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 at all angles — you know, hit it with all I’ve got. The more aggressive you get about how you get rid of 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
In the past, I’ve advocated 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 companies. 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! So here are my best ideas for DIY debt reduction:
1. Spend and live within your means.
Be frugal (not cheap): for instance, pick up a home budget software application like YNAB 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, check out this 7 day free trial or pick up our YNAB coupon code to get the program at a discount! If you prefer free online budgeting, give Mint.com a whirl.
2. Try to get lower rates on your loans.
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 — if you’re open to and comfortable with borrowing money. 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 DebtGoal.
This is the first time I’m mentioning this program, and it won’t be my last. I just came across this online service and have seen it mentioned in other debt and frugal blogs, so I thought to jump in with my own introduction here. 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:
DebtGoal Features
You can create a debt plan fairly easily. You’ll need to give DebtGoal 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 DebtGoals’ 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.
There’s also a debt free calculator available. While there are a lot of these tools floating around the internet that are available for free, this type of calculator is 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 DebtGoal community.
Now for the regular pricing, you’ll be charged $11.95 a month if you decide to stick with this program. 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 (with improving your credit as one of its goals), 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.
Parting Thoughts
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. 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!
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The most important thing to get out of debt is lifestyle change. You have to cut back on spending, there is no way around it.
Totally agree with you and 20s money as well! I have to cut my spending for sure. I’ll try to adjust my lifestyle so that I won’t spend as much…
I agree with the first 2 ideas, but I wholeheartedly disagree with the 3rd… at least, from my own perspective. I’ve found it better to self-manage my own finances via an Excel workbook. That way, I am more involved with my finances. And it’s done without a monthly fee.
Funny, I just signed up for Debt Goal 2 weeks ago and i love it. I’m probably worse off than most people so I definitely needed help. So I now have this little tracker with a “date I’ll be debt free” – fun stuff. Wish me luck peeps! Also, my advice to everyone else – don’t eat out more than two times a week. you’ll be amazed how much that saves you in time.
Excellent tips. I have heard of the credit counseling and debt settlement options but not the DebtGoal program. With the 7 day trial period available it would definitely be worth the investment to determine if it is a plan that addresses the financial concern. Also, the small monthly fee is not bad at all. Sounds like DebtGoal has a good support system as well.
This article hits on the basic strategy, but probably the best is to live within your means. If you can accomplish this, once you get out of debt, it should allow you to stay out of debt.
It is pretty easy to call and ask for a reduction of your rates – especially if they are very high.
As one who has clawed his way out of a debt load exceeding $63,000 in 11 months my advice is to get a good picture of where you are at, both debt,expenses and income. Develop an aggressive budget and attack that debt, smallest to largest. The old debt snowball works. Don’t let somebody else do it for you, because it was you who got you there in the first place.
@SVB – I’m glad you shared this solution with your readers. One of the problems with getting out of debt quickly is that of asymmetric information. Lenders collect a great deal of information and employ some very bright individuals to create sophisticated analyses of their borrowers. In addition, lenders know exactly what special payment programs (reduced payments and/or APR, settlements, pay down plans, loan mods, etc.) are available, but only share this information on an ‘as needed’ basis. In short, they have more information than borrowers, putting borrowers at a disadvantage.
In the event that debtgoal.com or another similar solution should reach the critical mass needed to solve the asymmetry problem, it will certainly be worth $11.95 or even $99.95 to purchase this information to eliminate debt more quickly.
Imagine a world where the credit card companies’ policies and procedures became public knowledge. People would be able to get out of debt faster and more efficiently than ever before. In short, borrowers and lenders might actually be on the same playing field.