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How to Get Out of Debt: 5 Ideas

If you're mired in debt, especially high-interest-rate credit card debt, it can seem impossible to dig yourself out. Take heart, though, because it can be done. Here at The Motley Fool, we've long heard inspiring stories about ordinary people paying off extraordinarily large amounts of debt.

There are many ways to go about it, but here are just a few thoughts on how to get out of debt that you might keep in mind:

  • Tackle your high-interest-rate debt first. That's because it's costing you the most in interest payments. If you're paying off lots of loans, it can be tempting to pay off and eliminate the smallest ones first, but you'll get more bang for your buck by retiring your costliest debt first.
  • Don't make things worse. Once you've committed to paying off your debt, aim to not add to it. Rein in your spending, and only charge what you can afford. In order to do that, some people have cut up their cards, or have frozen them in water and kept them literally on ice, in the freezer.
  • Negotiate a lower rate. As you stress out about your steep interest rates and how to get out of debt, you might not realize it, but you may be able to call your credit card company and ask for (and receive!) a lower rate. It will help if you've been a well-behaved longtime customer, but even if not, you can threaten to switch to a lower-interest-rate card.
  • Consider some extreme measures, such as getting a part-time job. It won't be easy, but it won't be forever, either. And it can help you generate valuable extra dollars to pay down your debt faster and avoid a lot more interest expense. If you net $10 per hour at a side job for 10 hours per week, that's an extra $100 per week. Over six months, it's $2,600 -- a powerful debt-reduction help. Alternatively, you might just look for a new job, one that pays more -- and perhaps even offers better benefits. You might raise some more funds by decluttering your home via a yard sale, too. 
  • Make a budget. Very often, people end up in debt because they don't have a good handle on how much they really bring in and how much they're spending. You can develop a better sense of how to get out of debt if you break out all your monthly expenses and inflows and see places where you can pare down spending or boost income. Perhaps you can get rid of premium channels on your cable subscription -- or ditch it altogether in favor of a streaming service.

Don't think you're doomed if you're stuck in deep debt. Once you're armed with some ideas for how to get out of debt, you can start taking steps toward a much healthier financial life.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Read/Post Comments (4) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 24, 2013, at 2:34 PM, datruph wrote:

    In other news. Wall Street Banks and other huge corporations, in the last 10 years; have received Trillions of dollars in Bailouts to pay for their debt.

  • Report this Comment On April 24, 2013, at 3:02 PM, SpokenLegacy wrote:

    Simple, yet, hard advice for people to follow...

  • Report this Comment On April 24, 2013, at 3:23 PM, Snoopy2012 wrote:

    @datruph - this crap I am hearing mostly from all the libs...tell me how much or how many of them even pay tax...? Most of them are food stamp receivers

  • Report this Comment On April 24, 2013, at 4:30 PM, Neuralblade wrote:

    Sound advice except for the extra job. That option is one that you need to evaluate before undertaking that extra job. The extra pay is nice while those extra checks are coming in, but watch out for the tax bite at the end of the year. All that extra pay comes in at the high end of your tax bracket and you may wind up breaking even or maybe even losing money. I know this from experience. Pulled an extra job for a few years and didn't seem to be getting ahead very much. We took a look at the extra taxes we were paying, plus extra gas, and meals, and the bottom line didn't look very good at all. So I quit the extra job. At first we missed the extra paycheck, but it was nice being at home on the weekends, got to spend more time wi the family, and we started getting money back at tax time. So please examine all aspects before taking on the second job.

    @snoopy - you know something, I am a liberal and I have been working my entire life and paying taxes, so don't give me that crap about liberals never working and never paying taxes. A smart person never makes assumptions. The only liberal I know who doesn't work and doesn't pay taxes is my mom and she is 82. The only assistance she gets is social security and she paid into that.

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