10 Steps To Take in the New Year To Get Out of Debt

Starting the New Year in debt can be overwhelming. However, if you look at the New Year as an opportunity to get out of debt, January 1 may actually be a date to look forward to this year. Our Georgia bankruptcy lawyers offer the following 10 steps you can take to get out of debt in the New Year.


It is nearly impossible to get out of debt if you do not know what you owe. Therefore, your first step is to gather all your bills together and add up exactly how much you owe. The total may cause you to be concerned, but focus on your goal of paying off this debt in the New Year.

Create A Budget

It is also nearly impossible to pay off debts if you do not know how much disposable income you have at the end of each month. Create a budget by adding together your net income each month and subtracting your monthly expenses before debt payments. You may be able to identify some areas in which you can cut back to increase your disposable income to pay toward debts.

Track Your Income And Expenses

Creating a budget is an excellent step; however, you need to learn to live within that budget. Online budget tools and personal finance tools make tracking and managing your finances easier and quicker.

Use The Snowball Technique For Paying Debts

Begin with the smallest debt. Pay off that debt as quickly as possible by paying more than the minimum payment owed on that account as your budget allows each month. When that debt is paid in full, transfer those payments to the next smallest debt. Paying smaller debts first allows you to celebrate short-term goals that can keep you on track to get out of debt in the New Year.

Pay With Cash

Stop using your credit cards and lines of credit. If you cannot afford to pay cash for something, take a closer look to determine if you really need that item or if you can do without it. Debit cards are okay. Ask for a cash discount. Don’t be surprised if you are offered a 10% – 20% discount if you pay in cash!

Increase Your Income

A part-time job allows you to earn more income to pay toward your debts. Use all the income from your second job to pay off debts.

Cut Expenses

Search for ways you can reduce your monthly expenses to pay off debt faster. Packing your lunch, skipping the coffee shop, and canceling your cable television are just a few of the ways you can reduce expenses to pay more money toward your debt payments. Read my blog on cutting your cable cord and save hundreds!

Begin Building An Emergency Fund

One reason people are in debt is that they do not have an emergency fund. Add an expense to your monthly budget for emergency savings.  The best way to ensure you save this money is by direct deposit into a savings account that does not have an ATM card attached to it. If you never see the money, you may never miss it. When an emergency arises, you have funds to pay for what you need instead of using credit.

Use Excess Cash To Pay Debts

If you receive money for your birthday, holidays, a bonus, or any other unexpected windfall, make an extra payment on your debt payments. Paying the money toward your debt may not be an exciting way to spend your extra cash, but it will be satisfying once you are debt free.

File For Bankruptcy Relief

If you have debts you cannot pay because you have no disposable income after expenses each month, you may want to consider filing for bankruptcy relief. A Chapter 7 bankruptcy case can get rid of your unsecured debts within four to six months.

Contact A Georgia Bankruptcy Attorney For More Information

If you have questions about filing a bankruptcy case to get out of debt, schedule a consult with a skilled South Atlanta bankruptcy attorney today for a free consultation to discuss your debt relief options.