How to Get Out of Debt Without Starving to Death

May 30, 2017 at 3:39 PM Leave a comment

“Beans and rice. Rice and beans.” That’s what radio talk show host Dave Ramsey recommends you live on if you want to get out of debt. For most of us, eating like that would get real boring, real fast. So, how can you get out of debt without starving to death? Follow these simple tips.

Pay Your Debts off from Smallest to Largest

Your very first step should be to list all of your debts from smallest to largest. This is the order in which you should pay extra on your debts. You may think that paying the highest APR bills should take precedence because they will end up costing you the most in the long run, but that does not treat the psychology of your debt.

For example, let’s say you have a $10,000 car loan with a 9% APR and a $200 medical bill that essentially has zero interest. With a strong focus, you can probably pay off the medical bill within a month. On the other hand, the car loan may take years. Do you think you can maintain your focus for years? Instead, it is sometimes recommended to go for the small amounts first so you can celebrate some successes quickly and use that as inspiration to tackle your larger debts. Plus, you can put your monthly payments for the paid-off bill toward paying off the next debt.

Increase Your Income

When you are in a debt hole, the best way to dig yourself out is to get a bigger shovel. Your income is your shovel. There are the obvious ways to get more money:

  • Pick up more overtime
  • Get a second job, such as babysitting, delivering pizzas, working as an Uber driver, etc.
  • Look to move up in your organization or to a higher-paying job at another company

Getting back to our hypothetical $10,000 car loan, you might consider selling that expensive vehicle and buying something that fits your current budget. Think of it as your debt car. In most areas, you can get decent used cars for under $3,000. Just be sure to shop around, and bring along a mechanically-included friend for test drives.

Another way to pick up some extra cash is to sell everything. Get acquainted with eBay and Amazon. These sites will give you a broad market for your items that you would not reach with a yard sale or Craigslist post. As you sell the items you don’t need (and trust us: there are a lot of items you don’t need), you will learn to appreciate what you have more and are less likely to spend frivolously in the future.

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