51 Ways to Get Out of Debt

A Harvard Business School Graduate recently made headlines for paying off a $90,000 debt load in just 7 months. It’s an amazing accomplishment and shows that it can be done. Maybe you can’t pay off that much debt in that little time, but if you’re willing to make tremendous sacrifices you can also abolish your debt in a fraction of the time as if you’d made regular monthly payments.

51 Ways to become debt free

This list is to inspire you and make you realize there are avenues towards debt free life. Whatever you choose from below all will lead to freedom. A freedom from worries and stress.

The best thing you can do is to bring the interest rate down on your outstanding loans. For example, although I am always current with my credit card payments, I am always scared about default. Just because I see the astronomical interest rate they charge. On average my 4 credit cards bear 21%+ interest on unpaid balance.

So, if you are not paying your balance in full (not minimum due) every month you are paying that high interest rate on your outstanding balance. Here’s what you should do.

  • Step 1 – Calculate the average interest rate on your loans and total debt you have
  • Step 2Shop for personal loan and see if you can get a cheaper loan alternative, as far as interest rate goes. (example – Let’s say you have $5,000 debt with interest rate 23%) You should shop for $5,000 personal loan with less than 23% interest)
  • Step 3 – Do not reveal your credit score to any personal loan lenders till you receive good faith estimates from a few of them to compare.
  • Step 4 – Take the loan and payoff all your current lenders. Now you have only one debt with less interest charge. So it’s easier to repay your debt now.

Many consider taking a new loan is actually putting you deeper in to debt hole. But here you are taking on a personal loan to pay off high interest credit card loans. So, it’s actually the opposite of what many think.

Yes, your credit score will take a hit initially because of a new loan. but immediately in a month or two your score will start improving as you paid off your previous debts. Over time, if you pay the new lender on time, your score will keep going up.

Monitoring your credit report and score is key to your success. With increasing score you are supposed to pay lesser interest rate. Credit Karma provides you with your actual credit score based on your TransUnion credit report, free of cost.

  1. Have the right attitude. Don’t let negative thoughts kill your motivation.
  2. Make a list of everything you owe, including the interest rate and payment amount. Check if you can get a loan covering your entire debt at a lower interest rate. If you can get one, you will effectively reduce your loan burden with a single action. Also, your multiple debts will become one, which will further boost your credit worthiness. I listed the very best personal loan providers.
  3. Don’t add any additional debt to the load you’re already carrying. The new debt should be to replace existing debt at lower interest rate.
  4. Get a second or third job and use the extra income on your debt.
  5. Married couples can try to live off one income and use the other to pay off debt. We are married and living off of one income. She doesn’t work. If we can do, you can as well!
  6. Temporarily reduce or stop retirement contributions and put the money toward your debt instead. Retirement funds won’t receive as much interest as your loans will incur.
  7. Increase your car insurance deductible to save money on your monthly premium.
  8. Switch from whole to term life insurance. Your monthly premiums will decrease.
  9. Have a yard or garage sale Sale off stuff that you don’t use any more.
  10. Cancel your cable or satellite subscription, internet too unless you use it to generate income.
  11. Pay off highest interest rate debts first. You’ll save money on interest.
  12. Keep an emergency fund so you don’t have to use your credit cards when something comes up.
  13. Pay as much as you can toward one debt each month.
  14. If you receive a raise, put the extra toward debt.
  15. Use windfalls, like a bonus, tax refund, or gifts to reduce your balance.
  16. Make money from a hobby. Read this awesome article to get ideas. My father is retired but ,still earning from his Etsy store, selling crafts.
  17. Develop frugal living habits to cut back on your expenses.
  18. Sell valuable electronics, jewelry, and furniture you’re not using. Use Craigslist, eBay, and even your local newspaper.
  19. Read books on personal finance and paying off debt – borrow them from the library.
  20. Follow blogs of people who are actively paying off debt.
  21. Start your own debt blog. You can make money from advertisements and build a support network with readers and other bloggers.
  22. Don’t miss any payments, and pay dues on time, the late fees will increase your outstanding balance.
  23. Live on a budget. Planning your spending puts you in control of your money. You may want to check out our guide to annual budget.
  24. Evaluate your spending habits, reducing where you can. We wrote a post on how to control impulse buying habit, it may help you.
  25. Negotiate a settlement on past due accounts and collections. You may be able to pay just 40% to 50% of the balance due. Banks and card issuers offer short-term hardship programs, you may call them up, no harm in checking if you qualify.
  26. Transfer high interest rate balances to a lower interest credit card, but beware of transfer fees and pay as much as you can before the intro rate expires.
  27. Use a calculator when you shop so you know when you’ve reached your limit. That way there are no surprises when you get to the register. When in debt, we recommend you stop using credit card, unless you can pay off the entire due balance every month. Else, it will pile up your credit card debt.
  28. Shop with cash and only carry as much as you’ve planned to spend. That way it’s impossible to go over the budgeted amount.
  29. When you pay off a debt, apply that monthly payment to another debt.
  30. Write down your debt goals. Share them with a close friend or family member so you’re accountable for them. Here’s a guide to setting up realistic debt goals.
  31. Celebrate small successes. Paying off 10% of your debt or knocking out a credit card is a cause for celebration. Just recognizing that you’ve made progress can boost your motivation.
  32. Fight discouragement. Sometimes you may feel like giving up, but trust me, if you keep working hard the work will pay off.
  33. Prepare your meals at home more often. It’s cheaper than eating out.
  34. Cut back on leisure spending, like fun, entertainment, clothes, shoes, and electronics.
  35. Ditch your smartphone and you can also get rid of the required internet plan.
  36. Start a side small business, like landscaping, painting, babysitting, or web design. Here’s all you need to know about starting a home based small business.
  37. Pay more than the minimum. Paying the minimum will make you pay the most interest overall. We would recommend pay in full, if you can.
  38. Treat your credit cards like installment loans. Calculate how much it would take to pay them off in three, four, or five years and make that payment.
  39. Ask your creditors to lower your interest rate. Lowering your interest rates lets more of your payment go toward the balance instead of finance charges. Mentioning that you get credit card offers with lower interest rates from competitor banks could make a creditor offer you a lower rate to keep you as a customer.
  40. Rent out an extra room or turn your garage into an apartment. The rental income can help you pay off your mortgage.
  41. If you’re renting, move to a less expensive apartment or home when your lease is up.
  42. Reduce your tax withholding if you regularly get a refund, the extra money on your paycheck can help you reduce your debt now rather than at tax time. More interest saved!
  43. Buy things from yard sales and resell them on eBay or your own “yard sale”. Some furniture can be spruced up and sold for a higher price. Here’s our guide to garage sell shopping.
  44. Offer tutoring services if you’re good in a school subject.
  45. Make crafts and sell them on Etsy. My wife is a regular buyer of stuff from Etsy. Recently she bought a pendant made out of used dinner spoon. Nice work of craftsmanship from someone in South Africa.
  46. Give music lessons if you have a musical talent. This NYT article talks about growing popularity of online music lessons.
  47. Take photographs and sell them. You can earn money each time your photos are downloaded. This article from Lifehack discusses the subject thoroughly.
  48. Work overtime at your job. If you’re paid hourly, your boss may let you work a few extra hours to get paid overtime.
  49. Teach a class at your local gym or community college.
  50. Cash out your stock. Some experts say you shouldn’t tap into retirement to pay off debt, but it could avoid problems down the line. Check with your financial advisor to see the tax impact of liquidating your stock.
  51. Get a support system and keep negative people out of it. Who makes You spend more?

The truth is there is no one easy way to get out of debt. Nearly everyone who pays their debt uses a variety of methods and strategies. Singly these items may not be that effective. Combine several of them and they will have a big impact on your debt.

This post was written by Eliza Collins, a personal finance writer specializing in savings strategies, alternative income and debt relief options. You can read more of her articles at the debtsettlement.com blog.

Readers, If this article helps you in any way, do leave a comment below, we appreciate feedback, all the very best to your struggle against debt!

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  1. Ian says

    Some really good tips and takeaways here. If people focused on just a dozen of these, they would start making a real dent in any debt they have and be on the path to good financial health.

    I actually wrote an article called 58 Ways to Get Out of Debt too, so I guess great minds think alike!


  2. says

    I think you’d actually have to be able to make $90K (more, actually, for living expenses) in a year in order to pay that much off 😉 I’m assuming he had a pretty good job/high earning career choice. I make 30K and even if I worked 20 hours per day, I wouldn’t make 90 K

    • says

      A Harvard graduate should command a salary in to 6 figures. I have a post on my side bar popular posts section, “living under 10,000 a year”. With a salary of $130 is a minimum to cover $90,000, $10,000 living expenses and pay for taxes

    • says

      Absolutely ! by pure mathematics he can’t unless he had extra income. Or he did some kind of settlement on his debt.

  3. says

    His methods are NOT recommended — he liquidated his 401K, he did a lot of things that were illegal, or borderline illegal. He’s an extreme case, and while it’s true that he was able to get out of a MOUNTAIN of student loan debt, it’s not like he can teach others. SB’s 51 ways is better because they’re all riffs on make more, spend less, apply the difference to your loans.

  4. Edward Antrobus says

    The first one reminds me of a post on Penny Thots. They called in “negative wealth.”

    As far as the No More Harvard Debt guy, he did sell his motorcycle and his second car. That probably cut out a quarter of the student loan debt.

  5. Jaime Punzalan says

    The tips shared are all intended to family and personal exposures. I would appreciate it if you can also share tips on how to approach savings strategy for high finance.

  6. says

    I was over $30k in the worst kind of debt (credit cards, car loan, school loan) and drawing a $70k salary.
    Paid it off in under three years.

    And I don’t have anything to sell, so listen up. :)

    My STRONG opinion is that the worst thing you can do is dilute your focus. Instead of taking on a second or third job, making arts & crafts at home then selling them on ebay, or make money from a hobby (it takes years to learn how to make money from a hobby), take your primary occupation and do it so well you make more money at it. This can involve quitting your job for a higher-paying job, freelancing your skills out at a higher hourly rate, etc. Overtime was one of my best tactics.. every time I got an extra $1,000 after taxes, due to working a 60-hour week, I would immediately pay off another 3% of my original principle. It adds up and it feels great.

    Also: don’t cash out your investments, except for liquid bank accounts. Don’t sock away for a rainy day fund, because as you pay off CCard debt you’ll have credit you can tap if needed. As you can tell, I have a slight difference of opinion about many of these suggestions.

    Most of the frugal living suggestions are great.

  7. says

    The only thing I disagree with here, is to stop paying ting money in retirement accounts. Really it depends on what rate your loans are at. My student loans at 5.75%, that are tax deductible, I am keeping as long as I can and I will throw the money towards retirement. The 6.55% one though? Those I will cut most of my retirement saving (I still keep a very small amount), to pay off.

  8. debt management plans says

    .Repeat off and on in your mind that debt is bad.What you repeat becomes part of your unconscious and hence effects you conscious.
    .Make cash purchases.
    . Work part time to get more money to pay for the debts you have taken.
    .Just don’t think of the present ease and luxuries,Think for your future as well.
    .Don’t buy just for the sake of shopping.
    .Step in to the malls and shopping centers that you can afford in cash.
    . Sell the useless commodities.This will help you in the payment of your debts.
    . Keep your needs a side until you don’t have money to buy them.
    . Buy when you can afford means when you have cash.

  9. says

    Getting out of debt is very difficult but it can be done. Make sure that when you have paid all your debts, that you won’t acquire new debts and be in the same situation when you started.

  10. Brick By Brick Investing | Marvin says

    My wife and I weren’t married when we crushed her debt but we lived solely off of my income while she paid down all her debt.

  11. says

    Debt can be a force of good if used the right way. However, most people are not aware of the differences of good and bad debt. The list in the article is great for helping you clear your bad debts!

  12. Deepika@bankingcodes says

    Great list.I love it and gives lot of information.I think maintain permanent and consistent employment in shaky economy…also will help.

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