DIY Debt Reduction Programs: 3 Affordable Ways To Beat Debt

by Silicon Valley Blogger on 2012-01-0312

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 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.

Special Offer: Best of all, SavvyMoney Pro has a 7 day free trial so you can find out how well this tool works for you before you decide to pay for its use. The standard pricing for this service is $14.95 per month, if you decide to stick with this program. But if you sign up through The Digerati Life, you can actually receive a 20% monthly discount resulting in a lower monthly fee of $11.95. Our readers will get 20% off the regular pricing.
Sign Up With SavvyMoney Pro

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.

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. 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.

{ 12 comments… read them below or add one }

20smoney February 10, 2010 at 7:00 am

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.

Credit Girl February 10, 2010 at 9:40 am

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…

Anthony February 10, 2010 at 11:07 am

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.

Tim February 10, 2010 at 11:25 am

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.

Lillie February 10, 2010 at 12:46 pm

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.

basicmoneytips February 11, 2010 at 3:35 am

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.

Paul @ FiscalGeek February 11, 2010 at 10:31 am

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.

Michael Harr @ Wealth...Uncomplicated February 11, 2010 at 11:20 pm

@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 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.

Lenore Keel April 4, 2010 at 4:24 pm

I have debt that I don’t know how I’m going to pay.

Lynda.L June 1, 2010 at 7:10 am

I do agree with your suggestions; we take responsibility for our own debt by doing what we need to do to come out a budget plan, limiting our spending and following our debt payment plan. More importantly, we should change our spending habits at the very least, as a quick fix solution.

Silicon Valley Blogger January 3, 2012 at 2:06 pm

Please note that the DebtGoal application that is referenced in these comments is the new SavvyMoney Pro. The company behind this tool has gone through a major rebranding effort, which we plan to discuss further in the future.

I’d also like to address some of the thoughts by other commentators regarding the paid subscription needed to use a debt management program. I agree that you can always do things your own way via Excel spreadsheets or free programs like (for budgeting) and Credit Sesame (for credit and debt tracking). However, a lot of programs are proprietary and companies often come up with their own methods and strategies for solving the same problems. Also, different debtors are at different stages of their debt recovery and may need to explore various options for addressing their concerns. From my experience as someone who analyzes various software solutions in the financial space, I’ve noted that everyone is at a different position with their finances and may want to determine which product/service works out best for their specific needs. There is a certain type of debtor who will probably appreciate SavvyMoney Pro more than they would other financial products. If they are getting the value they expect and want out of the service, then it may be worth it for them to pay a subscription fee that is cheaper than say, working with a professional debt counselor or debt settlement provider. If you are in debt, you’ll need to assess which approach is the most effective (and comfortable) for you.

DH May 23, 2012 at 5:30 pm

Great tips! However, I would like to say that we should start living not within our means but we should actually be spending a little bit lower than what we earn, so that can we can also save and stay away from debt.

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