10 Ways to Get Out of Debt

August 11, 2011

If you want to get out of debt–particularly a lot of debt–then you have to really want it.  I’m talking about flashing Rocky Balboa levels of intensity.  You have to make debt busting your second job.  Like losing weight, you’ll quickly learn that it’s hundreds of times harder to get out of debt than it was to get into debt in the first place.  Whether you sneak up on debt little by little or go all in, it’s going to hurt.  There will be sacrifices, and I’m not just talking about that morning latte.  If you’re reading this post, then you must be serious about getting out of debt.  If so, then get ready for ten serious ways to get out of debt.

Without further ado, here are my top ten ways to get out of debt.

1. Start a Business – Why do you think I spend all of my free time on writing about personal finance?  Sure, I enjoy my writing business, love my clients, and often times find my work to be in many ways a privilege.   But all that said, I am working a second job for a reason: to pay off my oppressive student loan debt.  Now you don’t have to start a freelance writing and copy business like me; in fact–there’s enough competition already– so please don’t!  But I’m sure there is a specific talent and/or interest you have that can be easily monetized.

As a teenager, most of us made a few extra bucks cutting grass for neighbors or babysitting.  At a bare minimum, that is the type of “business” that you should be able to start with little trouble.  When starting a business to pay off debt, you may want to put more of an emphasis on low-overhead/low-risk businesses.  The last thing you need when you’re trying to make extra money to pay down debt is to end up saddled with even more debt should your business be unsuccessful.

For some people perfect “side business” is doing something online, like running a blog.  Although online businesses take time to start generating cash, they are an easy “first business” that require relatively low initial expenses.

2. Work Part-Time – Although a part-time job may not be as sexy, creative, or as good for your soul as starting a side-business, it’s still another way to generate additional income that can be used to pay down your debt.  Remember that the faster you pay off your debt, the less interest you will end up paying overall.  Paying off my debt is almost as difficult as dropping a ring in Mount Doom, so I’ve at times worked part-time, full-time, and run a business simultaneously.

3. Getting a Raise/Working More Hours – Of course, all this talk of additional income sources is nice, but let’s not forget about what is likely our major income source: our full-time jobs.  Now proceed with caution when asking for a raise, particularly during tough economic times – you don’t want to make an enemy of your boss during layoffs.  However, with the right amount of research, planning, and preparation you can make a good case for a raise or promotion.

If you currently have some trepidation about asking for a raise, then perhaps you can figure out a way to work more overtime.  Now if you’re a salaried employee like me–and therefore not legally entitled to overtime–then this won’t help.  But there have been years where I’ve seen my dad generate 50%-75% more income than his base pay merely from overtime (he gets time and a half for overtime).  It won’t be fun working all those additional hours, but being in debt isn’t exactly a day in Disneyland either.

4. Avoid Debt – I know, I know.  What a cheater!  I’m writing a top ten list about ways to get out of debt and now I’m taking the easy (or as I like to call it, the “Ashton Kutcher”) way out and saying something as stupid as “avoid debt in the first place.”  But here’s the thing, even assuming you’re already in debt, it remains key to avoid additional debt.  If you’re working day and night at your freelance graphic design business to pay off your student loan debt, but then you’re also simultaneously generating credit card debt, then that’s the very definition of being counterproductive.

5. Sell Stuff – If you want to go with one of the laziest ways to make extra money, then simply sell some of your stuff.  Who hasn’t sold some old textbooks or made a few extra bucks with a yardsale?  Ok, probably most rich people, but they likely don’t have a ton of consumer debt, either.  If you want to join them in the trust fund arena, then you can’t be too proud.  So go out and sell that old stuff— it might be tough if you’re bit of a hoarder, but it’s worth it to pay off debt.

6. Cut Out Major Unnecessary Expenditures – Sorry, you probably shouldn’t be going on a fancy vacation when you have six figure student loan debt.  (hypocrite alert: my wife and I totally just did that ourselves).  Upgrading your car that works fine but no longer looks cool, buying a big screen television, or redoing your kitchen are also probably not options right now.

I never said being in debt is fun.  I’d rather have someone wake me up each night with a solid punch to the stomach than have the six figure chain around me that is my student loan debt.  But unfortunately, I’ve yet to find a way to trade my debt for midnight sucker punches.  So instead I have to deal with an outdated kitchen and feel like a huge hypocrite for going on one vacation in the past three years.  As will you, although hopefully not that second part.  It shouldn’t be hard to have more willpower than I do.

7. Cut Out Minor Unnecessary Expenditures – In personal finance circles, it’s often referred to as the “Latte Factor.”

We all like to believe that if we simply give up our morning coffee, then all of our personal finance problems will instantly be resolved.  That’s not the truth (unless your debt is so minimal that I have to question why you’ve made it this far in the article in the first place); but it won’t hurt either.  I’ve traded in Cable for Netflix (may have to soon trade back), I’ve given up fancy cell phones and gummy bears at the movie theater (matinee, too, by the way…and definitely no 3-D glasses).

I’m still as in debt as ever, but again, it can’t hurt even if it doesn’t help as much as we perhaps like to believe.

8. Become a Budget Monster – Most people from my generation will remember the seminal pioneer/avatar death of your friends game Oregon Trail.  A big part of that game, besides diphtheria and floating oxen across rivers, was the allocation of resources.  Any board game nerd will know that resource allocation is also the basic theme of games such as Monopoly and Settlers of Cataan. Budgeting (i.e. the allocation of resources) is a key part of paying off your debt.  You need to make sure you have as much money left over as possible to pay down your debt.  You accomplish this through budgeting.

9. Research the Tools Available to You – Consolidation, loan forgiveness, bankruptcy (hopefully not, but hey it’s sometimes the only option), credit agencies, and on and on.  There are a lot of tools out there to help you should your debt get out of control.  Just make sure you do your research and don’t get scammed. Being in debt can make you feel desperate and there are plenty of con-artists out there looking to take advantage of you.

10. Fight Back – There are plenty of companies you have relationships right now that find ways every month to get you to pay more money than you need to for the products or services they provide. It’ll take some time to research your options and to work the phone but there are ways you can cut hundreds of dollars of expenses by fighting back against companies that overcharge and under-deliver.


What have I left out?  How else can you get out of debt?


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Chris Thomas is a personal finance blogger at Debt Payer.com and the owner/creator of FreelancePF. Chris has a B.A. in English and a J.D. in law. Chris lives in the northeast with his Wife and dog.

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13 Responses to 10 Ways to Get Out of Debt

  • Vic @ Business Tips

    Starting a business can give us passive income and financial independence in the future. However, at the beginning, we need sacrifice a lot of things. We need a lot of patience and diligence. Because if we will fail in business, we might found ourselves in a life with more debts.

  • Rasheed

    Thanks for these ways! I’m not in debt (thankfully) but this is still a good way to earn extra cash and save more money, which is always good 🙂

    • Ben

      Hey Rasheed, congrats on having no debt. It can certainly be a monkey on your back, I’m glad to hear you’re not struggling with that.

  • @moneyperk

    These are very great ideas for others to get out of debt. We all can’t avoid to getting into debt. But people get in trouble with the debt issue because they fail to take steps before hand. It is smart to build your personal net worth paper assets, starting a business, and the things you mentioned in this article.

    Like i’ve said though, everyone gets into debt at some point in their life, and these are excellent ideas for one to get out of debt.

  • @moneyperk

    These are excellent ways to get out of debt. But, it would be even better to do these ideas before hand. Like starting a business, selling things and creating a budget. With that money you could invest start investing it, and still buy things in credit.

    You give yourself a great chance to back your credit with passive income.

    I enjoyed reading this article. Excellent ways to recover from financial mistakes.


  • harry

    I think there is another one: keep investing

  • Tracy

    Every year we sell things from our house on Craigslist that we are no longer using, and we bring in about $300 – $400 from it.

  • Benjamin

    While its true that most self made millionaires became rich through starting their own small businesses, there is a tremendous risk assocaited with doing so (if you’re not careful).

    Fortunately, your advice about starting at a very small scale (mowing lawns, starting a blog, etc.) does not require much in the way of capital investment to bring the businesses to scale.

    Ben @ Trees Full of Money


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