I don’t care how much you’re in debt, if you set your focus on a goal and you do a few things, I can almost assure you that you can be out of debt in less than 6 months.  Regardless of your situation, I’m going to show you some great tips you can use to cut back on your spending so that you can live a stress free life with no creditors breathing down your neck.

Go back to last month and take out EVERY bill you paid –

The first step I’m going to do here is look at each bill and I want you to ask yourself, “Do I need this to survive?”  If you don’t, we are cutting off that service immediately.  You don’t need cable TV if you’re in debt, you don’t need a NetFlix account, you don’t need satellite radio.  Do you catch what I’m saying?  The only bills I want to see in your pile are your electric, heat, insurances and mortgage payment (if you have one)

Now, let’s look at each situation that you may be in and see if you can cut back –

Where do you live right now?  Do you own a house?  If you do, can you sell and cut to something smaller.  There’s no need to have a 5 bedroom house when you have 3 people living there.  Sell the house, make a profit and get something smaller.  This will save you a ton.

What do you drive?  Are you making payments on your car right now?  If so, sell it.  Get something that you can afford to buy in cash.  You don’t need to be driving a $50,000 BMW.  Trade it in for a efficient $5,000 car.  Yes, they are out there.  There you go, another bill tackled.

Look over your insurance plans- If you’re going to get rid of your new car payments, get the cheapest insurance possible for your used car.  If you trash the used car, you won’t feel as bad because you only paid a few thousand for it compared to a nice $50,000 new car.

Be efficient with your energy – I highly recommend you go out and buy a programmable thermostat for $20 or so.  Program it so it only heats the house when you’re at home.   At night, set it down to about 60 because you can sleep with your bed sheets.  The more efficient you are with your energy costs, the more you’re going to save.

I know, these tips are HUGE steps but the question is, are you serious about getting out of debt?  Let me just show you a quick example below of how much someone could truly save –

Expenses Starting Out
Family Salary: 
$60,000/yr take home
Debt:  $20,000 total

  • Home – $2,000 / month
  • 2 new car payments – $300 a piece @ $600 total
  • Insurance for both total – $250
  • Average utility (heat, etc) – $150/month
  • Cable, Internet, Phone – $200
  • Groceries – $800 (family of 4)

Total = $4000 expense – $5000 take home = $1,000 for the month

As you can see, there’s not much left and if you think this situation is unrealistic, it isn’t!! There are so many people that live paycheck to paycheck, it’s sad.  Let’s just take this situation and cut off those stupid expenses for 6 months.

  • Home – $1,200/ month (sold house, downsized .  Made $15,000 profit)  $800 less/month
  • 2 new car payments – NONE (sold the cars, took $15,000, bought 2 5,000 cars.)  $600 less/month
  • Insurance for both total – $50 (cheapest insurance possible)  $200 less/month
  • Average utility (heat, etc) – $75/month (got thermostat, saved up to 50%) $75 less/month
  • Cable, Internet, Phone – $40 for one cell  $160 less/month
  • Groceries – $400 (use coupons, save up to 50%)  $400 less/month

NEW TOTAL:  $1765 compared to $4000..  a savings of $2235 month that can be put toward debt.
$2235 x 6 months = $13,410 + 5K profit from house = $18,410… close to 20k in debt in 6 months!

This is just one idea and no, you don’t need to live poor the rest of your life.  Learn your mistakes and once you pay off your debt, become more frugal with your spending.  I know not everyone makes $60,000 a year and people don’t want to sell their house, etc.  That’s completely understandable.  You need to look at every bill though to make things work.  If you’re serious about debt, the debt will soon disappear.