73 Great Debt Elimination Tips

Every Tuesday is Finance & Family Day at Zen Habits.

Last week, I asked you all to give me your best advice for getting out of debt. And boy, did you deliver. More than 70 of you chimed in with some amazing advice, and shared your success stories, and shared your failures.

It was overwhelming, and I applaud you all.

To take advantage of all the great advice you gave, I’ve compiled a list of the best tips below. I hope it will serve as inspiration for those who are trying to get out of debt.

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 I’ve included the redundant ones because they gave a different twist on the same thing that I really liked. For example, there are several tips about being creative so that you spend less on entertainment, eating out, and the like. They are basically the same tip — but with different suggestions. I kept them separate because I liked them all.

There are also contradictory tips. One says to pay off the credit cards with the highest interest, for example, while another says to pay the one with the lowest balance. They are 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.

I hope this serves as a valuable resource — let me know what you think in the comments, and feel free to add your tips!

Don’t get into debt. Use cash for all your purchases and don’t take on any debt except home and auto.
Spend less than you earn.
When debt is closed out, put 60% in savings and enjoy the remain 40%.
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.
Have only one credit card with a low limit, and only one loan with monthly payment not exceeding 25% of income.
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.
Cut up your credit cards.
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.
Stop using credit cards to make it to the next paycheck. Stop getting further into debt.
Don’t overpay your debts — leave enough so you have enough for regular expenses too.
Avoid eating out. Cook your own meals, except on very special occasions.
For entertainment, visit friends and be creative on how to entertain yourselves and your family without spending a dime.
Don’t pay off your credit card balance from the emergency account. Don’t touch the emergency account at all — it doesn’t exist!
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.
Make a budget - Purpose every dollar (including some buffer).
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.
Be on the same page as your spouse or partner. Competing interests are suicide.
Recognize your spending tendencies (and your family’s) and place limits on them. Develop good habits instead.
Read Dave Ramsey. Read “Your Money or Your Life”.
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.
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.
Praise yourself for every small accomplishment. But, don’t praise yourself by spending frivolously.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Leave yourself some “wiggle” room. Life throws some unexpected expenses your way, so include some slack in your plan for these little setbacks.
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.
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.
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.
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.
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.
Got a raise coming up? Bookmark it. Pretend it didn’t even happen, and funnel all of the new money into the debt relief.
Focus on the debt and getting out of it. Not focusing and humming along on credit is what gets people in trouble every time.
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.
High interest. Pay off the cards with the highest interest first.
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.
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.
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.
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.
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!
Pay more than the minimum.
Make it a habit. You’ll be very happy when you have some extra spending/saving money after your payments stop.
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.
Extra cash. When you make extra money from overtime or bonuses, use it to pay debt.
Debt slavery. Realize that (almost any) debt = slavery. If you don’t mind debt, why get out of it?
Read personal finance books, publications, blogs. Self-development blogs like this Zen Habits are also great.
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.
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.
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.
Put a note in your wallet with this text: “DO I REALLY REALLY NEED THIS?”
See yourself as completely debt free. FREEDOM! What is that gonna feel like. Imagine it.
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.
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.
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.
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.
Start a garden. Grow tomatoes, peas, beans, and herbs in pots if you don’t have a yard.
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.
Educate. Above all else, teach your children early so they don’t make the same mistakes as us!
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.
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.
And another. Another movie that looks critically about credit cards is MaxedOut.
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.
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.

See also:

If you liked this article, please bookmark it in del.icio.us. Thanks!

73 Great Debt Elimination Tips

Every Tuesday is Finance & Family Day at Zen Habits.

It was overwhelming, and I applaud you all.

To take advantage of all the great advice you gave, I’ve compiled a list of the best tips below. I hope it will serve as inspiration for those who are trying to get out of debt.

I hope this serves as a valuable resource — let me know what you think in the comments, and feel free to add your tips!

Don’t get into debt. Use cash for all your purchases and don’t take on any debt except home and auto.
Spend less than you earn.
When debt is closed out, put 60% in savings and enjoy the remain 40%.
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.
Have only one credit card with a low limit, and only one loan with monthly payment not exceeding 25% of income.
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.
Cut up your credit cards.
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.
Stop using credit cards to make it to the next paycheck. Stop getting further into debt.
Don’t overpay your debts — leave enough so you have enough for regular expenses too.
Avoid eating out. Cook your own meals, except on very special occasions.
For entertainment, visit friends and be creative on how to entertain yourselves and your family without spending a dime.
Don’t pay off your credit card balance from the emergency account. Don’t touch the emergency account at all — it doesn’t exist!
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.
Make a budget - Purpose every dollar (including some buffer).
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.
Be on the same page as your spouse or partner. Competing interests are suicide.
Recognize your spending tendencies (and your family’s) and place limits on them. Develop good habits instead.
Read Dave Ramsey. Read “Your Money or Your Life”.
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.
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.
Praise yourself for every small accomplishment. But, don’t praise yourself by spending frivolously.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Leave yourself some “wiggle” room. Life throws some unexpected expenses your way, so include some slack in your plan for these little setbacks.
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.
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.
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.
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.
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.
Got a raise coming up? Bookmark it. Pretend it didn’t even happen, and funnel all of the new money into the debt relief.
Focus on the debt and getting out of it. Not focusing and humming along on credit is what gets people in trouble every time.
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.
High interest. Pay off the cards with the highest interest first.
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.
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.
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.
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.
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!
Pay more than the minimum.
Make it a habit. You’ll be very happy when you have some extra spending/saving money after your payments stop.
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.
Extra cash. When you make extra money from overtime or bonuses, use it to pay debt.
Debt slavery. Realize that (almost any) debt = slavery. If you don’t mind debt, why get out of it?
Read personal finance books, publications, blogs. Self-development blogs like this Zen Habits are also great.
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.
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.
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.
Put a note in your wallet with this text: “DO I REALLY REALLY NEED THIS?”
See yourself as completely debt free. FREEDOM! What is that gonna feel like. Imagine it.
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.
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.
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.
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.
Start a garden. Grow tomatoes, peas, beans, and herbs in pots if you don’t have a yard.
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.
Educate. Above all else, teach your children early so they don’t make the same mistakes as us!
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.
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.
And another. Another movie that looks critically about credit cards is MaxedOut.
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.
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.

See also:

If you liked this article, please bookmark it in del.icio.us. Thanks!

Spewed into the world on 20 June 2007 in Finance & Family |
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Brilliant comments (67)

Noma Says:

June 20th, 2007, 9:34 am

Awesome list! I’m definitely going to check out the PBS documentary. Thanks for the tips!

jos Says:

June 20th, 2007, 10:38 am

WOW!!! lots of tips… hopefully i can do 1/2 and notice a difference, thanks for the motivation

Corey Says:

June 20th, 2007, 11:19 am

#19. Dave Ramsey wrote Total Money Makeover or Financial Peace University not:
Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence (Paperback)
by Joe Dominguez (Author), Vicki Robin (Author)

Pennies of Wisdom Says:

June 20th, 2007, 12:30 pm

I strongly object to rule #6 “Build up an emergency fund first.”

Yes, and emergency fund is important. However, credit card debt and many other debts have an interest rate that far exceeds what you would earn in an emergency fund. The very first thing you should do is build a budget. Then pay off your debt as quickly as possible. Only once you’re debt free and have a well structured budget, you should build up an emergency fund with three to six months worth of your income. Keep the emergency fund money in a safe investment that returns at a rate that beats inflation (ING Direct savings account is a good option). An emergency fund should not be in a risky investment, such as the stock market.

I haven’t yet read the rest of the list, but I do like your idea of organizing such a large and comprehensive list :)

Ryan Bestford Says:

June 20th, 2007, 12:39 pm

Another wonderful post from one of my favourite blogs!!

For anybody in the UK, one of the best places to get guidance on dealing with debt and other financial issues is Martin Lewis’s Money Saving Expert website (http://www.moneysavingexpert.com).

He is currently campaigning on issues such as reclaiming bank charges and dealing with debt. He produces a handy weekly email crammed full of tips and hints.

The advice given on his website is for the UK but may apply around the world.

Mark Says:

June 20th, 2007, 13:55 pm

Today for lunch I made a plate of egg noodles and leftover tomato sauce, with organic milk. Total cost of the meal was about 50 cents.

What amazed me most was that I did not resent the experience. In fact I felt as though I had almost no other choice. Fast food is completely unappetizing to me, for various reasons, mostly this one:

http://query.nytimes.com/gst/fullpage.html?sec=health&res=9405E0DD1331F932A25752C0A9629C8B63

And the fast food would have cost more! Yuck.

Debting Thomas Says:

June 20th, 2007, 14:57 pm

The documentary on PBS is awesome and I also recommend it. Pretty evil stuff. Also a great website to deal with debt collectors, do it yourself settlement, etc. that really helped me out is free and it’s http://www.creditinfocenter.com.

Great info with a great Forum to post and get advice.

Best of luck to all becoming debt free.

Peace
DT
http://www.debtingthomas.com
helping people break out of debtor’s prison and achieve financial freedom one dollar at a time!

Habben Says:

June 20th, 2007, 15:04 pm

FYI - Credit counseling agencies that obtain a copy of your credit report (in their name) raise red flags with mortgage companies. Ditto for debt consolidation loans.

Leo Says:

June 20th, 2007, 15:38 pm

@Pennies of Wisdom: There is truth in what you say, but as someone who is eliminating debt myself, I know the value of having this emergency fund, and I would highly recommend that you build up a fund of at least $1,000 before pouring everything into debt. Once you’ve paid off your debt, you can save the 3-6 month amount that is recommended.

But the value of having an emergency fund of $1,000 or more, before you pay off your debt, is that if something unexpected comes up, you can still pay for it and not ruin your budget. If you don’t have that fund, and something unexpected comes up, you will have to find the money elsewhere. And the first place people usually take it, because they still need to pay for their mortgage or rent or car payment or food, is the money set aside for debt repayment. Even worse, they might charge it to a credit card, which digs you deeper in the hole.

So while there is sense in paying off debt before saving, I would have at least a little fund before paying off debt.

Debt Collector Says:

June 20th, 2007, 18:44 pm

Lots of good advice with one exception…IMHO.

When you pay off a credit card, do NOT close the account. Closing an account results in a decreased visible credit limit and this can ping your credit rating in a negative way. The credit score doesn’t show a difference between you closing an account and the BANK closing the account…which would be a bad thing.

Better to have the credit available and just never use it!

Free Television Says:

June 20th, 2007, 18:57 pm

Some great tips, but also remember there are other ways to pinch those pennies. Alternatives to common pay products, eat at home rather then dining out, cancel your magazine/cable subscriptions and use what’s already available on the internet to make do for entertainment.

Universal Default Victim Says:

June 20th, 2007, 20:35 pm

With all due respect, @Debt Collector above:

To hell with the credit score, close those extra cards. They are financial land mines.

Nick Says:

June 20th, 2007, 21:20 pm

Tip #1 is deeply flawed. Home debt is indeed “good” debt, but auto debt is a very bad form of debt that is not tax deductible and can sink you financially! The end of the sentence should read “don’t take on any debt except home and education,” education being largely tax deductible and the best investment one can make to assure future wealth!

g Anton Says:

June 20th, 2007, 22:17 pm

Save your time and money! Read “Walden” by Henry David Thoreau (available free on the web in PDF format). Also be aware that not only do people own things, but that things also own people! It has been pointed out by people far wiser than I am that the whole world economy is dependent on Americans buying things that they don’t need with money that they don’t have.

menizzle Says:

June 20th, 2007, 22:35 pm

You forgot one. Don’t start your own business…

Bryan Says:

June 20th, 2007, 22:54 pm

You seem to be conflicted. Tip 16 says pay the lowest credit card balances first to snowball the debt, but tip 45 says pay the credit card with the highest interest rates first.

Snowballing is only advised if it will psychologically motivate you to pay off debts. It ends up costing you more. The most economical advice is to pay off your highest interest credit card first.

AC Says:

June 21st, 2007, 0:00 am

Way to obviously crib content from a variety of sources. You didn’t even bother to not say the same thing in multiple places, and contradict elsewhere!

Leo Says:

June 21st, 2007, 1:35 am

@Bryan and AC: I think you guys didn’t read the first few paragraphs of the article and went straight into the list. If you read the intro, you’ll see that these are tips from readers, so obviously they are cribbed from elsewhere. Also, you’ll see that I pointed out that some of them are contradictory … they are written by 70 different people. You’re encouraged to pick and choose the tips that will work for you.

Greg (Mighty Mortgages) Says:

June 21st, 2007, 3:30 am

I agree. The interest rates charged by credit card companies make it extremely difficult to get ahead once you are overwhelmed. I recently blogged on this subject myself (http://mightymortgages.com/save-money-mortgage-refinance-and-debt-consolidation-6.html )and by consolidating high interest rate credit card balances under a low rate mortgage refinance you can finally start paying down the principal.

Thomas Mathews Says:

June 21st, 2007, 12:32 pm

You listed a lot of good tips in your articles but something tells me that you yourself have not gone through debt hell otherwise you would not have listed some of them.

To get the perspective from someone who has eliminated over $124,445 in credit card debt after evaluating debt consolidation, debt settlement and bankruptcy you’ll learn some great insights on the pros and cons of a lot of your tips from someone who has fought the fight in the ‘real’ world. A lot of the info in this report banks and credit card companies don’t want you to know about.

I highly recommend this free report to your readers.

You can get access to this report at:
http://www.InstantDebtEliminator.com

Enjoy!

Dave Says:

June 21st, 2007, 14:08 pm

The list is full of good ideas, but it’s both redundant and contradictory. A simpler, clearer, more consistent list would have been better.

I once read a rule from a rich guy who said that to get rich, one should never borrow money and save half of everything they make.

Dave

Amber Yount Says:

June 21st, 2007, 16:02 pm

Great ideas. But what if your doing most of these and your still trudging along? At elast…I got to do some clothes shopping today though :) CLearance sales, and it was in my budget :P

Motorcycle Guy Says:

June 21st, 2007, 17:45 pm

how about quit buying starbucks?

Michael Says:

June 21st, 2007, 22:16 pm

Like somebody said earlier, SCREW your credit score. You don’t need a credit score if you have no debt. Dave Ramsey calls it the “I love debt” score.

DrStrangeBud Says:

June 22nd, 2007, 13:44 pm

I saw the PBS Doc, and was horrified! I had just gotten out of all my credit card debts, and started saving money. I was watching the show, and had to keep telling myself, “You don’t have credit debt anymore…” I felt like someone had taken my freedom away, and made me into a money slave. I will never ever ever ever take on unsecured debt again. Debt = Slavery, The credit card companies know it, they prey on you, and they want you to be their slaves, so they can convert your life into money, and give you cheap trinkets in return. If I cann’t pay cash for it, I don’t need it.

MillionDollarJourney.com Says:

June 28th, 2007, 9:46 am

Another one is to get your books from the library instead of buying them.

Mission Tuition Says:

July 23rd, 2007, 13:15 pm

These are some great tips. My three favorite are:

1. Pay Yourself 10% First (Golden Rule)
2. Have a Long Range Vision (Goals! Goals!! Goals!!!)
3. Change How You Think of Money (Put Things in Perspective)

I recommended these tips and more to my college student readers who are the number one crowd for debt!

Monica Says:

August 6th, 2007, 3:28 am

I am not saying that owing money is a good idea, but, unless the cost of housing is a serious issue, it does not make sense, even economically, to get rid of material possessions. Even if they are sold and not simply thrown out, there will be a financial loss, since the sale price will only be a fraction of the initial cost, or of the initial cost plus all the interest paid for those things. Getting rid of stuff, even if selling it at a loss, is a way to lose money without even keeping the goods. On the contrary, I would say: keep and enjoy whatever you bought. Just make sure you think very carefully before buying any more stuff, and if possible, don’t until the debt is paid.

I don’t agree either with the idea of paying the smallest debt first. For instance, I used to have a high-interest store card and two credit cards with much lower interest rates (the two cards had very similar rates but one was almost maxed out and one was not). I found it more motivating to employ the following strategy: pay the store card in full first because of the huge interest, then start by reducing the highest credit card balance. That way, I saw that the high balance started to become more manageable, and that encouraged me. If I just paid off the other card, I would simply have been back to where I was when one card was almost maxed out and the second card was not used yet.

Once both cards had a comparable balance, I alternated between them (to show both credit card issuers that I was paying), although, of course, I focused on the card with a slightly higher interest rate. And of course, when I say that I was paying a card, that does not mean that I stopped paying my bills. For each card that was not the main priority, I still paid more than the minimum payment. It’s just that for the “priority” card, the payment was as large as possible. And once the debt was paid, I continued to use credit cards for reasons of convenience and rebates, and to avoid problems with the bank (things like having to worry about whether funds from a cheque I deposited are actually available by the time somebody else cashes my cheques), but I made sure I paid the balance in full.

Robert Says:

October 1st, 2007, 15:04 pm

Thanks for the tips , it really make a big difference when the general public is informed, what it takes for many of us is, “HIT BOTTOM” in order to realize how much trouble we get into, which can be saved by simply trying easy to fallow educational resources, and debt management assistance, and over all common sense.

Anonymous Says:

November 20th, 2007, 4:28 am

credit cards with low limits hurt your credit score, not low balances. It looks much better to lenders to have high credit limits with low balances.

Seorsa Says:

January 17th, 2008, 17:40 pm

I got a raise this year that put my pay rate into a higher withholding bracket. My gross pay went up by about 800 dollars, but my net went up by 150! Of couse some of this was due to my retirement contribution (fixed %) and the old age tax, but most of it was federal witholding. By putting 400 more per month in my deffered compensation plan, I got another 300 on my take home! That was like paying myself the whole raise. Of course now I need to do this every time I get a raise, but what a great motivator to not grow my expenses every time I get an increas, and save more for retirement.

I figured this out from IRS Publication 15 at the irs website http://www.irs.gov/pub/irs-pdf/p15.pdf

Hopeful Lily Says:

February 12th, 2008, 16:02 pm

It’s worth mentioning that if you:

1) Have enough income to pay off debt above the minimum payment every month, and
2) Stop incurring new debt, then
3) You can pay off even daunting, large debt within a couple of years.

Been there, done that!

This only works if 1 & 2 are true, though. Lots of people are financing their lifestyle month to month with credit, so their truth is that they do not have enough income to pay off debt each month. And they’re incurring new debt each month, too. For these people, the road is much harder because they have to change daily habits of spending. Sadly, winning the lottery is not a debt repayment plan.

Sheilsestella Says:

February 26th, 2008, 7:00 am

You have to pay over the amount of interest to get any of your payment paid on the balance of your credit card. Let’s say the interest on your credit card was $35.00, you would have to pay a maximum of $85.00 so $50.00 will go toward paying off your credit card or loan. If you only pay the minimum that they say for you to pay, you aren’t even paying the interest that they add, and the bill just keeps getting bigger not smaller.
When you pay over the amount of interest, you will eventually see your bill going down, and the interest also goes down, if you don’t add more to your credit card before your next payment. Stop using the high interest credit card. Put it in a drawer under your clothes and forget it is there, then get that card paid off.

Roger Says:

March 6th, 2008, 14:38 pm

Amazing tips!! Thanks.

Ask yourself when you want to buy something:

IS THAT A “NEED” OR A “WANT”?

Be honest with yourself when answering and most of the time you will realize that you never needed the things you originally wanted.

Joost Says:

March 13th, 2008, 11:21 am

Why you Americans get into financial trouble so easily. Buying nice things why you can’t even pay them. In europe we buy a nice car if you have the money — we work for it. It’s not common to buy a nice car with a loan. Too stupid.

shy Says:

March 17th, 2008, 12:36 pm

Lots of great stuff, but I thought I’d let you know…

#46 can be called Kiting. If you consistently transfer balances, it shows up on your credit, and can be considered something like fraud. I worked for First USA Bank before it was bought out, and they could see that kind of stuff. That was in the 90’s, who knows how much they can see now. Just be careful. There are groups who consider it a game, and many take advantage of it, but being investigated for fraud is never fun. If it sounds too good to be true, it just might be.

phani Says:

March 24th, 2008, 1:36 am

great tips and i’m getting ready to start right now
thank you zen team

Web Design Lincolnshire Says:

April 2nd, 2008, 5:16 am

This is a great post. However, people like to spend lots of money and get into reoccurring debt. I look for ways to increase my income to fit my wants and needs.

Rather than borrowing. There are many opportunities to make more money. Think on the ways of creating more money rather than spending.

There are loads of people out there. That fake being rich, so they will buy flashy cars, expensive clothes, big houses and they don’t have the capital fund them.

PerT Says:

April 4th, 2008, 1:44 am

@Joost

That was two big Generalisations I’m sure that a lot of Americans don’t get into financial trouble and beeing Europeen, I know of a lot of people there in debt. (also from cars).

DailySpends Says:

April 30th, 2008, 11:13 am

Great post. Interesting points. It’s no. 44 that does it for me (Change how you think of money). Stop living on credit and live on cash instead. If you can’t afford it with the cash in your pocket . . . you simply can’t afford it!!!

Ryan McLean Says:

May 4th, 2008, 9:46 am

This post was really really helpful to me as I am actually in the middle of doing a series on my financial blog “Master Your Debt in 30 Days”……
I especially like number 52. Which says to make it a habit.
I think if you make paying of debt and saving money a habit and second nature then naturally you will just grow more and more wealthy
Thanks for the post.

theBillManager Says:

May 19th, 2008, 21:06 pm

wow, those just need to be written into stone tablets and half the world would follow them. Great advice. I think seeing a counselor is the best many people can and should do when they’re deep in the hole.

Dori Says:

July 5th, 2008, 18:55 pm

Love folks who have the answers for others. I am divorced.Go out to dinner twice a month; mostly to Wendy’s or WaWa. Don’t go to the movies, not to dinner with “the girls” or to the theater. Don’t smoke, don’t drink. Use to buy lunch at work sometimes; $10 a week. Now I take it every day.Cut out vacations 5 years ago. Drive a 4 year old Ford Focus.My indulgences? Put on the air conditioner when it’s over 92. Live in NJ. Send my daughter to the theater twice a year, and go to a Phillies game once a year.Oh, and I do have a cell and AAA, in case I break down or my child does. I should be ok and my budget sheet looks like I should have a little left, but when tuition goes up at my son’s college, when medical expenses come in,
and other non-expensive stuff comes up, I have nothing left. I don’t know how people do it. I have an MA plus.

loans Says:

July 16th, 2008, 14:39 pm

nice article nice tips
thanks

selly Says:

July 21st, 2008, 9:21 am

for me this list item 1, 2, 15, 12, 29,35 will work best for me, so I will try them. May be after some time I will chose other item from such big list.

Joe | A New Band A Day.com Says:

October 21st, 2008, 5:25 am

A really good way to help budgeting is to figure out how much money you can afford to spend each week, and then take it out of the bank as cash at the beginning of the week.

Then it’s in your wallet and you can physically see what you’re spending. A lot of money I was spending was on debit cards, which means that debt from them just creeps up on you.

Valeria | TimelessLessons Says:

November 10th, 2008, 5:52 am

Some great tips. More ways to pinch those pennies: alternatives to common pay products, eat at home rather then dining out, cancel your magazine/cable subscriptions and use what’s already available on the internet to make do for entertainment.

Haytham Says:

November 28th, 2008, 15:50 pm

It’s really useful and I agree with you…

ECC Finance Says:

January 14th, 2009, 17:28 pm

Some great tips there. We’ve become such a nation of spenders and not savers in the U.S. Good old Capitalism. The problem is the government’s just as bad as it’s people. What are these recent stimulus packages designated for. More spending.I believe that’s going to change after this Economic recession.

Mabuc Says:

January 21st, 2009, 3:16 am

Awesome list. I enjoyed reading it. thank you for sharing this to us. this one (Have only one credit card) dont work for me because I have more than one.

Pev Says:

January 25th, 2009, 15:10 pm

These are some very helpful tips. It will definitely help me to keep up with my new years resolution :). Thanks! I have a recommendation though - for one of them I wouldn’t say “stop spending” though. I think there are things we absolutely have to spend money on like food, rent, gas, etc. So maybe rephrasing it to “stop spending on unnecessary/impractical things” may be a bit better?

ms danielle Says:

February 3rd, 2009, 15:04 pm

i disagree with #1. how can you build up an excellent credit history if you pay everything in cash. i understand you don’t accrue debt, but i would recommend to “Pay off your small debt within 30 days” that way you don’t accrue more debt by paying interest, and your credit rating will sky rocket. assuming you *already have the cash*, deposit it into your checking account and use it to pay off your debt in a timely manner. you kill two birds with one stone.

Mark Says:

February 24th, 2009, 10:17 am

I love great articles like this that breaks info into many how-to steps. Honestly, this is one of the best financial articles I’ve read in a long time.

Keep up the good work!

Mark

nolton j Says:

April 6th, 2009, 16:30 pm

Never allow anyone to pay your bill for you. Never subscribe to a 12-36 month repayment plan. Never enroll in a settlement program. Never take out a new loan to pay an old one. Never ever act on emotion, fear or otherwise until you can talk to someone who has been in the industry for as long as I have (21years). The reality is that most debt settlement, debt consolidation, debt relief, or debt management companies are not free. If you pay them money to pay your bills, they will only distribute your money to the creditors or collection agencies who sign a document that allow the service to keep the fair market share of the amount you give for your bills. If the creditor or collection agency don’t sign the document, the money allocated for that bill is not paid and is washed up in admin cost. While on the other hand you are left to believe your bills are being paid. PLEASE DON’T BE FOOLISH…THE ONLY WAY TO GET OUT OF DEBT ASAP IS TO DO IT LEGALLY WITHOUT BANKRUPTCY, CONSOLIDATION, OR REFINANCE. For more info contact me to discuss your concern. I promise to give you all the proof you need to free you from the slave masters of debt.

Motivational Says:

April 11th, 2009, 18:35 pm

If you follow rule #1, you dont’ have to read the rest. :)

themaphabit Says:

May 16th, 2009, 5:22 am

Number 40 really rang true for me. I’ve tried and failed so many times and I believe this was the root cause:

“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.”

Without the right motivation and purpose nothing seems to stick, regardless of the strategy or plan of the latest financial rescue book.

Expert Says:

May 20th, 2009, 3:24 am

Here is a plan that will work but takes time, dilligence and discipline.

Cut up your credit cards…. don’t cancel the accounts… just cut up the cards.
Credit Card Debt: Start making twice the minimum payment on the card that has the highest balance and highest interest rate.
If possible pay as much down on this card as you can. Keep making min. payments on the other cards. Once the first card is paid off apply those payments to the second highest cards and add the min. payment you already pay on that card… and so on until they are all paid off.

This can take years… but it was you that spend that money and nobody but you got you into this mess.

While you are trying to pay down your debt it is important that you have a strict budget.

Sit down and write down the following:

Monthly Income
minus fixed bills (rent, utilities, set amount paid towards credit card debt, etc. AND fixed amount that goes into a savings account, even if it is just $25 a month.
What is left is your discretionary income and you divide this by 4.
Now you have the amount left that you can spend during the week on food, gas and whatever else you need.

Besides the set amount for your savings account you also need to set aside on a monthly basis any money you need for bills that come due only once or twice a year… car insurance, taxes due for property, etc.

Aldohas Says:

May 23rd, 2009, 15:21 pm

73…
what a number
great works, very creative

I think the best tips is the number 1
“don’t get into debt”
a guaranteed tips to eliminate debt

free divorce papers Says:

June 5th, 2009, 2:46 am

This article is really really helpful. We are trying to pay off two loans and two credit cards. Hopefully, the loans will be paid off in 4-5 months.

Leprakon Says:

June 7th, 2009, 3:16 am

I am currently using a Credit Counselling Agency. I never would have gotten where I am today without them. And my credit score is better than it has been in years.

I know Dave Ramsey speaks against them, but it’s been nothing good for me.

Your credit score may take an initial hit when you start the service, but as you debts go away your score quickly rebounds as you debt is eliminated.

I’ll be out of debt before this year is through and it is due to many of the above tips, but it is also due in a large part to a Credit Counseling agency who took control of all of my major debt, lowered all of my interest rates and got the bill collectors of my back in exchange for a $20 a month fee.

And my FICO went from the low 500’s to the mid 600’s and still rising.

Suzanne Thomas Says:

June 9th, 2009, 15:35 pm

Excellent tips! Funny how just reading a simple list of things to do, can motivate people to actually achieve them.

I suppose we all need that little push.

Ricarica Blog Says:

June 12th, 2009, 7:51 am

Great list, I have to print this and show it to a friend of mine.

Savings Interest Calculator - Julie Says:

June 15th, 2009, 12:29 pm

Thanks for this straightforward and useful list. #30 especially rings true. Sadly, nowadays we live in a credit hungry society where having it now and paying for it later is the new philosophy. No wonder we’re in a economic crisis! Our whole mindset needs to change before our nation can grow strong again.

Imokon Says:

June 18th, 2009, 8:53 am

I am really looking forward to my 401k coming in next month, I am just hoping it doesn’t go to pay the rent and that my actual work on my portfolio and job hunt do instead.

My husband and I also noticed a big decrease in spending after riding the bus instead of driving in the car. My day is more organized and it makes me think twice about going down to the corner store to buy a little snack.

Jack Mathew William Says:

June 19th, 2009, 6:20 am

Wow Great resource of debt eliminating tips :)

web tasarımı Says:

June 22nd, 2009, 18:33 pm

I think I definitely have random rhythms which can be frustrating in a work environment

Matt Hedman Says:

July 2nd, 2009, 9:11 am

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