Everyone wants to get out of debt, but few know how to tackle this challenge successfully. With hundreds of finance websites, budgeting strategies and money management suggestions floating around the web, how can you know which ones are truly worthwhile and which are just a waste of time? To prevent you from wasting time and to help you get out of debt, I’ve decided to share some of my favorite tools with you. I hope that you find them useful for saving, budgeting and reducing your monthly expenses so that you’ll soon be well on your way to debt-free living.
The first thing that you must do before figuring out how to become debt free is to realize that it is possible to do it, with just a little bit of work and sacrifice. One of the easiest ways to see the possibilities is to use Mint.com’s calculator that shows the value of reducing or foregoing expenses. In short, the goal of this calculator is to help you realize how much you’ll save if you just cut back on a few splurges. If you spend $30/month on gourmet coffee, for example, the calculator will tell you that by foregoing this expense (and, let’s say, brewing your own coffee), you can save $360/year, which translates into $3,600 over 10 years. Not only does that sum translate into a not-insignificant amount that you can use for retirement, weddings or other future expenses, but the calculator then estimates how much you could earn with a potential rate of return of 8%, for a total sum of $5,525 in ten years. If you think that cutting back on your small splurges won’t make a difference in your overall debt, this calculator will make you think again.
Even if you’re not willing to cut back on all of your indulgences, you can also find ways to save on necessary items. Spending less means that less debt will accrue and that you may even have extra money to start paying off your debts (or to save if you aren’t currently in debt). My favorite tool to help people save money on regular expenses is anything from BillShrink, and specifically their gas calculator, which will tell you exactly where and how to fill up in order to spend the least. You’d be surprised at how much you can save at the pump with a bit of forethought.
Simlifi also has a great tool to help you determine how to reduce your debt. The setup takes a while, but at the end, it will be worthwhile. If you have questions, the site has an easy video to explain how to input your information correctly. Once you’ve reduced/eliminated your debt, you can find other cool tools about how to manage your finances directly on the site.
Likewise, if you’re ready to start managing your finances on your own, you can do it easily (for free), by using an Excel spreadsheet on your personal computer. Microsoft offers dozens of free budgeting spreadsheets that can help you keep your finances in check, so that even if you’re not a computer whiz, you’ll be able to put in your information and have it calculated for you.
Of course, there are thousands of other financial tools that can help you get out of debt if you don’t like the ones I’ve suggested. When looking for one that will better suit your needs, just make sure to find something that sets reasonable goals and offers encouragement – the right financial tool will make getting out of debt seem doable instead of depressing.