How To Get Out of Debt – Debt Free Forever

This is the fourth post in a series that will explore how you can become debt free, and stay debt free forever. Future posts will talk about when you should and should not use credit cards for purchases. Why you should care about your credit score, how to save money on every day expenses, will credit repair companies help you or hurt you and much more. Make sure to subscribe to our feed so you don’t miss a single installment of this series.

So it has been awhile since my last post on how to get out of debt and stay debt free forever. How have you been doing? Have you paid off a credit card yet? Have you managed to go a month, a week, or even just a day without using your credit card? If not, don’t worry. It takes time to change your spending habits. Just keep trying, eventually it will all come together for you.

In my last post, The Credit Card Payoff Plan, I gave you a plan for paying off debt when you have a little extra cash each month. But what do you do if you don’t make enough money to meet all of your expenses? What do you do if you need to use your credit cards just to pay your bills? How do you manage to pay off your credit cards if you don’t have enough to make the minimum payments each month?

First you have to realize that you are in serious financial trouble. And it is going to take some major changes in how you deal with money to get yourself out of it. You must really commit yourself to getting out of debt. It is not going to be easy. However, you can’t just keep ignoring the problem. The longer you let it go on, the worse the problem will get.

Do not be tempted by payday loans and other such offers of easy credit. These types of loans have high fees and interest rates and are set up so that you will just get yourself deeper in debt, and pay more fees to the payday loan company. The more money you have going to fees and interest, the less money you have to pay off your debt!

Sometimes the only answer will be bankruptcy. And when you are deep in debt, bankruptcy can seem like the easy way out. After all, to be able to walk away from all your debt, and all your money problems can be very appealing. But understand, that unless you change how you manage your money, you will soon find yourself deep in debt again. Also, bankruptcy will damage your credit score. This affects you not just when you are trying to get a mortgage or a car loan. Auto insurance companies will charge you more for your car insurance if you have a bad credit score. You may find it difficult to rent a house or an apartment, and with many employers looking at credit scores, you may even find it hard to find a job. If at all possible you should avoid bankruptcy and work to pay off your bills.

You will also hear many companies advertise that they can negotiate with your creditors and settle your debt for pennies on the dollar. Don’t believe it! Often these companies are scams. They will ruin your credit and run away with your money. For more information on these companies read my post on Secrets the Credit Card Companies Don’t Want You To Know.

There are legitimate credit counseling companies that can help you work out a budget, and a payment plan that you can afford. They will talk to your credit card companies and get you a little breathing room. But you are still going to need to pay off the debt. You can find legitimate credit counseling companies and more information on debt at The National Foundation for Credit Counseling.

So, if you don’t want to declare bankruptcy, and there are no secrets that will make the credit card companies happily settle for less than you owe them, what are you to do? There are only two ways you are going to get out of your financial mess. You need to spend less money and/or make more money.

I can hear you already. I know you think there is no way you can cut back anymore, there is no way you can make more money. And I am going to tell you, that you are probably wrong. Almost everyone I helped get out of debt thought there was no way they could spend less or earn more. And with only one exception, they were all wrong! Sometimes they had to make some dramatic changes. One person sold their large home and moved into an apartment. Others have realized they didn’t really need that second car, they could live without a cell phone, and that cable television is a luxury! You need to look at every place you spend money and find a way to spend less. The more money you can put to paying off your debt, the sooner you will be able to add back those extras in life that most people consider necessities. In my next How To Get Out of Debt post I’ll go into more detail on how to make dramatic cuts in your spending.

Along with cutting back your expenses, you are going to need to make more money. In some ways this can be easier than cutting back on expenses. By taking a second job, or starting a part time home business, you may be able to keep some of your comfort items and still pay off your credit card debt. But please don’t be taken in by any of the get rich quick scams. You don’t need to spend money to find out how these make money schemes work. Use free sources like the internet and your local library to learn about legitimate ways to earn extra money. You can also take a look at my Work From Home Blog to learn about legitimate work from home opportunities. Don’t overlook the little ways to make some money. A weekend spend picking up aluminum cans from the side of the road might net you enough to make a minimum payment on one card. And don’t think of it as just earning enough to make the payment. You are also saving late payment fees and interest. In a later post I’ll talk more about ways to bring in a little extra money.

So to sum it all up, if you are in the position where you don’t have enough money to make even the minimum payments on your credit cards, you are in serious financial trouble and you will need to make dramatic changes to get yourself back on the right track. Finding ways to drastically cut expenses, and ways to make more money will enable you to pay off your debt, and get to the point where you can live Debt Free Forever!

13 thoughts on “How To Get Out of Debt – Debt Free Forever”

  1. I find the best approach is to tackled debt from both angles cut back on expenditure, do you really need to $100’s each year on coffee in the morning when you can make one for free at work….

    Also the internet means all off us can find ways to set up our own businesses in our spare time with minimal outlay.

  2. You are right, with the internet makes it easy to start a business. Making that business successful is difficult, and the subject of a future post!

  3. I’m actually a little glad I didn’t get approved. It would have been a distraction to me mentally to know I could buy a place. I’d waste time looking at listings when I should be working to pay off my Mom..

  4. Very informative article, when you are in debt it’s sometime hard to get out of it, so being careful with your spending is the key, and have a plan “B” ready incase Plan “A” fails.

  5. I am agree with you that extra work will really help out our debt. And this is a good idea not to take and buy any quick rich schemes. And for the first time free sources are good to start, for example: freelance, survey and affiliate.

  6. As someone that has assisted people online since 1994, the overwhelming issue about debt is that the best reason to get out of debt is to recover time that would otherwise be lost.

    For example, debt = time. The more financial obligations you have then the more you have to work to make enough money to pay for those obligations. Read “Your Money or Your Life” for more on this concept.

    So essentially, the question you need to ask yourself first before you commit to a future financial obligation is if you are willing to commit to X income/hours each month to service the debt.

    Without that financial commitment you have greater flexibility how you want to live your life. Being debt free gives you life options that you otherwise would not have had.

    For me, that’s the best reason to be debt free.

  7. I totally agree Steve. When I finally became 100% debt free I found that my daily living expenses were very low, so I could basically do anything I wanted. I had my time back.

  8. We can not wish away credit cards entirely because it is is utilized in a correct manner by spending with in your means and always paying on time, will reflect nicely on your credit ratings.
    And it pays to have a very healthy credit rating.

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