73 Great Debt Elimination Tips

This one is from Zen­Hab­its. It’s always impor­tant to think about the way we han­dle our finances. And it’s always great to start NOW.

It is not a step-by-step guide. It is a list of ideas and advice from dif­fer­ent peo­ple. There are many redun­dant sug­ges­tions, but they are included because they give a dif­fer­ent twist on the same thing.

There are also con­tra­dic­tory tips. The only rea­son both the tips are here is because they both valid approaches with solid rea­sons behind them, and each will work for dif­fer­ent peo­ple. Find the tips that will work best for you, and try them out.

Let me know what you think in the com­ments, and feel free to add your tips!

1. Don’t get into debt. Use cash for all your pur­chases and don’t take on any debt except home and auto.

2. Spend less than you earn.

3. When debt is closed out, put 60% in sav­ings and enjoy the remain 40%.

4. Take stock of all your lia­bil­i­ties, so you know exactly how much you owe to the world. Put them in a spread­sheet, with monthly pay­ments, inter­est amounts, bal­ances, and a run­ning grand total of all your bal­ances. Update it monthly as you pay off debt, and watch the over­all amount go down slowly. It’s very motivational.

5. Have only one credit card with a low limit, and only one loan with monthly pay­ment not exceed­ing 25% of income.

6. Build up an emer­gency fund first. If you come into extra money (tax returns, etc.), use it to build an emer­gency fund and pay off debt after that.

7. Cut up your credit cards.

8. Speak to a credit coun­sel­ing ser­vice to help work out a plan: your “must pay” out­go­ings, arrange with cred­i­tors to freeze inter­est and accept a revised monthly pay­ment. Warn­ing: a reader informed me that using a credit coun­selor will show up on your credit report and adversely affects your FICO score — not as bad as a bank­ruptcy, but it is coded, and lenders can see it. Only exer­cise this option if you’re really in dire straits.

9. Stop using credit cards to make it to the next pay­check. Stop get­ting fur­ther into debt.

10. Don’t over­pay your debts — leave enough so you have enough for reg­u­lar expenses too.

11. Avoid eat­ing out. Cook your own meals, except on very spe­cial occasions.

12. For enter­tain­ment, visit friends and be cre­ative on how to enter­tain your­selves and your fam­ily with­out spend­ing a dime.

13. Don’t pay off your credit card bal­ance from the emer­gency account. Don’t touch the emer­gency account at all — it doesn’t exist!

14. Look for expenses com­ing up in the future and plan for them, so you don’t have to go into debt when they come up.

15. Make a bud­get — Pur­pose every dol­lar (includ­ing some buffer).

16. Snow­ball the debt — Pay min­i­mums on every­thing, attack the small­est bal­ance with all the extra cash you can assem­ble, then move on to the next one.

17. Be on the same page as your spouse or part­ner. Com­pet­ing inter­ests are suicide.

18. Rec­og­nize your spend­ing ten­den­cies (and your family’s) and place lim­its on them. Develop good habits instead.

19. Read Dave Ram­sey. Read “Your Money or Your Life”.

20. Keep try­ing and don’t give up. Make a com­mit­ment, and if you aren’t get­ting out of debt slowly but surely, revisit that com­mit­ment. Change is dif­fi­cult and it takes dras­tic change in mind­set and behav­iors to get out of debt. Any­one can do it — as long as you really want to do it.

21. Stop spend­ing! You have to really, truly want to do this. Oth­er­wise, you’ll put your­self on a finan­cial diet and then crash and burn and find your­self jus­ti­fy­ing why you deserve to spend so much money on a new iPhone when you have a per­fectly good phone and $20,000 in debt.

22. Praise your­self for every small accom­plish­ment. But, don’t praise your­self by spend­ing frivolously.

23. Find the tools that work for you and stick to them. If the tools aren’t work­ing, find new tools. There are plenty of tools and ideas out there — for free.

24. Change your­self. If you have a spouse or part­ner that is con­tribut­ing to the debt, it can be a big chal­lenge to get them to change. Focus first on chang­ing your behav­iors and attitude.

25. Be real­is­tic. If you started accu­mu­lat­ing debt three or four years ago, real­ize that it will prob­a­bly take you more then three or four years to get out of debt and stay out of debt.

26. Cre­ate a real­is­tic bud­get. Put as much money as you can towards pay­ing down debt and hav­ing an emer­gency fund, but allow for a lit­tle bit of. Only the truly ded­i­cated can live with no social/recreational activ­i­ties for the amount of time it takes to become debt-free.

27. Elim­i­nate. Take a hard look at what’s truly nec­es­sary, and be will­ing to make com­pro­mises. Cable TV, satel­lite radio, and lunches in the office cafe­te­ria are not neces­si­ties. If you have a hard time let­ting go of these things, run your num­bers through a debt cal­cu­la­tor twice — once with your cur­rent bud­get, and once with addi­tional money cur­rently pay­ing for niceties. You’ll be amazed at how much of a dif­fer­ence those few extra dol­lars make.

28. Get cre­ative. If there’s some­thing you think you don’t have time to do more fru­gally, find a way around it. For exam­ple, cook­ing at home is much cheaper than eat­ing out. If you don’t have time to cook, try invest­ing in a crock pot.

29. Be patient. Debt reduc­tion is a long, slow process. Depend­ing on the method you use, you may see no sig­nif­i­cant progress at first, but it will happen.

30. Stop bor­row­ing money — no mat­ter what! This means no more credit cards, no more car loans, no more cash advances, no more home equity lines, etc. If you can’t afford to buy some­thing with CASH you have now, then YOU CAN’T AFFORD TO BUY IT.

31. Save up the money and buy it with cash. By the time you’ve saved up the money, it’s very likely you will have real­ized you don’t even need the item you were think­ing about buy­ing any­way. This hap­pens all the time.

32. Track your expenses in a soft­ware pro­gram like Quicken. Cat­e­go­rize your expenses and report out how much you spent in each cat­e­gory so you can eas­ily spot your prob­lem areas (eat­ing out, clothes, gas), then tar­get those for reduc­tion. Always know exactly how much money you have in your check­ing account.

33. Max­i­mize your 401K con­tri­bu­tion. Every time you get a raise, increase your con­tri­bu­tion by 1–2% because you won’t miss the extra money if you don’t ever see it.

34. Pay your­self 10% first. Put this into an account that is hard to touch. A money mar­ket account can earn good inter­est. Make sure it is a chore to get the money out (you have to drive to the bank), so you will only tap it con­sciously and for major expenses.

35. Make a plan … ANY plan. You’re bet­ter off with a mediocre plan than no plan at all. When in doubt, the “snow­ball method” is sim­ple and works well.

36. Leave your­self some “wig­gle” room. Life throws some unex­pected expenses your way, so include some slack in your plan for these lit­tle setbacks.

37. Have a long range vision. Keep your eyes focused on where you will be five (or ten, or fif­teen) years from now, because get­ting out of debt takes time.

38. Turn off your tele­vi­sion, and dis­card cat­a­logs and other adver­tise­ments imme­di­ately (but not coupons!). Do this, and your urge to buy stuff you don’t need will plummet.

39. Move into a smaller place. Forc­ing you to get rid of a lot of stuff that you’re prob­a­bly still in debt for will show you just how lit­tle any of it matters.

40. Find your pur­pose. Is it your chil­dren, to start your art busi­ness, work from home, free money so that you can give? Find­ing moti­va­tion beyond the money dri­ves our pas­sion. Oth­er­wise our drive is lim­ited. This pas­sion will lead us find out the ‘right’ things to do like stop bor­row­ing, cre­at­ing bud­get, etc. Take a look at the things you value deeply and view that frame­work to judge your actions buy.

41. Exam­ine your expenses and elim­i­nate the unnec­es­sary. Thing about gym mem­ber­ships you’re not using, cable TV, Net­flix, other types of sub­scrip­tions and see which are least necessary.

42. Got a raise com­ing up? Book­mark it. Pre­tend it didn’t even hap­pen, and fun­nel all of the new money into the debt relief.

43. Focus on the debt and get­ting out of it. Not focus­ing and hum­ming along on credit is what gets peo­ple in trou­ble every time.

44. Change how you think of money. Cal­cu­late how much money you make (net) per hour. Do this regard­less of whether you are a busi­ness owner, salaried or hourly employee. Now apply the time fac­tor to any pur­chase you make. For exam­ple, is that 32? flat screen tele­vi­sion you’re think­ing of pur­chas­ing worth 10, 20 or 30 hours of your time. Once the dol­lar amount was removed from the equa­tion and the time fac­tor applied, spend­ing habits can change overnight.

45. High inter­est. Pay off the cards with the high­est inter­est first.

46. Bal­ance trans­fers. By trans­fer­ring bal­ances on credit cards, you can con­sis­tently pay an aver­age of 4%. One thing to look out for is trans­fer fees: make sure that the fee isn’t greater than the inter­est you would save.

47. Opti­mize small long-term advan­tages instead of large short-term pay­ments — for exam­ple, go for the dif­fer­ence between 8% and 6% on a note, or can­cel satel­lite TV and save/invest/pay debt with the difference.

48. Edu­cate your­self on your alter­na­tives. Some­times we spend a lot on things because we assume there are no alter­na­tives. Is cook­ing at home as bad as you think? What about ten-year-old cars? Room­mates? Cheaper parts of town? Thrift stores? Libraries? Bicy­cling? Wear­ing a sweater and fuzzy slip­pers inside in the win­ter so you can turn down the heat? Ask ques­tions, do some exper­i­ment­ing, do some research. Find your biggest expen­di­tures and do some brain­storm­ing and some googling.

49. Think about your goals. The author of The Tight­wad Gazette was will­ing to work harder to save on food, cloth­ing, and enter­tain­ment so she could spend more on hous­ing, have more kids, and let one par­ent stay home with the kids. Quit spend­ing money on stuff you don’t care about.

50. Pay atten­tion to whether you’re buy­ing stuff just because of soci­etal norms or parental expec­ta­tions or keep­ing up with the Jone­ses. Hang around peo­ple who are the way you want to be so that peer pres­sure can be used for good instead of evil!

51. Pay more than the minimum.

52. Make it a habit. You’ll be very happy when you have some extra spending/saving money after your pay­ments stop.

53. Think about wealth rather than debt. If you think “I’m going to get out of debt” you will keep think­ing about debt. If you think “My finan­cial sit­u­a­tion will con­tribute to my over­all wealth,” that thought can keep you going.

54. Extra cash. When you make extra money from over­time or bonuses, use it to pay debt.

55. Debt slav­ery. Real­ize that (almost any) debt = slav­ery. If you don’t mind debt, why get out of it?

56. Read per­sonal finance books, pub­li­ca­tions, blogs. Self-development blogs like this Zen Habits are also great.

57. Think pos­i­tive. Telling your­self “no” stinks, choos­ing to not go on vaca­tion stinks, look­ing around and feel­ing like every­one else has more money than you stinks, even if you make a good chunk’o’change. Instead think about how each month you owe $1 less is a good month.

58. Pay off your small­est debt first to get the momen­tum going. Some peo­ple go by the rule to pay the high­est inter­est ones off first, but oth­ers like the rush from pay­ing a card off com­pletely and clos­ing it. It’s a great moti­va­tion to continue.

59. Be will­ing to make sac­ri­fices. Remem­ber, you own things. They do not own you. We had to sell one of our cars and get a “beater” but this was the best move we could have made. It was so empow­er­ing not to have a car note hang­ing over our heads.

60. Put a note in your wal­let with this text: “DO I REALLY REALLY NEED THIS?”

61. See your­self as com­pletely debt free. FREEDOM! What is that gonna feel like. Imag­ine it.

62. Use super­mar­ket fliers and plan menus for the week, clip coupons, and put the amount of money you save from coupons each week into a sav­ings account.

63. When you make your bud­get, be hon­est. Make sure you bud­get for gifts, enter­tain­ment and what­ever other things we all spend too much money on and don’t like admitting.

64. Find free or low cost enter­tain­ment. Check the local news­pa­per, or look online and see what upcom­ing events are going on. Many towns have free con­certs in local parks, the local libraries often have fee arts and crafts classes, get a state tourist guide and see what’s going on in your area, and be a tourist in your own town.

65. Be cre­ative. Learn to paint or refin­ish hand me down fur­ni­ture, or sew cur­tains and pil­lows. I have been read­ing DIY blogs and got­ten some really great ideas for my home.

66. Start a gar­den. Grow toma­toes, peas, beans, and herbs in pots if you don’t have a yard.

67. Make more money. Some­times you can only stretch your cur­rent income so far. But how can you start an online busi­ness, with­out spend­ing a lot of money? And with­out your own prod­uct? By sell­ing other people’s prod­ucts — as an affiliate.

68. Edu­cate. Above all else, teach your chil­dren early so they don’t make the same mis­takes as us!

69. Cre­ate a bal­ance sheet and update it every month. List your assets on one side and your lia­bil­i­ties on the other. Assets should only include things you can eas­ily sell and there approx­i­mate value. Lia­bil­i­ties should include all of the money you owe oth­ers. If your start­ing value is neg­a­tive your goal should be to make that num­ber smaller every month. If your num­ber is pos­i­tive your goal should be to make that num­ber larger every month. The real value of this exer­cise though is it puts you in the habit of check­ing your finan­cial sit­u­a­tion every month which will rein­force habits that are increas­ing your wealth and hope­fully allow you to catch and stop habits that are decreas­ing your wealth.

70. Credit doc­u­men­tary. Watch the PBS doc­u­men­tary about credit card com­pa­nies. Get mad, really mad and start hat­ing the credit indus­try. They are enabling you to do some ter­ri­ble things to your­self. Cut up your cards and pledge to never use them again. It is a form of slavery.

71. And another. Another movie that looks crit­i­cally about credit cards is MaxedOut.

72. Oprah. Great advice on Oprah’s Debt Diet along with great forms to help you find out where you are and plot a course out.

73. Read the book: How to Get Out of Debt, Stay out of Debt and Live Pros­per­ously by Jer­rold Mundis. Once you’ve read it, read it again.