Personal sacrifices that can help you get out of debt

Smart financial moves to help you pay more than your monthly minimums.

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If you’re in debt and trying to avoid bankruptcy, there are sacrifices you can make to save up enough to pay more than your minimum monthly payments. For small debts, even an extra $50 a month can help you get the snowball rolling —but bigger debts will require bigger sacrifices.

5 sacrifices you can make to get out of debt

1. Your daily comforts

The little things you spend money on every month can add up, and cutting back can help you get out of debt. If you use the debt snowball method, even an extra $50 a month can help you get started.

2. Your time

Take a part-time job on the weekends or after work to earn extra cash — perhaps in a shop you love or a bar you frequent. If you cut out your gym membership in the last step, try walking dogs or babysitting young kids to get exercise instead. If mobility is an issue or you need to stay home, freelance online or get a part-time work-from-home job.

Also, take some time to re-evaluate your finances. See if you can cut down on health insurance premiums by getting rid of excessive coverage, save on your car insurance by switching companies, get by with a cheaper cell phone plan or renegotiate your salary at work.

3. Your possessions

A big lump sum paid to your creditors can help you cut down on the amount of interest you’re paying every month.

If your TV is more of a decoration than anything else, consider selling it for extra cash. Same thing goes for that guitar you never learned to play, ice cream maker you got as a wedding gift or corner of your closet full of clothes you never wear.

If your cell phone plan comes with a free or low-cost new phone every year, you can make some cash by selling it new-in-box online and keeping your old one instead.

4. Your vehicle

A car comes with its own recurring expenses like gas, insurance and maintenance that you could pocket if you lived without one. Assuming that your car is in good shape, you could also consider selling it and using public transportation to get around. Consider the following before you sell:

  • If you want to keep your car, you can drive for Uber or Lyft to make extra cash. Heard of Turo? You could rent your car for extra cash during the week with its service. You could even use Zipcar to rent a car when you need one.
  • If you do want to sell, think about the area you live in and see if it’s realistic to use public transportation every week — and if the cost of public transportation is lower than the cost of car ownership. Remember to factor in gas, insurance and maintenance.

5. Your home

If you’re in a lot of debt and the first four steps aren’t enough to get out, it might be time to consider downsizing.

If you rent, look into moving into a smaller apartment when your lease is up. If it’s OK with your landlord, you can also make extra cash by renting out your place on Airbnb on weekends and holidays while you crash with a friend.

If you own a house, consider selling if it’s more than you can afford. If your income is high enough to comfortably afford it once you get out of debt, consider renting your house out to a tenant and living in a cheaper house or apartment. If you go this route, make sure you have enough padding in your savings account to cover both your mortgage and rent if your new tenants miss a payment.

Getting out of debt based on your income and credit score

Debt consolidation loans.

If you have debt from several different lenders, a debt consolidation loan can help you manage your finances. Debt consolidation allows you to combine your existing debt into a single payment with one lender. In addition to simplified payments, you can save money by getting a lower interest rate when you consolidate.

Compare debt consolidation lenders

Updated October 20th, 2019
Name Product Filter Values APR Min. Credit Score Max. Loan Amount
4.99% to 35.99%
Good to excellent credit
$100,000
Get personalized rates in minutes and then choose a loan offer from several top online lenders.
3.99% to 35.99%
500
$100,000
Quickly compare multiple online lenders with competitive rates depending on your credit.
5.99% to 17.66%
680
$100,000
No fees. Multiple member perks such as community events and career coaching.
5.99% to 29.99%
640 FICO®
$35,000
A prime lender with multiple repayment methods.
6.95% to 35.89%
640
$40,000
A peer-to-peer lender offering fair rates based on your credit score.
3.84% to 35.99%
550
$100,000
Get connected to competitive loan offers instantly from top online consumer lenders.
6.98% to 35.89%
620
$50,000
Affordable loans with two simple repayment terms and no prepayment penalties.

Compare up to 4 providers

Before you sign up with a debt relief company

Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And they aren’t always transparent about these costs or drawbacks that can negatively affect your credit score. You might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.

Consider alternatives before signing up with a debt relief company:

  • Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
  • Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
  • Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.

Bottom line

If budgeting isn’t enough to get out of debt, it might be time to consider making some sacrifices. To get started, figure out how much money you need to set aside each month, and then start at the top of the list and work your way down to see what you can cut. Getting out of debt won’t be easy, but if you can avoid bankruptcy, the sacrifices will be worth it.

Picture: Shutterstock

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