Tuesday, October 4, 2011

Financial Tips For Getting Out Of Debt

By Suzanne Cramer

It can be tough to get out of debt, especially if you are a single parent living on one income because, let's face it, kids are expensive. But getting out of debt is easier than you think if you stick with these three simple tips:

Stop Using Credit Cards
Sounds simple…and it is! Having a credit card in case of emergency is one thing; but very few of us are able to limit their use to just that. I often hear the following excuses:

I didn’t have enough cash to pay my electric bill so I charged it.
My son needed a new pair of sneakers for school, so I charged them.
I didn’t have cash to put gas in my car, so I charged it.
My roof was leaking so I charged the repair bill.

Are these all emergencies? Maybe for some of us, but they all could have been avoided by having a budget and an emergency fund. Debt can be a vicious cycle; without an emergency fund you are unprepared for life’s unexpected twists, such as a leeky roof or new sneakers. Without a budget you are at the mercy of what’s in your bank account.

If you don’t cut up your cards, you WILL continue to use them and incur more debt. So stop making excuses and grab a pair of scissors.

Just because you cut them up doesn’t mean the debt goes away with them so, there are a few more steps you need to take:

  • Cancel all recurring payments (such as gym memberships, magazine subscriptions, and insurance renewals) set up these payments to draft form your checking or savings account.
  • Call your credit card companies and ask for a lower rate. You may not get a yes the first time, but, persistence beats resistance so keep trying! 
  • Make more than the minimum payment each month.
  • Don’t cancel your credits; by cancelling them you are decreasing your amount of available credit and this may cause your credit score to drop.

Start An Emergency Fund
Financial experts argue all the time about how much you should keep in an emergency fund. Some say six months worth of expenses while others say a year; the important thing to understand is that something is better than nothing. If you can only save $25 a week, than start with that. Use this savings instead of your credit cards for true emergencies.

There are a few things to keep in mind when it comes to emergency funds:

  • You want your savings to be liquid; don’t put it in a CD.
  • Keep your emergency fund separate from your checking account.
  • Start today, don’t wait till tomorrow.

Create A Budget And Stick To It
One of the most overlooked components of creating a budget is making sure it is realistic. Reducing expenses by 50% is unrealistic, whereas reducing expenses by five or ten percent is much more realistic, and attainable.

  • Track.  Get a notebook and a pen or a free budget planner and track all of your expenses for two weeks. Include every expense, whether it is your mortgage payment, or your morning coffee. Be diligent and thorough. This information will serve as the foundation for your budget. 
  • Organize.  You can use paper, a spreadsheet, or free online spending journal to create your personalized spending plan. Categorize the expenses in a way that makes sense to you. Entertainment, medical, housing, transportation, and groceries are a good place to start.       
  • Cut, cut, cut.  This is the difficult part. It is time to identify and cut expenses. Gym memberships, magazine subscriptions, cell phones, and cable packages are all great items to review and cut if you are not using them on a regular basis. Make the cuts realistic. You don't have to starve or go without basic necessities and essentials.   
  • Review.  Sit down every three months and review your spending. Based on your performance, you may find other areas to cut, or find that you have done such a good job that you can put a few extra dollars towards your emergency fund.
Getting out of debt is never easy but if you follow these simple yet powerful ideas you will be on track to getting out of debt in no time!

Suzanne Cramer is a certified credit counselor and a Social Media Specialist for CareOne Debt Relief ServicesSuzanne writes for Divorce, Debt and Finances and Major Life ChallengesFollow Suzanneon Twitter @ADivorcedMom where she shares her insights as a single-divorced mom with tips and tricks to keep your finances in check.  


  1. Great tips. I've started my emergency fund and tracking my expenses in a spreadsheet. It certainly has made me more conscious of the money I spend. I think three times before I buy things now.

  2. Great tips & thanks for sharing. I called this week about lowing my rate on my credit card was denied. Called my cable company to get a lower package. None available. It's so frustrating! I would work a 2nd job again to make extra money, but that means less time with my daughter, and I already don't feel like I see her enough now that she's in school & afterschool! Just cant catch a break

  3. I need to get back on track! I did good for a while now my debt is getting out of control. Thanks for sharing this info!

  4. @YUMMommy Good for you! Conscious spending is a step in the right direction for a debt free lifestyle!

    @Mommy Glow I know it's tough, but you tried and that is important! Keep trying--surprisingly sometimes those no's turn into yes's! Keep your head up!

    @Baby Shopaholic Maybe this post is just the push you needed to get back on track! If you are really having trouble with your debt and would like some help check out how CareOne can help!


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  6. Okay, these are GREAT tips!!
    I'm a slave to my credit card, and i really need to quit while Im ahead. *smh*
    Thx for this post, much needed.

  7. LOL's. Me make a budget and stick to it! I think I have tried that one, and every time I look up something goes wrong. It feels like each time I work towards having a savings my husband finds ways of spending money. I have sort of given up. Really!

    But great post, with wonderful tips on how to move forwards financially.

  8. This is great info, I am taking heed in the areas where I need to improve. There is always room for improvement.

  9. These are such doable and realistic tips...I think that is where I have fallen short because I set such a high bar and then give up when I don't make it. Thanks so much!

  10. @Jasmine: "DO-able" is the word of the day. It can be so hard when we set the bar so high, but making smaller steps can help with managing that. Keep on going, lady.


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