5 ways to avoid taking on a debt loan

If you're struggling with credit card debt, car loans or other personal loans, you may be considering debt consolidation. Also known as a debt loan, though, these can be a black hole that makes your debt problem grow larger and more unmanageable. While debt consolidation may be sensible for some, consider these five ways to climb slowly out of debt without simply shifting debt from one pocket to another.

Build your budget

One of the most crucial ways to get out of debt is to create a real, written budget. A monthly or weekly budget will put your money in the right direction. Without an end goal in mind, your money too often enables mindless spending, leaving you broke and burdened with even more debt.

Get a roommate

Sharing the mortgage can greatly reduce your monthly expenses. If you have an extra room or basement, consider renting this space. You could easily make an extra $400 or more per month by bringing in a roommate. If you're uncomfortable with that idea, have the tenant sign a three-month or six-month lease to test the waters.


Is your monthly mortgage or rent payment more than 28 percent of your gross monthly income? If so, it may be time to downsize. Downsizing can greatly reduce the amount of money that is pouring out each month, inching you closer to the debt-free finish line. Once you pay off your debt and have a fully loaded emergency fund, you can upsize to a more desirable living situation -- but stay within your means.

Sell your car

If you're making car payments, it may be time to say "goodbye." Car payments are a debt trap. Remember, cars are not investments; they continuously diminish in value. Head over to the classifieds, sell your car and take mass transit until you can afford to pay for a vehicle with cash.

Avoid unnecessary expenses

Debt is usually acquired little by little, pizza by pizza, night out by night out. It's rare that debt is piled on by one huge expense. By avoiding little unnecessary expenses like restaurants and shopping, your debt will stop adding up and even begin to shrink.

If your debt is completely unmanageable, a debt loan may be a good way out. In most cases, however, you can become debt-free on your own with patience, self-control and determination. Consult a financial adviser to learn more about debt management and debt loans.

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