How do I get out of debt and stop living from paycheck to paycheck?

Question

I’m in my mid-20’s…I have a car payment and pay insurance. I have rent (I live with two other people) and school loans. I’m in credit card debt up the wazoo and am making the minimum payments. I have to fill up my tank every week with gas and food costs me approximately $140 monthly. These bills cost me approximately $1900 monthly. I have a very small savings, but even putting away $5 or $10 is hard. I know I have made some bad decisions in regards to the credit cards, but now that I’m in debt, I’m trying to get out of it. I don’t spend much on entertainment cause I don’t have much left over. What can I do to get out of debt and stop living from paycheck to paycheck?

Answer 1

I sympathize with your situation. I graduated from college in 2007 and have student loans and credit card debt also.

Look at the credit card that has the highest interest rate and pay that one down first since it is costing you the most. Pay minimums on the others and put as much toward that one until it is paid off. You can also try to do a balance transfer to another card that has a lower interest rate.

Try consolidating student loans if you haven't already http://www.salliemae.com/  This is what I used.

Ways to help pay down debt:

*Sell your car and buy a cheaper one so you can eliminate that monthly payment. (not ideal, but it will help)

*Cut costs on food if possible. (buy in bulk, look at weekly ad and plan meals according to what is on sale, clip coupons

www.coupons.com

http://www.couponsurfer.com/

www.coolsavings.com

www.couponcabin.com

http://www.mysavings.com/  -this last site has many coupons and free samples. When you order the sample they usually send along coupons too)

*Get a second job

*Donate plasma (if possible) to make some extra cash

hope this helped a little

Answer 2

Debt is an issue that takes its toll on more than your bank account at times. Knowing that your income will not go far enough no matter what you do can be a source of anxiety. I know it was for me!

FIRST and foremost, do not charge anything more on your credit cards! If you ever want to make those balances shrink, obviously they need to stop growing. If you have multiple credit cards, pick out the one with the smallest balance and try to make more than the minimum payment until it's paid off. This will give you some sense of accomplishment and free up a little extra to attack the next one. Credit cards are likely your debt with the highest interest rate, so I would try and get that out of the way first.

Since you have no entertainment budget anyway, getting a second job might not be such a bad idea. The extra income could be devoted exclusively to paying down your debt and reduce the time it takes to get rid of it.

It seems you have a solid sense of budgeting already, and there's no magical cure for your problem. I would try tackling each loan individually by making more than the minimum until it's gone, and keep paying those minimums on the others so your credit rating doesn't slip.  

Answer 3

To tell you the truth, you shouldn't really be asking on yahoo. Find a finacial advisor. One thing i can tell you though is once you have your credit card debt payed, cancel them. Young adults always are in debt because of their credit cards. Until you are financially stable you shouldn't own a credit card. Debit card is the best thing for you. No credit cards.

Try not to eat outside too much, like once or twice a week. Try to buy vegtables and meats that aren't too expensive or are a special price and make your own food from a recipe that you know or you can always look on foodnetwork.com. The gas, i can't say too much because I don't know what your position. If you are renting or not. If it is a Suv or car. But from what i see, its most likely a sedan. Correct?

Try to avoid using your car as much as possible. Take the bus. Its cheaper. If not, try to carpool with a friend if possible.

If you want, you can email me at [e-mail] with more details about your position.

Hope that helps.

Answer 4

This is a complex issue and there are many steps to get out of it. Once you get started though, you will see that it isn't as hard as it seems.

1. Stop using credit for anything.

2. Write a budget in order of importance. Start by listing expenses beginning with living expenses (And that does not include satellite TV or large cell phone packages) then transportation expenses (sometimes selling an expensive car and buying a more affordable one is the best choice. insurance rates usually go down as well.) After living and transportation expenses comes the student loans and then finally the credit card debt. Be sure to figure in groceries, laundry soap, etc. Also give yourself a little elbow room by giving yourself an allowance for spending, cokes, clothes, movies whatever. Deduct the expenses from your income to see what is left over.

3. Trim expenses. Shop around for auto insurance. Change to a smaller cell phone package. Buy round steak instead of rib eye.  

4. Get out of debt. This is how you will stop living from paycheck to paycheck. When you owe nobody anything your wealth will grow incredibly. To get out of debt you need to apply all your extra money to your debtors. Line them up in order of smallest to largest and pay only the minimum on all but the smallest on this one you should hammer away at with all you can afford until it is gone then move on to the next. As your bills go from ten to nine to eight the motivation is indescribable.

5. Sell what you don't need. Put all the proceeds toward the lowest debt.

6. Earn more money. Take on an extra shift or a second job. Do odd jobs like lawn mowing or cleaning gutters. Again apply all this money to debt.

7.Once you are out of debt save for big ticket items. It is ridiculous to pay $1000 for a $600 TV if all you would have had to to is save instead of charge.

Remember fools pay interest, the wise earn interest.

Answer 5

Ok I think the best way to help you get out of debt is to only live off the bare minimums for a little while. Make a list of what you buy and spend *bills and food and clothes and extra activities, ect...* and put what you need on one side and what you can live with-out for a while one the other side and try to eleminate the most costing you can live with out. You might wanna leave a few things you can live with out on the list, that away you have a smaller chance of getting into a bad habbit of spending.

If you cut back on eating out, stick to generic foods*such as a loaf of bread for 79 cents and a small package of lunch meat for $2 and eat a  sandwiches for lunch some days, OR but some instant noodles, ect...*

You can try to lower the electric and water bill, ask the two other people to help cut back on the water use and the electric bill too, try not to buy anything you don't need *no shoe shopping or clothes shopping or anything* I would also recommend checking to see if you could possibly get a better paying job. If you want to go out and hang out with your friends try to recomend going to the park or somewhere that is free or cheap to go to instead of a bar or amusment park.

You get what I am saying? It will be very hard to do but anyone can do it...

Answer 6

I agree.  Your best option is to cut everything back on what you're spending.  Then you should speak with a financial consultant.  http://www.jacksfinancialconsultantlist....

Answer 7

Move back in with your folks so you don't have that rent payment.  Then put all the rent money to pay down your credit cards.

It'll suck for a few years but will get you out of debt.

Answer 8

Your bills are 1900.00 but you never mentioned about how much you make. Look at your credit card debt and if your debt exceed 10k I would suggest you get a consolidation loan so that will have you only paying 1 company at a fixed rate , or get with your creditors to set up  payment plans with your credit cards. But you have to call and ask. Also, shop around for insurance because sometimes you are not getting the best rates. If it's really hard, ask for a forbearance on your student loans to give you some breathing room. Normally they can do delay payment for hardship for about 6 months. Also, I actually took on a part time job along with my full time and took one bill and paid off one at a time. Its hard but it can be done.  

Answer 9

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Answer 10

Ramen Noodles.

Answer 11

join the club buddy. get 2 jobs, thats the only way.....and ramen noodles

Answer 12

Cut down food costs, especially if your eating out. Take a look at trying to save on energy bills. Turning off A/C when you leave house, and at night. If you have cable, cut your cable and just go with network stations, and maybe even your internet until you get more financially stable to afford such things

Answer 13

Credit counseling is the answer. Record and evaluate all expenses. Compare your WANTS vs. your NEEDS. Get all your monthly bills and income information and consult a counselor. They can help reduce the interest rates and consolidate some loans in to 1 payment. But you are the one that needs to take responsibility and realize that it will not be easy and yes, a second job may be necessary (and put all income from it toward bills) even if it's for a short time to try to get ahead. Good luck to you

Answer 14

make a budget and figure out how much money you make.

Then list EVERYTHING you buy, and don't lie to yourself.

Cut out what you don't NEED. what you need is food shelter, car, gas, heat.

If you don't have enough money to cover necessities then get a second job.

Next to get out of debt, call your debtors and talk to a supervisor. Tell them you are in over your head and need to start a plan to pay them back. They will help you set up a plan to pay them back.

It will take some time but you will eventually get out of debt.

Answer 15

The best option for debt trouble is negotiating your debts with your credit companies to keep the payments from swallowing all of your income. Typically, you have to get a counseling agency to call on your behalf. If you try to work with them yourself, many of them will not cooperate with you because you are not enrolled in credit counseling. Try http://www.womenindebt.info. Good luck!

Answer 16

I live the same exact way.  I found a way to make it though, but you may not like my suggestion.  My boyfriend of five years and I moved to a big city in our state where his mom resided.  With all three of us working we always have money.  With the way things are this day and time, moving in with someone is what it's coming to.  It really helps to split the bills with a roommate or family member.  Then you will find that you have money left over to save.  Or you could get a second job if you don't already have one.