10 Best Ways To Get Out Of Debt in 2023
9 MIN READ
Published April 06, 2023 | Updated April 24, 2023
Regardless of how dire your situation looks, there are many ways to get out of debt for good. You can look forward to a bright financial future with the right plan and debt relief strategies.
It may take a lot of determination and effort, but it is possible to get out of debt.
With the right plan, you can look forward to a future where you don’t have to spend all your earnings on debt payments.
While there are many ways to become debt free such as stopping unnecessary spending and canceling your credit cards, there are other more effective debt solutions.
In this blog post, we’ll talk about ten different ways you can regain control of your finances.
10 Different Ways to Get Out of Debt
Before delving into how to get out of debt, it’s important for you to make a firm decision to be done with debt for good.
Take a moment to decide that you will no longer take out any personal loans or swipe your credit cards for unnecessary expenses.
This can be challenging and will require a major change, but if you really want to change your life, it’s worth it. Set your goals and stick to them.
Crushing debt and living a happy, more fulfilled life is possible.
1. List All Your Debts and Pull Your Credit
Start by taking stock of your finances. Make a list of all your debts, so you have a clear idea of how much debt you are dealing with.
List down the outstanding amounts for each debt. You should also list down the interest rate you are paying for each form of debt.
Having the full picture in front of you can induce anxiety, but it is necessary. This is the only way you’ll know exactly how much you owe, and you can start building a repayment plan to get out of debt sooner.
2. Decide How Much You Can Pay Each Month
The most important thing you can do to get out of debt is to change your attitude and beliefs toward debt and money.
You will also need to stop accumulating debt. This means no more loans, credit card debt, or spending money you don’t currently have.
Understand the true cost of taking out loans and credit card bills to dig yourself out of debt faster. Research has shown that credit card users are willing to spend as much as 83% more for goods and services compared to those using cash.
Make a budget to get an accurate picture of your income and expenses on a monthly basis. Use an envelope budget system to make mindful choices and manage your variable expenses.
Based on this budget, decide how much you can pay toward your debt each month.
3. Set a Realistic Budget: the 50/30/20 Rule
Creating a realistic budget is one of the most effective ways to get out of debt.
Track all your expenses for a few weeks and keep a close eye on your bank account to identify areas where you are wasting money.
A budget will also help you find opportunities to cut unnecessary spending and lower your expenses.
A budget can help you identify that you are spending too much on subscription services or on car insurance.
You can then reduce your expenses by comparing insurance quotes from different vendors or by canceling your subscription services.
Try the 50/30/20 budgeting method that will allow you to group all your expenses into three categories- your needs, wants, and savings. Based on this budget, set aside 50% for your needs, 20% for your wants, and 30% for savings.
If your goal is to pay off debt, you can allocate some or most of your savings for debt payments.
4. Create a Plan to Pay Off Your Debt
Make a debt payoff plan based on your budget to stay on track.
There are several ways to pay off debt, but the two most popular options are the snowball and debt avalanche methods.
The debt snowball method involves paying off your smallest debts first and then moving on to the next smallest debt.
The avalanche method involves paying off the debts with the highest interest rate. Ideally, the avalanche method allows you to save more money by addressing the debts that are the most expensive because they carry the highest interest. If you are looking for a psychological boost and motivation, the snowball method is more suitable.
Regardless of the debt repayment strategy you choose, the most important thing is to stay on track and follow the plan.
5. Pay More Than the Minimum Every Month
If you’re trying to figure out how to get out of debt quickly, you’ll need to pay more than the minimum payment each month. Any time you have any extra cash, you should use it for making extra payments.
This will bring you closer to a debt-free life.
After you create a budget and figure out what you can pay towards your debts each month, you should stick to that plan. Then, use any opportunity you get to add to your debt repayment to reach your goals faster.
Some months you may not have anything more than the minimum payment but make it a habit each month to add a little to your debt repayment.
6. Get a Side Job
Look for ways to earn a little extra cash on the side. Consider starting your own business.
Whether you have a knack for creating handmade products or a skill that you can monetize, it has never been easier to start a side hustle.
You can even start a part-time job to earn a little extra money. Anything extra that you can pay towards your debt will help you get out of debt quicker.
7. Consolidate All Your Debts
If you have a lot of credit cards and personal loans at high-interest rates, consider debt consolidation.
If you have fairly good credit scores, you can apply for a 0% balance transfer credit card or a lower-interest rate debt consolidation loan.
This new loan will help you reduce your overall costs and make your debt more manageable.
Approach different lenders and prequalify to see what terms and APRs they offer. Compare all your options to find the lowest rates to increase your savings.
8. Settle Your Debt
Debt settlement will allow you to settle your account for less than you owe. In many cases, you may be able to save up to 50% on your enrolled debt before fees.
If you have overwhelming debt, debt settlement can be a viable option for your financial situation. Work with a reputed debt relief company to negotiate with your credit card issuer and other lenders.
If you have maxed out your credit cards, missed loan payments, late fees, or have debts in collections, a debt settlement company can help you negotiate your settlement terms.
9. Consider Bankruptcy
If you do not have any way to pay off your debt, bankruptcy can be the last resort. Consider this option only if you have exhausted all other debt-relief options to get out of debt.
When you file for Chapter 7 bankruptcy, your assets will be liquidated, and the funds will be used to pay off your debts. Any remaining unsecured debts will be discharged.
Chapter 13 bankruptcy works differently. With this option, you’ll have a repayment plan to pay off your debts. Once you complete the repayment plan, the remaining debts will be discharged.
Consult a bankruptcy attorney to explore your options.
10. Make a Plan and Stick to It
Life happens, and even the best plans can fail.
Even though you may be determined, an unexpected emergency may make you fall behind. This is why it is important to have some flexibility in your plans and in your budget.
This will make it easier for you to make adjustments if things don’t work out the way you planned.
If you feel that your current plan is not working for you, don’t hesitate to make a new plan based on your current circumstances.
Continue to learn as much as you can about budgeting and personal finance, and use your new skills to create a better budget.
On the other hand, you don’t want to use that wiggle room to make any unplanned purchases. If you want to get out of debt, you must be willing to make a few sacrifices in the near future.
Soon enough, you’ll have your entire paycheck to yourself and will be able to start building an emergency fund.
Whether you want to pay off your medical bills or your credit card, even small changes can make a huge difference. With the strategies discussed above, it is possible to become debt-free sooner.
TurboDebt can provide you with the support you need in your debt repayment journey. Our advising, consultation, and planning services will help you identify the right debt relief program to achieve your financial goals.
Connect with our knowledgeable debt relief professionals for a free consultation today. Here’s what our satisfied clients are saying about our debt relief services.