How to Get Out of Debt: Step 4 – Find Ways to Cut Back & Earn More

Corey —  March 24, 2010

       This article is the fourth in a series on how to get out of debt. If you haven’t already, you should check out the previous articles:

Step 4 – Find Ways to Cut Back & Earn More

       Once you’ve created a budget, you have a powerful tool to propel you out of debt. By looking at where your money is going, you can target areas to cut back. First, you can look at your biggest expenses. Finding ways to cut back just a bit (percentage-wise) will give you a large return on your effort. Saving 10% on your rent or mortgage payment will provide you with more extra money than saving 10% on your grocery bill. That’s not to say that the latter is not good, but going for the biggest wins first will help you get the best return on your time.

       Next, you can look at the small expenses. Where are the little leaks that are sinking your financial boat? Five dollars here and ten dollars there can add up to a significant sum by the end of the month. Pinpoint a few of your small expenses to target at first. You’ll soon plug all the holes in your boat.

       When you’re prioritizing the areas of your budget where you’ll cut back, don’t ignore the personal value you receive from each expense. You’ll find greater success by attacking the items you don’t enjoy very much rather than depriving yourself of small things that make you happy. For example, you’ll feel more satisfied by lowering your tax bill than you will by giving up sweet tea and drinking only water. (I bleed sweet tea so that’s my example.)

       Finally, find ways to earn more money. If you can take more hours at work or get overtime, that’s a good way to grab some extra cash. Get a second job, sell your stuff, or start your own side business. You don’t have to completely change careers to earn more money. Yes, you’ll have to give up some of your personal time. But if you really want to get rid of your debt, you’ll be well served by both cutting back and earning more. Combining those two strategies is like fanning the fire. You’ll burn more debt away in a much shorter period of time. (The same could be said for dieting and exercise. You lose the most weight by doing both.)

       What do you do with this extra money you find? You’ll first build your savings (so you don’t have to go into debt again). Then you’ll attack your debt aggressively. Every extra dollar you can get will bring you closer and closer to your goal. Be sure to check out the next article to find out why you should build your savings before paying off your debt.

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       Let me know how you’re going to cut back or earn more in the comments below!



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

6 responses to How to Get Out of Debt: Step 4 – Find Ways to Cut Back & Earn More

  1. Good advice on cutting the big expenses like housing. If the big expenses are untouchable, we can only get so far with budgeting.

    The other thing is that something as significant as housing has other expenses attached to it–utilities, maintenance, repairs, furnishings, etc, that are comensurate with the house. So by cutting a single large expense, others will come down with it.
    .-= Kevin@OutOfYourRut´s last blog ..Majoring on the Majors by Learning to Say NO =-.

  2. You’re exactly right about the big expenses, Kevin. When we cut back on those it’ll often have rippling effects on the rest of our budget. And while most people don’t want to admit it or do it, cutting back on housing is probably the quickest way to make your budget work. Same goes for auto, food, entertainment, and shopping/clothing – some big areas for some people that are taking up huge parts of their budgets and keeping them poor or living paycheck-to-paycheck.

  3. As far as earning more, I am making myself more available for music gigs and selling a few items. To cut back, we recently changed cell phone plans and internet providers. I also joined a newly formed penny pinching group at our library to learn from others (this is a thrill for me, I know I am crazy!). I am looking for other ways since I have bigger plans for our hard earned money! God bless.

  4. As far as earning more, this is a great choice…finding extra work can accelerate your speed at removing debt…I just took a second job that will bring $400 a month…glad to be making progress.
    .-= Ken´s last blog ..Friday Findings =-.

  5. @Donna: Those are some great ways to earn more and cut back. Using your talents and skills is a good way to earn some extra cash. I really like the idea of a penny pinching group. A group discussion about saving money will provide you with more and better ideas than you can come up with on your own.

    @Ken: An extra $400/month will really help to knock down your debt quickly! That alone would help you pay off nearly an extra $5k a year. Keep up the great work!

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