Debt Management

One of the best New Year’s gifts you can give yourself is to get out of debt in 2025. It’s totally possible to achieve in a year’s time for many people. Here are some tips to help you spend less and pay down your debt faster.

Curtail Spending

It’s not helpful to get out of debt only to put yourself back in the hole by spending again. Naturally, you can’t cut back on necessities like groceries, mortgage, insurance, and such. But you can certainly curtail your spending in other ways. Here are some simple ideas. See which ones you might be able to implement in your life:

Avoid Social Media

Social media can be a positive thing. It helps some people feel less alone, or to instill a sense of community and togetherness. But there’s a trend these days to tout lifestyles through product promotion. You’re likely to spend more when you see the latest and greatest gadgets that influencers make look like the greatest thing since sliced bread. Sure, you’ve already got a perfectly fine can opener in the kitchen drawer, but now they have one that you just press a button and the can is opened! This is the kind of thing you can live without. Social media is full of temptations like these and for someone trying to get out of debit, it’s best to limit your time with social media.

Avoid the Sales

Each week, you may peruse your local grocery store’s sales flyer, planning your meals based on what’s on sale. But are you absolutely sure you don’t have plenty of food in the pantry and freezer already? A sale is great if it’s something you need, but you’re not helping your cause if you’re buying something just because it’s a few cents cheaper than usual.

Repair, Not Replace

Before tossing away things that are old or broken and replacing them with new items. Take a closer look and see if you can get by with it for a little while longer with a little bit of TLC. That pilly sweater can get revived just by running a razor blade over the pills. That torn pocket on your overcoat can easily be stitched up with very basic sewing skills. 

Look for more ways to cut your spending and you’ll find that you have more money left over to put toward paying off your debt.

Consider a HELOC

A home equity line of credit, available to those with sufficient equity in their home, can be used for anything, even if it’s nothing to do with improving your home. In other words, if you can get it for less interest than your debt loans, you could use it to consolidate your debt and be debt-free in 2025. Just bear in mind that you’ll need to pay off the HELOC as soon as possible.

Get a 401(k) Loan

If you have a 401(k), you can borrow against it, often up to $50,000. You’ll have about five years to repay it, and repay it you must if you’re to ensure a safe retirement. Just remember to never borrow more than you need, because this is about getting out of debt, not finding more ways to be in debt!

Switch Services

Companies like to hike up prices for customers they’ve had for a long time. As soon as you see a rate going up, start looking elsewhere. For example, if your website hosting service is going up to its regular rates, you can easily switch things to a new host and get introductory rates. 

Take an hour or two and research balance transfer credit cards. You may be able to get an interest free credit card for a year, which is a decent amount of time to pay down the balance on that card. Just be sure not to keep charging on the card. You want the balance to go south, not north.

Take on a Side Gig

With just a few hours a week, you can work a side gig and put all those wages toward paying down your debt. Side gigs are abundant on the internet. Some of them don’t even require you to leave the house. Every extra dollar you can put toward your monthly debt payment is an extra dollar you don’t have to pay interest on.

Make Bi-weekly Credit Payments

Have you ever heard of that strategy where people pay their mortgage off early by making two payments each month instead of one? Well, the same “trick” is effective for your credit card debt. There’s no law saying you can’t make payments before your bill arrives or make payments twice a month instead of once a month. The earlier you pay, the less interest you’ll end up getting stuck with. And again, if you can add an extra buck or two to each payment, that will pay off in the long-run by bringing that balance down.

Trade High Interest For Low

If you have a number of high interest loans, look around and see if you can get a cheaper loan rate somewhere else. Then you can get the new loan and use that money to pay off the high-interest loan. At least you’ll be paying a lower interest rate, which can help you to get out of debt faster.

Sell Items You No Longer Use

Another way to get out of debt in 2025 is to sell things you no longer need or use. You won’t be joining the billionaire’s list this way, but it will generate some extra cash for you to put toward your debt. There are lots of online marketplaces to choose from, like Facebook Marketplace, Poshmark and even Craigslist.

The key to getting out of debt is two-fold. You need to pay more toward debt and spend less. Hopefully, you’ve gotten some good ideas here that you can easily implement in your household. For more helpful information about handling money, consult with your CPA.

by Kate Supino

As a small business owner, you know all too well that it is important to keep track of every dollar.  Along with paying any employees you may have, you also must have money available to purchase new equipment, pay for insurance, make improvements to your building when needed and so forth.  Unfortunately, there are almost always times when unexpected expenses arise at the worst possible moment, resulting in you taking on various amounts of debt.  While initially you figured it would be no problem to get the debt paid off, the result may now be that debt  is hurting your business.  If you've had enough and are ready to pay off the debt associated with your business, here are some of the best ways to eventually become debt-free.

Avoid Predatory Loans

Depending upon your situation, you may be needing cash very quickly.  When this happens, some small business owners turn to predatory lenders such as payday loans, title loans or high interest installment loans.  While it's true you may get some quick cash, it will come at a price that is far too steep.  Since loans such as these come with interest rates of as much as 300% in some cases, you are actually only compounding your debt problem.  Since there are better options, avoid these loans at all costs.

Use Economic Stimulus Checks

With the current pandemic crisis, small businesses are finding themselves hurting more than ever in many cases.  However, if you have taken on additional debt in an attempt to get through the hard times, don't forget that the federal government is offering help in the form of economic stimulus checks. You may be able to use this money to pay off some of your most pressing debts, including those with the highest interest rates.

Cut Your Expenses

While you may think you have already cut your expenses all you can, chances are that once you reexamine your budget there are a few more cuts you can make.  In some cases, this may involve making tough decisions such as reducing employee hours or even laying off some employees.  Another way to cut your expenses may be to renegotiate with your suppliers to see if you can get lower costs on certain items.  If you've been a long-time customer who has always paid on time and is on good terms with your supplier, an honest talk may produce lower costs. Just make sure you avoid any agreement like delaying payments until a later date. It may feel like it's helping now, but that’s just another form of debt.

Put the Credit Cards On Ice 

While credit cards can sometimes be a lifeline to small business owners, they can also become a way to take on too much debt over a period of time.  Therefore, you may want to consider putting your credit cards in storage for a while. Tucking them away in a safe drawer means they’ll be out of sight, out of mind. However, this by no means implies you should find a pair of scissors and start cutting up all your credit cards. That could hurt your credit score. Instead, just let them take a break for a bit, which will allow you to see just how many unnecessary expenses you have been incurring and stop the financial bleeding.

Take Advantage of Low-Interest Credit Cards

While you are taking a break from using your credit cards to make purchases, it may be a good idea to see if you can transfer balances from cards that have higher interest rates to those with lower rates.  Although you'll still have debt that needs to be paid off, you won't be getting charged as much interest as before, making it easier to get the debt finally paid off. 

Have a Conversation with Your Creditors 

If you have creditors who are waiting to get paid and you know it may be difficult for you to do so under the current terms and conditions, don't be afraid to have an honest conversation with your creditors.  Since the goal of creditors is to simply get paid in a timely manner, most will likely be willing to work out an alternative plan with you until your financial picture improves. If you plan to try this, always make sure you do so before your payment is late, since creditors will be more willing to negotiate with you before the situation deteriorates.

Take a Second Look at Your Budget 

When you want to pay off your business debts, go back and take a second look at your current budget.  This should be a top priority for you, especially if it seems like the accumulation of debt has become a monthly problem. For example, if your revenues have decreased due to the pandemic or other reasons, you'll need to make sure you allocate enough money to continue paying rent, utilities, employee salaries, and other key expenses.  Once you can create a new budget that more accurately reflects your current situation, there may be some newfound money to put toward paying off debt.

Always Pay More than the Minimum

If you wonder how you accumulated so much debt in a short period of time, chances are one of the reasons is that you were only paying the minimum amount on your credit cards. While it's true you were making payments, the reality is that interest continued to accumulate each month, driving up your monthly payments.

Evaluate Chapter 13 Bankruptcy

While it should be used only as a last resort, filing Chapter 13 bankruptcy could actually benefit you in some ways regarding the paying off of debt.  Though it would involve hiring a bankruptcy attorney to help you through the court process and establishing a three to five-year repayment plan with creditors, filing Chapter 13 would allow you to retain control of your property.  However, try all other reasonable methods to pay off your debt before pursuing this option.

Though accumulating debt is always much easier than getting it paid off, following some of the above-mentioned tips can allow you to see some light at the end of the tunnel.  By using some common sense and good judgement about your finances, chances are your business could be debt-free sooner than you might think.

Being able to borrow is a huge benefit when you need extra help, but debt is a huge burden that is very hard to dig your way out of. The problem is that debt creeps up on you over time. No one purposely goes into debt for tens of thousands of dollars. But little by little, it’s very easy to wind up owing so much that it’s almost impossible to see your way out of debt. Don’t be discouraged if this has happened to you. It’s happened to many good people throughout time. And there is hope. At first, it will feel like you’re just using a teaspoon to dig your way out, but over time and using the strategies below, you’ll be getting rid of your debt with huge shovelfuls.

Review the Interest You’re Paying on Debt

Interest is the biggest obstacle to paying down debt. To dig your way out, make a list of all your loans and credit cards and find out how much you’re paying in interest on each of them. To do that, dig out the disclosure papers you got when you first received your credit cards in the mail; they’ll tell you exactly what your interest rate is. Seeing this all lined up in black and white should give you extra motivation to pay off that debt. If you can’t find the disclosure docs, just examine your statements or call up each card company to find out.

Put Your Debt in Order of Interest Rates

Next, put numbers next to each debt in order of which one has the highest interest rate down to the lowest interest rate. This will tell you which debts are the worst and which demand your immediate attention. You don’t necessarily have to pay off the high interest cards first; just be aware of which cards are doing the most damage.

Pay Off at Least One Debt

Financial pundits will tell you to start paying off debts in the order of the highest interest rate. That makes sense as far as reducing the amount of interest you have to pay going forward. But it doesn’t make sense in terms of your own psychology and satisfaction. They key here is to stay motivated, and for that, you need to see some instant results. Take the lowest debt amount and pay that off. That will be the one you can most afford because it’s the smallest. If you can’t pay it off right now, at least chip away at it. Pay off as much as you can now, and then the next paycheck you get, pay off the rest or as much as you can. Getting rid of one entire debt—however small—will motivate you to keep paying down your debt, one by one.

Put That Card Away

Once you pay off once credit card, take it out of your wallet and keep it at home, tucked away. It will be there for an emergency, but you shouldn’t consider using it again for everyday purchases. If it’s not in your wallet, you can’t use it impulsively.

Make Double Payments on The Rest of Your Debts

Making minimum payments each month may feel easier on your budget, but it won’t help you dig out of debt. Commit to making double or at least one and a half times payments on each of the rest of your debts. For example, if your minimum payment is $25, pay $50 or at least $37. Do this every month going forward and you’ll see your debt going down much faster.

Ask For a Different Due Date

Most people can’t handle a huge cash outlay all at once for debt payments each month. It often helps if you can stagger your payments. If you have two payments that always come due in the same week, call up one of the creditors and ask if you can have a different due date. Most credit card companies are willing to help in this regard.

Pay Twice a Month

Another way to get relief from debt is to make two payments a month. Credit card companies don’t have a problem with this strategy and you don’t need permission to do so. Just log in twice a month and split your payment in two parts. For instance, if the minimum payment due is $25 and you want to pay $50, log in and pay the $25 by the due date, but then log in again and pay another $25 two weeks later. This will reduce your interest charges slightly and also lessen your cash flow burden by staggering that $50 payout.

Review Your Personal Loan Options

Another option for digging your way out of debt is to take out a personal loan. If the personal loan interest rate is less than your credit card interest rates, you’ll be making a positive step forward. Use the personal loan to pay off credit card debt and then use the same paydown strategies mentioned above to pay off the personal loan over time. If you can’t qualify for a personal bank loan, try a collateral loan against your vehicle. If that isn’t viable, consider a loan from a parent or close relative. Be sure to seal the deal with an official promissory note and, above all, make good on all of your payments so you can preserve your good relationship with your relative.

Use Your Tax Refund to Pay Down Debt

Instead of spending your tax refund on other things, use it to pay down debt. The peace of mind in knowing that you no longer have a hefty credit card debt far outweighs the short-term joy of having a brand new plasma screen in your living room.

Digging out of debt can be done. Others have done it and they may even have been in a far worse situation than you. Just keep at it and don’t let your motivation wane. Eventually, you’ll be debt free and you’ll be able to sleep better at night.

At first glance it might seem more than just a little odd that a large number of debtors surveyed were reluctant to take advantage of alternative “non-government” financing options—i.e. refinancing their student loans for a more attractive interest rate. This begs the question: why won’t a larger number of student loan debtors take advantage of refinancing alternatives that would lower their effective interest rate?

A poll has shown that a primary reason debtors are not refinancing and securing lower interest rates is the attractiveness and flexibility of the government’s “income-driven” repayment option. Apparently, many student loan debtors are fully aware o f their options, but have opted out of their refinancing opportunity.

According to Bloomberg, “the debtors who have opted out of refinancing say that they don’t trust the banks. And besides, a lower rate isn't always worth giving up flexibility.” To quote an interviewee: “Going to the private sector for financial advice, especially with student debt, feels fraught,” he explained. “There aren’t government resources that could clearly explain the proper way to manage student debt that would be more trustworthy.”

Also noted by Bloomberg, according to a poll of 1,001 American student debtors, 20.1 percent pointed to the federal loan option that ties payment amounts to what they're earning, and they didn't want to risk losing it by refinancing. Out of the total number of interviewees who had already refinanced their debt the majority, 39.4 percent said they weren't sure that a low interest rate was worth the trade-off. In other words, they did not want buyer’s remorse that would come from switching to a lower rate but losing the government’s flexible repayment options that keep monthly payments manageable and relative to income.

Apparently, the perceived value of the “income-driven repayment option” is more appealing to a significantly larger number of student loan debtors.

All too often anyone you talk to who has student loan debt will tell you the same thing: they feel that they are making little to no progress in paying this debt off.

And it’s understandable. It’s easy to feel like you’re spinning your wheels when dealing with the same debt over and over again every month. There are many who are living paycheck to paycheck, barely able to make ends meet, having to give up “a life” for the sake of scratching out enough to make a debt payment. It can be pretty demoralizing when making a meager student loan payment makes a next to nothing impact on the outstanding balance. It’s a sad story to tell when you take into consideration the fact that being saddled with drowning student loan debt was the price to pay to get an education in the hope of having a prosperous and productive future.

The purpose of this article is to shed some light on things you can do or take advantage of that will help accelerate your debt payoff or lower the amount of your monthly payments.

Student Loan Refinancing: Typically, the interest rate that student loans carry is at the high end of the interest rate spectrum. Refinancing alternatives are geared toward replacing high interest student loan debt with rates that are much closer to current market rates. Over the long term this alternative can have a significant impact on how quickly your student loan can be paid off.

Student Loan Consolidation: As noted by StudentAid.gov, consolidation can simplify loan repayment by combining multiple loans into one bill and can lower monthly payments by giving you up to 30 years to repay your loans. You might also have access to alternative repayment plans you would not have had before, and you’ll be able to switch your variable interest rate loans to a fixed interest rate. However, there are some potential downsides to consolidation that need to be taken into consideration, as explained in this quote from HowStuffWorks:

• You lose any grace period built into a loan structure if you consolidate too early. Let's say you decide to lump all your loans together the month after leaving college. The interest rate drops a tiny bit, but before your resume even reaches prospective employers, you have to begin paying your loans. Remember, consolidation resets the loan clock -- sometimes for the better and sometimes for the worse.

• Certain loans have interest benefits within a tax structure. When you consolidate a loan, you might lose those benefits, as well as the grace period, if consolidation occurs early. This means you have to do your homework and read the terms and conditions of the loans that will be consolidated. The terms will explain if there are any special benefits that might be lost if you consolidate the loan.

• You may adversely affect your extended repayment options.

• You can only consolidate student loans a limited number of times -- usually only once.

Alternate Repayment Plans: Under the Obama Student Loan Forgiveness Program, there are five variations of non-standard repayment plans available that are geared toward making repayment of the student loan more affordable for the borrower. They are as follows. See more at this article at LifeHacker.com:

• Standard Repayment

• Graduated Repayment 

• Income Contingent(ICR) 

• Income Based(IBR)

• Pay As You Earn(PAYE) 

Private Student Lending: As noted by Forbes, a financing alternative typically reserved for the graduate level student is something called Private Student Lending. Private student lending is financing for graduate school made available through private banks and lending institutions. One of the major advantages of the private lending approach over public lending alternatives is that interest rates available through the private lending system can be dramatically less than what equivalent Federal loans carry. One of the major drawbacks of private student lending however is that there are fewer repayment options to choose from (less flexibility) than through the public federal lending system. In addition, many private loans have variable rates, which means your interest rate could go up and down with the market.

Home Equity Line Of Credit: The typical scenario with a Home Equity Line Of Credit alternative involves a homeowner parent seeking to assist child student with paying for the student’s education. With this type of arrangement the parent takes out a line of credit with a lending institution that can be drawn against at any time to pay for the child’s education expenses. With most lines of credit, payments are discretionary with interest accruing on the line of credit’s outstanding balance. A home equity line of credit can be put in place prior to ever having incurred any Federal student loan debt (i.e. upon graduation from high school) or the line of credit can be used to pay-off an existing federally funded student loan balance.

Student Loan Forbearance and Deferment: It is possible for a struggling student to qualify for temporary relief from having to make any student loan payments. Student loan payments are put on hold. However, this alternative is less than ideal and leaves the borrower in a worse situation than before because interest will continue to accrue on the unpaid balance, unless you’ve been approved for a deferment (more on that in a moment). Thus, forbearance increases the amount you owe unless it is possible to obtain an interest-only option.

However, the federal government also offers interest-free deferment options, which means no interest will accrue during your deferment period and your debt will not increase. A borrower, however, must apply for this deferment option and meet one or more requirements.

If you’re having trouble making payments, the best thing to do is to always contact your lender and find a sensible, temporary solution until you can begin payments again--either secure a deferment or forbearance. It is better to discuss the problem with your lender rather than avoiding any communication and letting your loan payments fall delinquent.

On that note, always make sure your lender has your latest contact and address information. If you fall behind on a loan payment without realizing it--i.e. you had to cancel a debit card because you lost it and got a new card, but forgot to update your student loan account with your new payment information--and if the lender is unable to contact you as payments become delinquent, they might immediately place your account in default because 1) you are not making payments and 2) they no longer have your most current contact information to resolve the late payments, which poses a big problem for them.

If you take more than you make, you may have find yourself with more debt than you know what to do with.

Don't feel bad. It happens easily and can sneak up on you. There are so many things to pay for: car repairs, food (especially growing costs if you have a family), mortgage, utilities, taxes, classes, memberships, entertainment, gas, insurance, more insurance, medical expenses...and it seems to snowball doesn't it?

And it happens to the best of us. It tends to snowball right onto credit cards and payment plans you've worked out along the way here and there.

Here's some help you can implement today. We've provided you with some practical financial ammo to help you get on top of paying for it all. Most of all, this is a way to sleep easier and get free of debt.

1. Get real about your situation.

If you've been ignoring debt, now's the time to face it. Writing it all down and adding it up would give you a number you may not be ready to stomach but, it's the first step towards attacking your situation.

• Write down everything you owe as of this very moment. Even your bills that aren't debt necessarily but, you owe on a monthly basis like a utility.
• Take solace that we're showing how to break this big number down into realistic nuggets that help you easily knock out your debt for good.

2. What debt costs you the most?

There are a couple of ways to determine where to start. Picking out the card or debt with the highest interest rate is the best way to go about things because it is costing you the most money in the long run.

But for some people though, they need a sense of accomplish to grease the wheels of getting out of debt. So you might want to look at what debt might be the easiest to take out first

• Once you've decided which debt you're going to attack first, figure out how much extra you can pay in addition to your monthly payments.
• Then keep making minimum payments on the rest of your cards.
• Now that you've wiped out one debt, take that money and apply it towards the next debt you want to get free from.
• Keep repeating this until you're free of debt. Don't lose heart. It starts out slow but every time you pay off one debt and put it towards another it starts paying off faster and faster.

3. Save first.

It's great that you have a plan in place to start paying off debt. But here's where most people's plan falls apart:

They have nothing saved. It's tempting to think saving money should be something you do after you've eliminated your debt. Not saving though can cause you to be right back in the same situation you are now. See if this sounds familiar:

You have a plan in place for paying off debt. You have a solid tight budget for making sure you get there. And then the car doesn't start. It gets towed to the shop and it's going to cost about $1000 dollars to be repaired. Because you don't have savings to cover it, everything you are doing to stick to your budget and knock out your debt completely unravels.

• Make more than you take. You have to make enough to pay all your bills and put money towards an emergency fund.
• Look at every cost you have and see what you can live without. Cable is always a good place to start.
• Get a second job. Deliver pizzas if you have to. Or use your experience to provide consulting to companies that could benefit from your expertise.

4. Pay with cold hard cash.

Paying with cash eliminates some anxiety by taking the guessing game out of what's in your account. Paying with cash makes it easier to balance your checkbook. And if you have your cash budgeted out, you know you have the money to pay for what you're buying.

Plus, it can be a confidence-builder by paying for things in cash. Cash sends a stronger message to your subconscious about your ability to manage your money and build sustainable wealth.

You can do it!

The most important thing you can do when you are attacking your debt is to not give up no matter how big or how many times you slip up. Keep going; you'll be glad you did.