what we recommend.
Brian Walsh, a certified financial planner
6. Set Micro-Goals
We recommend breaking down your finances into micro-goals that allow you to focus on 30-60 day sprints that will build-up to the big goal.
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