Image via WikipediaThis seems like a timely and helpful article for most people... Ways to get out of debt!
You might have heard that there are a million ways to make money. Likewise, there are probably just as many ways to get out of debt, but when it comes to achieving that goal honestly and effectively, your options are reduced. Here, we will explore three of the best ways to get out of debt without having to resort to debt avoidance techniques like bankruptcy or fraud (yikes). The first two will probably not come as much of a surprise, but the last one will certainly help expedite your efforts.
Analyze How Funds are Spent
Arguably one of the most well-known ways to get out of debt consists of writing up a budget and analyzing how funds are spent each month. The objective is to reduce these expenses and use the saved funds to repay debt. It does not matter whether you save $10 or $1000 every month, if the extra funds are paid toward debt, you have found one of the easiest ways to get out of debt. The problem is that this method often involves some form of sacrifice and can often be so aggressive that people easily give up or "fall off the wagon."
Looking at Increasing Income
When it comes to popular ways to get out of debt, looking at increasing income is definitely in the top three. This is because it is relatively easy to do in some cases. To earn more income, debtors can either take on a new job at a high rate of pay or they can get a second job. Ideally, the extra funds earned are paid toward debt. What makes this option a little more difficult, particularly at times like these, is that getting a new job offer could require updated skills or knowledge, and in some cases can mean extended travel. These expenses are often offset by the higher earnings.
Reduce Expenses & Increase Income
A final recommendation incorporates both. This means reducing expenses, say by 20%, as well as increasing income, say by 5%. For people who spend even $500 on expenses every month, this means reducing those expenditures by $100. As well, it means increasing income by a simple $125 per month. Both objectives are clearly simple to achieve, but the end result is an extra $2,700 per year being allocated toward debt repayment. Alone, they may not seem significant and even on a monthly basis it might not seem very effective, but over the course of a year, the impact against your debt is rather astounding. Now, imagine if you could further reduce expenses by another 10% or if you could improve income by 10% instead of 5%. The end result would be even more impressive.
Hopefully, these three popular ways to get out of debt have given you some inspiration and insight into how easily you can work your way out of debt. Clearly, these are not top-secret tactics. In fact, they are easily executable and once you put such tactics into practice you may even uncover other ways to get out of debt. The point is that taking action should come first and if any of these three methods can help, then please go ahead and get started today.
Chris has more than 16 years of experience in the financial services industry, having helped thousands of clients fix their personal finances. As the author of the Help Fix My Finances e-book, he contributes Debt Consolidation Opinions at Debt Consolidation Opinions.com and maintains a debt-free blog at HowToRepayDebt.com.
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