More (Creative) Ways to Dig Yourself Out of Debt

When I was a whole lot younger and lot more foolish (as compared to being a whole lot older and STILL a bit foolish) I used to spend like there was no end in sight, (which is difficult when you only have a dollar in your pocket to begin with). Before I knew it, I easily racked up some significant debts. With those debts came Life Lesson #1: "It's a whole lot easier to get IN debt, then get OUT of debt." This lesson is followed by the response: "Now What?"

Debt can paralyze you. Credit card debt is especially difficult to escape. Credit card offers are not only tempting but plentiful. I have one credit card, and still get several offers every month. You can easily lose track of how much you're spending on your credit card until the bill comes in.

Does this sound familiar: if you've charged more than you can afford to pay for right away, you'll owe interest on your balance. And guess what - if you can't pay off your balance the NEXT month, MORE interest is added. Now you're paying interest on the interest! And just like the proverbial hole that keeps getting deeper, when the interest starts adding up, over time you could end up paying more interest that the actual cost of the item you charged.

I'm probably preaching to the choir when I say you shouldn't be charging on your card with money you don't have anyway. But let's say you do. Keep in mind that the ripple effect of too much spending and too little paying can lower your credit score. And a low credit score represents a credit risk. That is something prospective employers, insurance companies, and lenders don't like. A low credit score can impact your ability to get everything from a car loan to an affordable mortgage.

Take control NOW. Here are a few strategies that can help you dig your way out of debt. It may not be easy. It may take some time. But eventually you'll get back on your feet.

Develop a Spending Plan: Keep track of where you're spending your money for a few months. Itemize your expenditures and look for places where you can cut back. Here's an example: a friend of mine spends an ungodly amount of cash on DVD RENTALS. He didn't even realize it until he started keeping track. He soon discovered he was spending between 12-15 dollars a week on DVD rentals. Doesn't sound like much but at the end of the month that in itself was enough for a credit card payment. (Now he gets his DVDs from the library for free). The point is, if you step back and take a closer look, you'll be surprised to see how much you spend on miscellaneous items. Experts say "not spending" can be as difficult as trying to quit smoking. But it can be done. Take baby steps: bring your lunch to work instead of eating out. And if you're going to eat out do it once a month instead of weekly.

Don't Carry Your Credit Cards With You: Another tough act to follow, but if you leave the card at home you won't tempted to use it. Try paying with cash instead. And guess what -- if you don't have the cash you won't spend it anyway. Heck yo probably won't even leave the house.

Make More than the minimum payment on your credit card: Whether your paying off a car, a house or TV, paying only the minimum amount due on your credit card will extend your payments significantly and impact the amount of accrued interest. Making the highest payment you can afford each month gets you out of debt quicker.

Pay Your Bills on Time: Believe it or not, even if your bill is only a day late, most creditors will still tack on a finance charge. That can be an expensive habit and guess what -- it ALSO lowers your credit score. If you're paying by check, get that baby in the mail at least 10 days before the due date. Or better yet -- pay electronically. You can allocate money out of your checking account to pay for pretty much any bill. The bills get paid on time and you have peace of mind.

Plan Ahead for Major Purchases: Instead of using your credit card, set a "saving goal" and gradually save up the money you need for your purchase.

Want to tap into some way-cool resources? Check out www.budget101.com, one of the best sites I've ever seen that will give you tips galore on budgeting your money, living on a budget and doing it in a way that is -- GASP! -- fun and exciting. Another fun site is www.wanderingindianmonk.blogspot.com, written by a guy who is "...very passionate about exploring ways to do things better, cheaper and faster..." And finally, I urge you to check out www.smartmoney.com which provides you with a worksheet to help you plan your expenditures.

Like I said at the beginning of this article: being in debt SUCKS. But getting out of debt sucks a lot less. So start working today on getting out of that financial hole.