How to Get Out of Debt

Do you know what bothers me about music these days? They make it sound glamorous to be in debt. To spend all of your money on a night you can’t remember. Take, for example, Katy Perry:

“Last Friday Night
Yeah we maxed our credit cards
And got kicked out of the bar
So we hit the boulevard
Last Friday Night”

Really? That’s the message kids these days are listening to? A belligerent evening every weekend? Maybe I’m getting old, but those kiddos need to know that you have to work for what you want. Charging money will eventually catch up to you and lead to a pile of debt. If you need help from a professional, consider contacting Halifax Debt Freedom.

So, Katy Perry — this post’s for you.

1. Stop the debt!

This is an obvious one, right? Do what it takes to stop the debt from continuing — cut up the credit cards, sell the car and buy a cheaper one, stop eating out as much, go on a shopping fast. If you really want to get out of debt, you’ll need to cut back somewhere. Maybe you have a car just sitting in the garage, you can get fast cash for a car in Sydney.

2. Find your number

How much debt do you have in total? Check out the net worth post to help determine this. My number was $13,800, the amount of debt I had through student loans and my trip studying abroad.

3. Start a budget

Figure out how much you can allocate towards your debt and what you need to cut to put down more. Check out the post on how to create a budget to help determine what you can afford each month.

4. Put together a snowball plan

If you have more than one debt, the snowball method is a good place to start. It’s called the “snowball method” because as you start to pay off each debt, it gains traction and becomes easier to pay off more on the larger balances. Here’s how it works:

List all of your debts in order from small balance to largest.
Commit to pay the minimum payment on every debt.
Pay the minimum payment plus the extra amount towards the smallest debt until its paid off. For example, if you have a total of $150/month that you pay towards the minimum balance each month, but have $500 to pay off debt, then you would pay the minimum $150 per month towards the minimums and an extra $350 to use on the lowest debt.
Once a debt is paid off in full, add the old minimum payment (plus any extra amount) from the first debt to the minimum payment on the second smallest debt.
Continue to go down your list until all debts are paid in full.

Here is a link to get a free debt-reduction snowball calculator.

5. Consider getting a part-time job or find extra ways to make money

When I was getting out of debt, I babysat, one of the best ways to earn some extra cash after work! I watched a young boy every Thursday evening from 6 – 10 and it became a highlight of my week! I got $50 each week that went straight towards paying my debt. That may not seem like a lot, but when you’re getting $200 a month, that makes a huge difference.

Here are a few ideas of earning extra cash:

Open an Etsy shop
Babysit
Tutoring
Exercise instructor
Barista
Dog walker or pet sitter
Sell books
Mystery shopper
Clean houses
Deliver pizza

6. Celebrate when you become debt free!

Buy a new dress! Throw a party! Take a trip! Frame a picture! For me, I bought myself a Tiffany’s necklace to remember my debt being paid off. It’s one of my favorites. :)

What other ideas do you have for ways to earn extra money? What would your debt-free gift be to yourself?

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