Getting Out of Debt


  • Cut up your credit cards: This will rein in your spending and may make it possible to extract better repayment terms from lenders since new debt can’t be added to the old.

  • Combine your debts: Some creditors will allow you to merge all your debts so that you have only one payment to make per month. This will eliminate many of the interest charges. While this won't lessen the amount of money you owe, it can ease the stress you feel from owing money to so many places. As well, it can be easier to remember and to only make one payment per month.

  • Communicate with your creditors: Large creditors will often agree to suspend interest charges while you decrease your debt, as long as you pay on time each month. This will keep your debt from growing larger with time and save you money in the long run.

  • Keep track of expenditures: Writing down where your money goes makes you more responsible. The $20 you had yesterday afternoon could be gone by lunchtime today with no recollection of where you spent it. The more conscious you are about money, the more you'll find you have.

  • Reduce your activities: To get back on your feet, you may have to discontinue a few activities for a while. Terminate your membership at the spa, cancel magazine subscriptions, discontinue cable TV, eat meals prepared at home instead of going out, and put your children’s music lessons on hold. The money conserved from these activities combined on a monthly basis could be saving you more than $500.

  • Seek help: A network of nonprofit organizations across the country offers free or low-cost assistance to people with money-management and debt problems. To locate the nearest Consumer Credit Counseling Service office, call 1-800-388-2227.

  • Set aside a specific shopping time: Go shopping on a specified day of the week. Daily runs to the store for just “a couple of things” can add up quickly.

  • Set limits: This can be the most difficult suggestion, but in order to get out of debt, you must use discipline. Place a strict budget on kids' clothing allowances. Live on a certain dollar amount per week. If you happen to overspend, take it out of next week’s budget, not out of savings. 

  • Shop with a list: Before you head to the store, make a list of the items you need. Take only enough money for those items, buy only those items, and leave other forms of payment at home. This reduces spontaneous shopping and spending.

These strategies all demand some kind of sacrifice. In the short run, these sacrifices are necessary, but the long-term gains can be enormous. By eliminating debt and high-interest charges, you'll have more money at your disposal. Some simple changes in your lifestyle may be all that you need to get out of the red. Being in debt can make you feel helpless and like you are in over your head. But you don't have to drown, and you can gain control of your money. It takes time and discipline, but you can live debt-free.