How To Get Out Of Debt

By Adrian Fletcher in Debt Consolidation on June 4th, 2008

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by Adrian Fletcher

There are only two ways to get out of debt and they sound ridiculously simple but still people struggle to reduce their debts. These two ways are to make more money or to spend less money. If you make more, you will have more to put towards the debt. If you spend less, you will have more to put towards your debt. In fact, I’ve just thought of another way to reduce debt ” make more money and spend less of it. Then you will have even more money and get out of debt quickly.

I bet you’re thinking, wow like I didn’t already know that, tell me something new. Well, the problem is that most people can implement these ideas but they can never stick with them. They don’t have the discipline and patience to see the strategy through to the end.

Most people in debt probably acquired this debt over an extended period of time. It could be up to or more than two years that they spent money impulsively and didn’t care to budget. Then all of a sudden their debts hit a critical point and they want to get out of debt fast.

If it took years to get into debt, why do you think it will take minutes to get out of debt. It just won’t happen. Getting out of debt is about chipping away at the mountain that you have created until it eventually crumbles.

And this analogy holds true for getting out of debt. The more you persevere, even if it seems hopeless, the quicker the momentum will build until the debt mountain crumbles. Or more specifically, once you are paying off the compound interest each month and also eating into the capital amount that you borrowed, the debt will reduce at a faster pace.

So, how do you make more money ? That’s a good question that millions of people ponder everyday. You could get a second job. If you already work a lot of hours per week this may not be a good idea. It’s your call. don’t work to hard that your health is at risk. That would be counter productive.

If you find something enjoyable or interesting then this won’t be a stressful. A hobby like wood turning can be turned into a profitable sideline of making ornaments and selling at flea markets. This could be an acceptable second job that could bring some useful monthly income.

Or you might consider having a home clear out and selling all the stuff you no longer need. Have a garage sale or stick the items on Ebay. You might not make a fortune but it can certainly help towards your debt problem.

Finding ways to make more money is hard however as you only have so much time. I would suggest it is probably easier to find ways to save the money you already have so here is the basic idea.

Many people in debt don’t have a budget. They have no idea how much they have to spend each month and no idea what they spend their money or credit on. This is the first step to reducing your spending and getting out of debt.

It is quite straight forward to work out how much you have to spend. It is simply your monthly pay plus any other ventures you have going on the side. Deduct any taxes from this amount if your employer does not do this automatically.

Now sort out how much you spend. Record every transaction over a month. You want to divide these expenses into essential and non essential expenses. Essential expenses are things you must have in order to survive. So food and a place to live are essential expenses. Other items may not be essential and can be scrutinized more carefully.

Having said that, you may be living in a lavish apartment that is beyond your means. You may even consider getting cheaper accommodation. In terms of grocery shopping, do you really need a large selection of cheeses and do you eat all the fresh food you buy or do you throw out some of it.

Non essential items are things that fall into the category of entertainment. Sure it is important to have an outlet after work but are you overdoing it. Can you cut back on entertainment costs. These should be the first things you look at.

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