Some ways to pay off debt without spending an arm and a leg.
When I think about reducing debt, I’d like to approach it from all angles — you know, hit it with all I’ve got. The more aggressive you get about how you eradicate debt and how you pay off your credit cards, the faster it’ll be for you to escape the rut of paying someone else for all the stuff you’ve already spent on and accounted for, many months or even years ago. That’s the thing about debt — you won’t really feel like you’ve escaped your financial past until you’ve truly become debt free.
DIY Debt Reduction Programs: 3 Affordable Ways To Beat Debt
I’ve often advocated for “do it yourself” approaches to dealing with one’s finances and have often recommended a few methods for getting that debt monster out of our way on our OWN terms. Of course, there are other debt solutions that people continue to try, which involve seeking debt counseling and turning to debt settlement. While seeking debt help is at least a step in the right direction, know that if you do your own debt management, you’ll come out of the experience much more empowered, plus you can’t beat the fact that it’s lighter on your wallet! In general, you should work to stop incurring additional debt at your current pace, as well as seek to bring down your existing debt levels. Here are my best ideas for DIY debt reduction:
Step 1. Spend and live within your means.
Start by curbing your cash outflow. Put a stop to money leaving your household, which you can do by adapting a more frugal stance: for instance, pick up a home budget software application like YNAB (short for You Need A Budget) to get things under control. For more on this, check out this review of YNAB, which I’ve written. If you’re interested in trying it out, you can sign up for a 7 day free trial. If you prefer free online budgeting, give Mint.com a whirl or check out our full list of budgeting tools here.
Step 2. Try to get lower rates on your loans.
Work on quashing your debt faster by channeling more of your funds towards your debt load. Easier said than done, right? So to help this process, you can attack the problem from a different angle as well: see if you can reduce your debt obligation through negotiation, refinancing or consolidation. So there are a few ways to go about this, but before you seek loans with lower rates, be aware that there’s an important prerequisite involved: it boils down to having good credit. By being responsible about your credit, you’ll qualify for a lot of cheaper loans and may be able to “refinance” your existing debt. For instance, you can check out balance transfer credit cards or try out 0% APR credit cards if you know you can pay off your balance quickly before the 0% intro rates expire. Or you can check out a peer to peer lender like Lending Club where personal loan rates are relatively lower for those who do qualify for a loan through this network.
3. Try out a DIY debt reduction program like SavvyMoney.
There are several debt oriented software applications and programs out there. For example, Credit Sesame is a free service that provides you with tools that can help you optimize your debt. There is another compelling site I’ve come across that offers debt management help via a subscription service. It’s actually well advertised and mentioned in other debt and frugal blogs, so I thought to jump in with my own introduction here. SavvyMoney Pro (formerly known as DebtGoal) is yet another debt fighting tool and online program whose primary purpose is to get you out of debt. So how does this tool help you achieve your goal of reducing debt?
Here’s a rundown of its features:
SavvyMoney Pro Features
You can create a debt plan fairly easily. You’ll need to give SavvyMoney some insight into your online accounts, but once you do, you can apply various strategies to set up your debt reduction plan, be it via debt stacking, debt snowballing or a custom approach of your own.
You’ll receive payment alerts, notifications and reminders, as well as a payment progress summary. Specifically, you’ll get weekly reports on the payments you’ve made and you’ll also receive a monthly report on your progress.
You can check your debt plan’s progress online at any time via SavvyMoney Pro’s Progress Tracker. This feature will show you how much of your debt you’ve put away and how much you’re saving by adhering to your plan.
SavvyMoney also provides various free debt management tools and calculators. These calculators are a good, convenient addition to any comprehensive debt program.
The site also has a community element, much like many new financial sites out there today. You can share your experiences or trade tips, ideas and stories with others who are part of the SavvyMoney community.
You may wonder what makes this tool worth the monthly charge: well, if you compare it to many debt management or debt counseling services that aim to do the same thing for you, then it’s a more affordable solution. It also promises to focus on debt reduction and loan management, which makes it a bit different from other money management software applications in the market today. If you’ve got debt you seriously want to address, then I would suggest taking the free trial offer to see if this approach is something that could help you.
The bottom line is that the best and cheapest way to beat debt is to practice some self-control and to take the steps to manage your debt yourself. Remember that improved credit is a nice side effect of managing debt successfully. While it can be a challenge to dig out of a huge debt load, I’ve read and heard of people who’ve done it in a few short years. With all these new tools and resources available to help us expedite our debt elimination plan, we shouldn’t be making any more excuses about being stuck in debt!
Created February 9, 2010. Updated January 3, 2012. Copyright © 2012 The Digerati Life. All Rights Reserved.