Frugal Tips

How to get out of debt became one of the most important questions within the last year.

Before the recession many Americans didn’t have a problem living on credit and mortgaging themselves to the hilt. The recession not only hit people in the wallets, but opened their eyes on how dangerous living on credit might be.

If you are desperate to know how to get out of debt, you don’t need to buy any guides or take any internet courses. Getting out of debt is not as hard as it seems, but there are a few rules that everyone who wants to be debt-free must follow. All you need is discipline.

First of all, DON’T SPEND MORE THAN YOU BUY. Don’t let anyone believe that you “need” to have something. There are very few material things in life that you actually NEED. Try to distinguish between need and want. When our microwave oven broke, we were pretty busy and didn’t have time to buy a new one. Two months later we realized that we didn’t really need it. Stove and oven worked just as well. Besides, using microwave is not always the healthiest choice.

Secondly, keep track of EVERY purchase. Two dollars here, three dollars there, a few – somewhere else…This habit got many people in debt. Small things add up.

Don’t apply for store credit cards. Getting 10% discount on a 10$ scarf is not worth lowering your credit score. Actually, get rid of your store credit cards. You don’t need to be tempted. It is a good idea to destroy all your credit cards except one with the lowest interest rate.

If you have multiple credit cards, pay off the ones with the highest interest rates first.

Refinance your mortgage if you can.

Make a monthly budget and make sure you stick to it. Be realistic. If you are a family of 5, you will not be able to spend only $60 a month for food.

Before going grocery shopping, don’t forget to use coupons. You can save a lot of money using these. We don’t get local newspapers, so we get most of our coupons from Coupons.com.

Learn to use cash instead of credit cards. When you pay cash you can actually “see” how much money you are spending. Using credit cards is dangerous, because people often treat it like “magic” cards and forget that they will have to pay them off. Use credit cards for emergencies or major necessities (such as vacuum cleaner, for example)

Get a part time job or earn some extra cash from home. If you are willing to work hard, you can actually make decent money blogging. I wrote a post about it awhile ago.

Live within your means. If you do, most likely you will never face the rhetoric “how to get out of debt” question.

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