How to Be Debt-Free With the Money You Make
Getting out of debt does not necessarily require an increase in your income. If you have an income above the poverty line, this should be enough to eventually be debt-free. You just need to adjust the way you spend the money you make so you can handle all of your bills and have some extra to put toward debt repayment.
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Choose Affordable Housing
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The biggest expense for most households is housing. If you rent your home, consider whether you could move to a smaller home in your neighborhood or a less-expensive home in a different part of town. Also consider whether you could save money on transportation by moving closer to where you work, shop or frequently drive to. If you want to keep living where you are, consider whether you could rent out a spare bedroom to make your housing more affordable.
Sell Unneeded Items
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Some of the purchases you have made in the past might not be strictly necessary, and could be costing you now as well. For example, if you purchased a new vehicle and are making large monthly payments on it, it might be time to cut your losses. Sell that car and get a less-expensive used car, which will significantly reduce or eliminate your car payments. You can also sell any expensive items, such as electronics, jewelry or furniture that you do not really need. Use the proceeds from this to pay off some of your debt.
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Live Within Your Means
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Make a balanced household budget that allocates the money you make among all of your basic expenses. Be deliberate about your purchases and only buy things that you can afford right now. Using credit to support a lifestyle beyond your means will just make your debt problems worse. Some areas of your budget to pay special attention to include your entertainment, pocket money, eating out, groceries, clothing and travel. As you reduce your spending in these areas, you will find yourself with enough money to meet all of your needs.
Make Extra Debt Payments
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Whenever you are able, pay more than the minimum on your debts with the highest interest rates. Doing this will not only help you pay off your debts more quickly, but also reduce the amount you spend in interest. You should not only use leftover money in your monthly budget to make extra debt payments, but also use any windfalls you receive. Your holiday bonus at work and your tax refund are two sources of money that you can put toward debt repayment.
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