I recently had the opportunity to talk with a friend who took a very smart, but different approach to paying off debt.

His debts totaled about $14K and was diversified between a car loan, line of credit, school bills, and medical bills. He did not have a credit card, and still does not due to his lack of interest in them. This does show how ever that credit cards are not the only way of creating overwhelming debt.

As explained by himself, the way he got into debt is very similar to the way I got into debt. Instead of using a credit card and increasing the limit he used his personal line of credit loan. He also was paying for schooling out of pocket, and did not take out any loans. His auto loan was the biggest expense of them all, originating at $8,000 dollars out the door. With a 10% APR he was looking at $2,199 extra cost in interest. A car loan that was going to cost him $10,199 in the long run was weighing down on him.

What steps did he take to get rid of debt?

First off he sold his car. This is something none of you babies would do, and even myself wouldn’t do (notice how i did say COULDN’T) I feel strongly that i need my car, and i am sure all of you do to. He obviously felt differently. He got rid of a major portion of his debt, just with this one step. As mentioned before, by paying off his car loan he avoided paying $2,200 extra in interest. So i think this was very smart on his part. He can regroup, save up, and buy a different car with a better APR. (now that he knows me and has access to my financial wisdom!)

Secondly, he talked with debt collection agents. When the rest of the world is ignoring debt collectors, he had the brains to talk to them. This was a huge step for him paying off debts that were overwhelming. He spoke with a debt collections agent and was able to settle some of his debts with 50% off his original amount. He did this with just a few phone calls, and promising to pay a certain amount each month. He constantly checked in with the agency and made sure they knew he was actively paying off the debt. This scored him some points and they were able to settle with him for much less that if he ignored them. If you have bills you can not pay, the worst thing you can do is default on it. It is much more beneficial to call up the lending company and ask some questions. Ask how they can help you. Let them know that you can not pay the full amount but that you do want to pay off the debt. Ignoring debt is the number one way to ruin your all important credit score, and rack up late fees, finance charges, APR increases, ect ect.

What made him take control of his debt?

He started being faced with bills he wasn’t sure if he could pay or not. He admitted that right before he sold his car he could not make the monthly minimum payment. That was the main reason he sold his car. “It was like i could never get out. The only way out was to make some kind of payment, but i could not make the minimum.” he said.

Before his massive debt payoff and consolidation his credit score was better than average. Ranging from 700-750. After the massive pay off, closing of a few accounts, his score is now averaging 600-650 but it is on the rise.

This 20 something paid off a total of $8,350 worth of debt using methods not commonly seen. Not everyone will agree with these methods. I know i don’t expect you to sell your car, but if you can not make the monthly payments, consider it.

He is now down to school tuition and medical bills that have no interest and working his way back to the top. He is becoming debt free and educating himself financially, starting to save, invest, and be more aware of credit cards, loans, APR, and how credit scores affect total cost of something.

I would say we all have a lot to learn from this individual. I know i do.

When you NEED money

A lot of people I have been talking to recently have been criticizing the fact that I cut up my last credit card. “What if you need the money?” they say. I respond with “There are a lot of places I can get money if I absolutely have to.”  For some reason, they cannot think of any. Here are places I go for money Before dipping into my credit card.

One place to start off with is Selling Belongings. I typically only do this when I am in a jam. The end of the month is near and I forgot a bill, or an emergency came up and I needed money fast. I can usually get away with selling something I own,   a book, video game, DVD, sports equipment, ect ect. Selling something will also show others you might ask for money, that you are in a tight spot and serious about getting out. Would you want to loan someone $500 who has 2 big screen TVs, an Escalade with Rims and every DVD on the planet? No, you would expect them to sell off some of their stuff before they asked for money.

The second option of getting money fast is returning something recently purchased. As mentioned in other articles, this is a fast way to accumulate some cash, if you bought with cash.

Dip Into Savings-Not such a good idea. If you have emergency savings, yes dip into that, because that is what it is meant for. If you only have money put away for a House, College, Kids, ect. I would avoid dipping into accounts like that. Doing things like this is a slippery slope, it makes it too easy to do it again and again.

I would next go to family or friends and ask for a loan. I know it can be hard asking people you are acquainted with for money, but they will most likely be the ones to help. For some people asking for money is easy, for others it is a pride issue. I on the other hand do not like the feeling of being a burden, so I avoid this as much as possible. The good thing about asking friends or family for money is they typically do not ask for interest in return, unless of course they are Loan Sharks. If that is the case, get some better friends. Some other benefits of borrowing from your family is that the loan will not show up on your credit report, it will not affect your credit utilization rate; you will not get charged late fees unless you belong to a mafia family. This clearly makes this option the most beneficial.

I generally buy goods and keep them for as long as possible or never sell them at all. I do this because items rarely hold their value for long periods of time.  I try to get the most of my money out of an item. When you go to sell an item, you will typically get about 50% of retail price. Most individuals tend to value their property more than others.  Let’s say you pay $100 for an item, you won’t want to let it go for less than $80, but the truth is most people would expect buy it for about  $50.

I sell items when I am in a jam and need the money. It hasn’t happened a lot but I know we all have these stories. Garage sales are a great way to sell possessions. I am constantly surprised at what people will buy. Selling items using a local classifieds is another option. Sites like www.craigslist.com, www.ksl.com, and www.ebay.com. I generally only sell items I know that I can get back when I have the money. I recently sold my Xbox 360 because I know I can always buy another when I am in a better financial position. (or when the new Call of Duty comes out ).

If you buy something and it doesn’t turn out as high of quality as expected or not what you needed, try to return it first. If that option is out, try selling it.

If you made a big purchase on credit, such as a TV or furniture, try to return it. Scrutinize your purchase, do you really need this? If not return it and feel good about not owing that much more in debt.

I love exploiting side jobs to make a little extra income each month. I set up earning budgets on my Mint.com account to keep myself motivated to earn money in each category each month. Side jobs that create revenue can be used to pay off debt! This is why i continue to work random jobs, perform strange off beat tasks. If you made $200-$400 extra a month you could be on your way to being debt free in no time!

1. Donating Plasma- I know this is not glorious (neither is being in $10+k worth of Credit Debt!!), and will not work for everyone.  For those of you who are not afraid of needles it is a great way to boost your income $250-$300 more a month for just 2 hours of your time 2 times a week.  For some reason people look down on this option of creating revenue. They think it is essentially selling bodily fluids, when really it is a Donation. They only reason people are compensated is because of the time it takes to perform the donation, up to 3 hours. Donating blood goes very fast, hence no compensation. So essentially you are being compensated  for the time you spend waiting, and donating.

Find a Donation Center near you for more info. Here are some Plasma Donation FAQs

2. Mowing Lawns- Sure it is mostly performed by younger kids to teens but i think its a great way to increase income. I get great exercise, fresh air, and sunlight. Depending on how good of a job you do and what services you offer (weed pulling, trimming, or edging) you could make decent money in an hour. Even doing one lawn a week for $25 is an extra $100 dollars a month.

On the contrary, if it is winter time and you live in a snowy area. Shovel Walkways for a little side money. If you have a snow blower, even better. Ask your neighbors before you do this.. Don’t just do it and expect to get paid!

3. Walking Dogs- I personally tried this with little success, but i tried during economic hardships when people were less likely to spend money on such services. I also failed to market myself as well as i should have. I did get calls, meetings, interviews, and a few sessions before it fell apart. Charging $10 an hour is a great price for both the customer and yourself. Walk 4+ dogs in the same hour to stack your income. ( I could be taking advantage of this now, but i am currently too busy to do this)

4. Selling Belongings on Ebay- I love ebay.com. For the obvious reason that i can make money by taking a picture, writing a little bit about a product and then going back to playing Call of Duty:4. It is that easy. The key to selling something on ebay is making sure there is a demand for such a product. For example i sold a fairly new piece of technology recently and it did great. I got almost as much as it is worth. It was new in the box, and it was not doing me any good anyways. Trying to sell something that you made out of construction paper and macaroni noodles is probably not going to sell, unless it rivals Picasso. Ramit Sethi wrote an awesome blog about making money on Ebay recently.

5. Research Studies – If you are a college student this one has probably been right in front of your face. Participate in studies or experiments that your college is doing and be compensated for your time. When i go to the university book store there are always bulletins up about people being needed for studies. This can range from medical studies, psychology studies, or even photography models. These typically pay about $10 factoring in they normally need test subjects for 3 hours and compensate $30-$40. This is a study that needs couples in Utah. Notice how it says “you will be financially compensated” groovy.

6. Online Surveys- If you have frequent spouts of spare time, you might want to consider this as a way of earning side income. I have tried a few survey sites and i found the best is www.opinionoutpost.com (Click the link to join). With Opinion Outpost you can make about $100 extra dollars a month with some effort. You can also refer friends and make a little side income that way. Other Survey sites i have tried are www.SurveySpot.com and i never made more than 5 dollars with that site.

Other Blogs with Similar Posts

5 Ways to Earn Extra Cash in Your spare time (Get Rich Slowly)

What is the best way to make more money (I Will Teach You To Be Rich)

My Jeep!

By replacing the shocks on my vehicle myself  i saved about $300 if not more. Seeing as how most places charge $100 per hour for labor and “it takes 4 hours”.
So by going to AutoZone, buying my own shocks for $100, and installing them myself (Very easy to do, AutoZone has DVDs for $5 that will teach anyone how to do it. even a granny)

I only spent $100, and  i will save $300 on the over all process.

UPDATE!

I completed the project today. It took me 3 hours total, with hand tools. So when Pro shops say it takes 4 hours for them with power tools, a garage lift and more than one person working, i say BS.

All in all here is what happened.

I bought 4 shocks, Total -$92 dollars
I bough 2 Jack stands- Total -$32
I got a rebate for the fourth shock- Minus 22 dollars

DIY Total= $102
Taking it to a shop= $400+

So i saved $298 over all, got a good work out (my bolts were very rusty) and i learned how to Do it myself. It was my first time, it will only get easier from here. Thanks for viewing.