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April 4, 2018

5 Realistic Tips for Getting Out of Debt

Anyone that’s experienced debt knows the powerless feeling that comes with not making the progress you want—or worse, trying to cut back but ending up increasing the amount you owe. Don’t be discouraged though, keep that hard-work mindset in place and pair it with these five realistic tips for getting out of debt.

1.     Subscribe to the Library
OK, maybe we don’t “subscribe” to libraries like we do Netflix, Kindle Unlimited, or the latest-and-greatest personally tailored box goods delivery service. But we should. The library is a mecca of peace, knowledge, and all things free.

At libraries, people are souls instead of wallets. Let these hallowed grounds inspire and nourish your mind free of charge. Ditch Netflix and rent films from the library instead. Doing so will not only save you money, it’ll help limit your media consumption. If you have a remote job, don’t waste money paying for croissants and coffee to work at the café, use your library’s Wi-Fi and bring your own coffee and snacks. And there’s nothing wrong with having a Kindle, but libraries have great selections and will let you check out multiple books at one time. And unless you read like Will Hunting, the check-out-and-return process shouldn’t be an inconvenience.

2.     Know When Your Debt is Beyond Your Means
Nobody likes a quitter, and you’re no different. If you’ve realized your debt has exceeded your ability to pay it back, don’t give up and accept defeat. Instead, turn to professional avenues.

Seeking the advice of debt relief experts and credit counseling can do wonders for your confidence in getting out of this mess. Each financial situation is different, so you’ll need to decide which of the common programs offered make the most sense to you. Programs could include debt management, debt reduction or settlement, debt consolidation, or in extreme cases, chapter 7 or 13 bankruptcy.

Not all of these are ideal options if your debt is still manageable but identifying when it’s gotten out of hands will get you on a path to financial independence faster than if you simply wallow in your predicament.

3.     Break Up with the Gym
I know, I know, “health is important,” as you speed walk on a treadmill at your overpriced gym. Health isn’t only important, it’s vital to our physical wellness and mental clarity. That’s why you should get in the habit of working out without a big fancy gym. Develop a regimen to work out at home and run outside. A medicine ball will cost you $5, a yoga mat, $10, and walking or running outside is as free as it gets.

4.     Liquidate All That Isn’t Essential
You may have looked around your place a few times for things to sell, concluding that you own nothing valuable. That’s probably not the case. Take inventory of all your things as if you were getting a renter’s insurance policy along with their approximate values, and then go down the list deciding what you actually need versus what you enjoy owning.

Anything that falls outside the ‘need’ section gets sold on Craigslist, Facebook marketplace, eBay, or if not worth much, then at a garage sale. If your stuff isn’t worth anything, then donate it to Goodwill and save the tax-deductible receipt. Every little bit counts and if you have a lot of stuff you can spring clean your place and stock up some money to get back on your next tax return.

This might not change your financial situation overnight, but it will help you live more minimally and reinforce the hallmark frugal habit of spending money on things you need, not want.

5.     Use Your Tax Refund to Pay Your Debt
While completely dependent on income level, filing preferences and the state you live in, you probably get a tax return. In fact, according to data from the IRS, eight in 10 taxpayers received a refund worth an average of $2,895. That’s a giant lump sum to hurl at your debt!

Don’t be tempted to reward yourself (especially if you’ve been practicing better financial habits all year) with a vacation or hobby spending. You’ll feel better when you watch your debt shrink a sizeable amount with one payment.

While there are innumerable other tips to get out of debt, the above tips are relevant to any human with a pulse. Abide by them and let the positive feelings that follow continue to fuel your debt-erasing efforts. Good luck! 

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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