David Bakke managed to get out of $30,000 in consumer debt by changing his habits and learning to live frugally. He now shares his tips for others to do the same on the Money Crashers personal finance blog.
When it comes to paying off personal debt, quick solutions don’t exist. If you have $20,000 in debt, you simply cannot fix it overnight.
You can, however, make an impact on your debt in a short period of time by implementing some easy-to-follow tips. Use these methods and watch your debt shrink or, better yet, disappear!
5 Ways to Reduce or Eliminate Your Debt
1. Stop Dining Out
This may sound extreme, but you can easily remove dining out from your daily or weekly routine to save an extraordinary amount of money.
Dining out offers much convenience, as well as an opportunity to try new foods and spend quality time with your friends and family. However, rather than dining out, consider having a family night where everyone gathers in the kitchen and helps put together a new recipe. Alternatively, invite your friends over for a pot luck dinner.
You can also join or start a dinner group. My parents joined a dinner club that included a dozen couples, and they rotated where they gathered each month for a meal.
2. Cut Everything in Half
This tip refers to the use of just about every common household item. Do you use a full cup of liquid detergent for each load of laundry? You don’t need that much to clean your clothes. You can also cut the amount of detergent you add to the dishwasher in half. Additionally, you can cut your dryer sheets in half, take quicker showers, and reduce the amount of toilet bowl cleaner that you use in your home.
3. Change Banks
Although the federal government enacted credit card legislation to help consumers, banks always find new ways to charge customers more money. Beware of new fees coming your way for normal banking transactions. Double-check your bank statement to make sure that your bank hasn’t already devised additional fees. If they have, choose a new bank.
4. Pay Your Mortgage Biweekly
Paying your mortgage twice per month can save you thousands of dollars over the life of your mortgage. Consider this example: you have a principal balance of $100,000, your interest rate is 5%, and you have a 30-year fixed mortgage. Paying your mortgage biweekly rather than monthly saves you just under $18,000 over the life of the mortgage.
Call your lender in advance to let them know about your plan, and to make sure they correctly process your payments. This fast and simple biweekly mortgage payments plan can save you a significant amount of money over the life of your loan.
5. Clip Coupons
I consider myself an expert grocery shopper, and I always clip coupons to save money. Grab a Sunday paper and see how much you can save on the items that you buy the most. If you have kids, you can even turn it into a contest: see who can clip the most coupons for the foods you buy all the time.
You may view this as a time-consuming ordeal, but the time spent clipping coupons pays for itself by shaving money from your grocery bills. You can even learn how to extreme coupon by timing the use of your coupons with store sales.
I am constantly looking for new ways to save money. These 5 tips are easy to implement and should result in immediate savings. The road to financial freedom can be long and difficult, but with these tips you can begin saving money and getting your debt paid off.
Do you have any other tips for saving money and starting the process of getting out of debt?
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