Before getting started, I would like to disclose that this is not a personal financial advice. This is not an investment advice either. You should take the full responsibility for your action by yourself. This is also not a suggestion to avoid paying your financial debts.

Rather, all the guides below should be treated as educational material only. Feel free to do some experiments with them but do them with caution. Don’t forget to always follow your own common sense.

Tip 1: Stop the bleeding.

When you have already fallen to the financial debts, the first thing and the main thing you need to do is to stop the bleeding. This means to identify your biggest recurring cost, and focus the efforts to deal with it: stop it soon.

To do this you can start with building the notes or list for all of your recurring costs. Rank them in order from the largest one to the smaller one, and cut the top.

This is not easy, and this can be the most difficult tips. But, when you can go through this and stop the bleeding, it will make huge supports for your efforts to pay off your debts.

Tip 2: Learn to live frugally

At least until your piled-up debt was paid in half, or even better when you have cleared up all of your piled-up debts. Keep in mind that living frugally does not mean to live unhealthily.

There are many ways to live frugally but keep up with your health.

Some examples:

  • Instead of subscribing to a gym membership to do physical activities, you can do a morning run or morning walk several days in a week.
  • Instead of having dinner in a restaurant, you can cook it yourself, or ask the other family members to help to prepare it.
  • Instead of purchasing a luxury big car, you can purchase a smaller, more economical car.
  • Instead of trying to afford the bigger house, why don’t you move to a smaller house?
  • Stop and control yourself for the urge to buy new shoes, new gadgets, or any other new things unless the old one you have already completely broken

Tip 3: Do a side-job that helps

Look for a side-job which helps you to pay off your piled-up debts. Be sure about the time so it won’t conflict with your main job.

This does not mean to start a new business, though starting a new business is good, it’s not good when you’re still in financial debts. It will just add up the stress to your body and mind because new business takes times (even years!) to mature and fully support your financial life.

Tip 4: Earn more money by selling unused stuff.

You can do this through a site like Craigslist. Collect all the things you rarely use, never use, or those you don’t use anymore. Then, make an offer on Craigslist. Be sure offer them at a reasonable price.

 

Tip 5: Avoid buying new things.

This still relating to the first tip above. You should restrict yourself to buy new things you don’t need.

Even you think you really need that cool gear, try to delay it as long as possible to verify that you really need it. Consider alternatives before you buy it like borrowing it from families or one of your relatives.

Buying new things (especially a luxury one) should be on the last item on your priority list — at least until you resolved all of your debts.

 

Tip 6: Don’t liquefy savings or investments yet.

Focus on paying off the debts first. In case you already had some investments or savings, that’s great. Try to defend it with your best effort. This means, try your best to pay off the debts without liquefying them into a cash.

Consider liquefying them into a cash as the very last effort.

 

Tip 7: Delay new investment.

Based on my own experience, instead of putting cash for investment, I prefer to use it to reduce the debts as much as I can. But when you feel you had some more breathing rooms, feel free to add a portfolio to your investments.

 

Tip 8: Arrange better payment or installment plan – with your creditor.

This can be one of the hardest. But it’s worth to try to talk with your creditor or bank to arrange a better payment plan for you. A better payment plan can be longer installment term or lower interest on the installment.

 

Tip 9: Stop to add more debts consciously.

It is useless and not effective to pay off your debts by borrowing money from others. It will move you nowhere. It is just moving your financial debts from one to another place.

With additional costs and rates, you will end up with more pile-up debts. So, stop the urge to borrow more money right now.

 

Tip 10: Evaluate the way you spend

Evaluate your biggest recurring spending. Think again if those spendings were really important. Cable TV subscription, gym subscription, game subscription, and an online subscription.

Revisit them and cancel them all if possible (usually yes, except you’re under contract or the term of service did not allow it).

 

Tip 11: Replace credit card with debit one.

This will help you to stop spending when there is no more money. Unlike a credit card where you can spend even you don’t have money in the account, a debit one will restrict you to spend more when it is empty. Here is an inspiring news about people who cut out their credit cards. Click here to read it.

 

Tip 12: Build up the spending list and outsmart it

Write up the thing you need to buy for a month such: soap, shampoo, snacks, foods, etc. Then, subscribe or pay attention to any discount deals or promotion deals on the market, either online or offline. My wife is very smart to do this. I notice she is always able to get the things we need at a good price on a good deal.

If needed, follow the store’s social media accounts on Facebook, Twitter or Instagram to get the news and updates earlier.