Debt, the mere thought of it can keep us awake at night, make us feel ill and drive us crazy with the phone ringing from debt collectors. Take heart, there are some very simple ways to get out of debt and stay out of debt. You don’t need to earn more money, you need to know where your money is at any given moment.
Use cash only
Cut up those credit cards and use cash only. Yes, this is difficult and for some, even painful, but this is the start of being debt free. If the credit cards aren’t there, there is no longer the temptation to spend money (that isn’t yours to begin with) on them.
Go ahead and use direct deposit for paychecks, but when bills are due pay them in cash whenever possible. If not possible, got to the bank and get either a money order, or a certified check. This way you’ll no longer have bounced check fees (which can add up to astronomical rates) and be on your way to becoming debt free.
Debt snowball
List your debts in order of lowest to highest. Start by paying the smallest amount on each debt and then add an extra payment to the smallest debt owed. Do this each month and as debts are paid off move the extra dollar amount to the next debt in line. This way the credit cards will be paid off in record time.
Sleep on it
If considering a major purchase first explore all of the options available. Is it really important to own the high end appliance that is $1000 extra for a specific feature that you’ll probably never use? Go home and sleep on any major purchases before making them. Chances are things will seem much clearer in the morning and the decision will be made with more wisdom.
Use it up, wear it out
Although new cars sound like a great deal, they are usually not. The moment a car is driven off of the car lot it depreciates in value. Buy a good used model and drive it until it will go no further. Save the money in the meantime for the next car. Cars don’t have to be brand new as long as they are drivable, drive them.
Re purpose and reuse anything and everything that is owned until it’s worn out or no longer functions properly. More than one gardener has used duct tape on a rake to keep it going for an extra season or two. Be innovative and don’t worry if others laugh, they’re the ones in debt, not you.
Find an alternative
Re evaluate insurance annually, often times discounts become available or another company might be able to charge less for the same coverage or even better coverage. Borrow a seldom used item from a good friend or neighbor if possible. Walk to the corner grocer instead of taking the car whenever possible.
All of these little tricks will help to save money and help a person to get out of debt and stay out of debt. Sometimes it’s hard and a person really feels the need to spend money but if you’re using cash, you can only spend what is available. Using this method will help to stop excess spending and avoid further going into debt.
These simple ways are used by many of Dave Ramsey’s followers and work well for anyone.