6 Extreme Ways To Save Money

Whether you have high expenses, debt to pay off, or you’re just a penny pincher, there are many ways you can save money.

You likely already do plenty of them like cook from scratch, shop with coupons, combine your errands while driving, compare prices, and keep your expenses lower than your income, etc.

However, there are plenty of more extreme ways to save money.

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side income, you can also make money by selling the things you find in the garbage.

Become Homesteaders

If you want to live a certain way and eat a certain way, you may consider becoming homesteaders and living off the land.

There are plenty of bloggers and YouTubers who document this lifestyle.  One woman, due to health issues, had to eat gluten free and all organic.  This led to an exorbitant grocery bill every month for her family of seven, so she and her husband decided to move to the country and become homesteaders.

Now, she farms, cans, gleans and routinely spends less than $200 a month on groceries.

While some of these extreme frugal strategies aren’t for everyone, if you embrace them, they can save you thousands, even tens of thousands, of dollars.

Do you utilize any of these extreme frugal practices?  If so, which ones?  Which ones are too extreme for you?

Source: biblemoneymatters.com

Homie Highlight: Gabriela Lopez

Title: Agent Support/Admin Assistant

In her role, Gabriela is the glue of real estate operations at Homie in Arizona. She assists Homie buyers’ and listing agents with uploading documents, updating statuses, submitting documents for broker review, and making sure everything stays organized.

Gabriela’s Background

Gabriela is an Arizona native. She can take the heat, she loves Arizona’s weather, and she enjoys mountain views. When she needs a break from the heat, she likes taking trips with her son up North to fish and camp, and she enjoys visiting our many lakes to ride jet skis.

She’s spent a large part of her career as a personal banker. She loves customer service and helping people. She loves organization and helping her team do their job seamlessly, which is why she’s a great fit for her current role.

Gabriela is also bilingual, speaking Spanish and English. She learned from her family in Mexico along with classes in school. She is a great addition to help our Spanish speaking Homie customers!

A fun fact about Gabriela is that she is a licensed aesthetician, specializing in corrective skincare.

Why Homie?

Gabriela first learned about Homie through Jennifer Gutierrez, who was already part of the Homie team. In her previous role as a personal banker, she would often work with people who were buying their first home and with loan officers. She always thought real estate was exciting. She knew Homie’s flat rate model was going to be the future and wanted to be part of that. After meeting Homie co-founder, Mike Peregrina and reading reviews of Homie online, she was sold.

Gabriela is most excited about Homie’s growth. She loves being part of a company that is expanding to new markets, nationwide. She feels like she has grown so much already professionally and can’t wait to see what the future holds. What makes Gabriela excited to go to work every day? She loves the vibe she gets from her team. She feels like her voice is heard.

“You are able to talk directly to the CEO and other co-founders at the company. When I worked at the bank, I could never get that close to leadership. If I have an idea, I know I can send an email or text to one of our executives and they will listen.”

Join the Disruption

If you want a career you love, want to help change the lives of others, and want to join a company in disrupting the real estate industry, check out careers at Homie!
Want to learn more about what Homie real estate agents do for their clients? Click here.

Read other Homie stories:

Homie Highlight: Chris Fryer
Homie Highlight: Jaime McAlarnis
Homie Highlight: Jennifer Gutierrez
Homie Highlight: Juan Gomez
Homie Highlight: Tahni Harr

Source: homie.com

How to Organize a Garage Sale Like a Boss

This post may contain affiliate links. Please read my disclosure for more information.

You’ve been feverishly decluttering your house and now the weather is nice enough that you’re thinking about hosting a garage sale before you bring everything to the thrift store.

Before you get your price stickers and signs ready, you should do a little preparing so you can organize a garage sale that will make you as much money as possible.

How to Organize a Garage Sale

There are several steps that go into hosting a successful yard sale.

First, you have to schedule a date for your sale. This may not be a problem right now but usually there’s a lot going on where I live so I wanted to pick a day with as little happening as possible.

It would suck to plan this whole thing to find out it conflicts with a major event. I used the “Events” tab on Facebook, you can input a date and it’ll show you upcoming events.

Disclaimer: If your only available day conflicts with a big event, don’t worry too much. Serious garage sale shoppers stop at nothing to get their fix.

The other important detail is day and time. We decided to hold ours on a Saturday from 8am-5pm. We held our sale in a fenced-in backyard so we could set up the night before and minimize work in the morning.

<img data-attachment-id="928" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/img_0067/" data-orig-file="https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/IMG_0067-e1493003467791.jpg?fit=370%2C228&ssl=1" data-orig-size="370,228" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"1"" data-image-title="Yard Sale" data-image-description="

yard sale

” data-medium-file=”https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/IMG_0067-e1493003467791.jpg?fit=300%2C185&ssl=1″ data-large-file=”https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/IMG_0067-e1493003467791.jpg?fit=600%2C338&ssl=1″ loading=”lazy” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” class=”size-full wp-image-928″ src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.jpg” alt=”yard sale” width=”370″ height=”228″ srcset=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.jpg 370w, https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/IMG_0067-e1493003467791.jpg?resize=300%2C185&ssl=1 300w, https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/IMG_0067-e1493003467791.jpg?resize=100%2C62&ssl=1 100w” sizes=”(max-width: 370px) 100vw, 370px” data-recalc-dims=”1″>

our sale on and poppin!

I read that serious buyers would show up early and without fail, at 7am they were there. We were mostly set up so we just let them in.

The morning was the busiest. We were steady until 1:00 then really quiet for 45 minutes. We had a late rush at 1:45 then it was steady again for another hour and a half. It started sprinkling at 4 so we packed everything up a little early.

I’m glad we decided to start at 8, I couldn’t imagine people showing up at 5 or 6am. There is not enough coffee in the world for me to be ok with that. If I could do it over I probably would’ve ended at 1. The last rush of people was nice but not worth the sitting around.

How to Advertise Your Garage Sale

The key to a successful sale is good advertising. You can have the best stuff but if no one knows or there’s no incentive to come then you wont sell them. There were three things we did to make sure as many people got to our house as possible.

1. Have Multiple Sellers

We were inspired by another sale that had six or seven different people selling in one place. Having a “multi-family” sale not only means more items but also a larger variety, that gives more people incentive to come, even people who might not be into yard sale-ing.

People with different interests accumulate different stuff and if you don’t jive with one seller’s items you might like what another seller has to offer.

If it is a lot of the same stuff, consider theming your sale to set it apart. JD Roth from Get Rich Slowly looked at what he had most of and listed his sale as a “Geek Garage Sale.” You might think you’ll drive people away by niching down but you actually make your sale more attractive to non garage salers.

Multiple sellers also means more exposure. The more people you have selling, the more people you have sharing the event with their friends.

<img data-attachment-id="931" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/garage-explosion/" data-orig-file="https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/garage-explosion-e1493003705456.jpg?fit=400%2C300&ssl=1" data-orig-size="400,300" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="garage explosion" data-image-description="

garage explosion

” data-medium-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/garage-explosion-e1493003705456.jpg?fit=300%2C225&ssl=1″ data-large-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/garage-explosion-e1493003705456.jpg?fit=600%2C450&ssl=1″ loading=”lazy” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” class=”size-full wp-image-931″ src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-1.jpg” alt=”garage explosion” width=”400″ height=”300″ data-recalc-dims=”1″>

probably no room for multiple sellers here

2. Coordinate With Another Garage Sale

Sales that happen on the same day aren’t competition, they’re advertising! I discovered this one by accident and it by far brought us the most traffic. A friend at my work had planned a sale for the same day as ours. She was nearby so I suggested we print out fliers for each other’s sales and hand them out to people as they left.

The flier was a simple half-sheet of paper with the sale address, times, and highlights of what we were selling. This is a great option for people who want to host a multi-family sale but don’t have space. And I’m sure if none of your friends want to host you could easily find nearby sales on Craigslist and email the seller to set something up.

3. Post Your Garage Sale Online

Craigslist is where all the serious buyers and sellers go. I posted on Monday and then another with a rephrased title on Thursday. Then I posted in Facebook Marketplace and in relevant local Facebook groups.

I also Googled “garage sale” and posted to every site that popped up on the first page. Most of the garage sale listing sites are in the same family of websites which made filling out the details easy (thanks auto-fill!).

yard sale

<img data-attachment-id="3908" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/how-to-have-a-safe-yard-sale/" data-orig-file="https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?fit=1000%2C1500&ssl=1" data-orig-size="1000,1500" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"1"" data-image-title="How to Have a Safe Yard Sale" data-image-description="

Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks

” data-medium-file=”https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?fit=200%2C300&ssl=1″ data-large-file=”https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?fit=400%2C600&ssl=1″ loading=”lazy” class=” wp-image-3908 aligncenter” src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-3.jpg” alt=”yard sale” width=”330″ height=”496″ data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” srcset=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-8.jpg 200w, https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?resize=400%2C600&ssl=1 400w, https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?resize=768%2C1152&ssl=1 768w, https://i0.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/How-to-Have-a-Safe-Yard-Sale.jpg?w=1000&ssl=1 1000w” sizes=”(max-width: 330px) 100vw, 330px” data-recalc-dims=”1″>

How to Prepare Your Yard Sale

Go through the boxes of stuff you haven’t seen in years before you put them out for sale. My husband was going through one I’d put out and found a copy of my social security card, I had not intended to sell my identity.

And if you can’t put everything out the night before like we did, you should do as much as possible to limit your stress on the morning of and have time for more coffee.

1. Garage Sale Pricing

We used a combination of methods for pricing. For clothes and items we had a lot of I made a sign with individual and bulk prices, I bought price stickers and put them on other items. A lot of stuff we left blank. When people asked how much we either yelled out a price or asked “How much you offering?”

If we’d had a smaller sale I wouldn’t have priced anything. When people name their own price they’re more likely to buy the item. The nice thing about putting prices on some stuff was that I didn’t have to talk as much. Introverts will appreciate pricing items individually.

I found pricing suggestions on Angie’s List and found that people will haggle you down whether the price is fair or not, so best practice is to price high.

<img data-attachment-id="930" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/beanie-babies/" data-orig-file="https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/beanie-babies-e1493003601746.jpg?fit=400%2C300&ssl=1" data-orig-size="400,300" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="beanie babies" data-image-description="

beanie babies

” data-medium-file=”https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/beanie-babies-e1493003601746.jpg?fit=300%2C225&ssl=1″ data-large-file=”https://i1.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/beanie-babies-e1493003601746.jpg?fit=600%2C450&ssl=1″ loading=”lazy” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” class=”size-full wp-image-930″ src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-4.jpg” alt=”beanie babies” width=”400″ height=”300″ data-recalc-dims=”1″>

People will pay $1 each for beanie babies

2. Garage Sale Signs

I bought signs to stick in the ground and neon cardstock to post on poles, fences, etc. I thought four signs would be enough but my paranoid husband thought we could put up every sign we had. He was right.

It was the signs on neon poster board that attracted the most attention. People saw the white signs in the ground but they got to us by the bright ones. Our signs just said “Yard Sale” with the address at the bottom and an arrow in the middle pointing the way to treasure land.

If you can, have someone check your signs midway through the sale. One of ours fell and was pointing AWAY from our sale.

What to do The Day of Your Garage Sale

First, give yourself more time to post the signs than you think you’ll need. We had a debate on which illegal places would be least illegal to post our signs. Every city has their rules so check yours to be sure.

I posted a Facebook Live video on my profile giving a tour of the sale. I called attention to some of the more enticing items and introduced all our sellers.

Here are some essentials that kept our ship sale-ing (lololol):

Chill music– It’s too early in the morning for all that hip hop, play something inviting that will keep the people browsing and your neighbors from yelling at you.
Fanny pack– Keep your money close and your fanny pack closer.
Free section– There are some things that no one will buy at your yard sale, doesn’t mean you can’t put them out, but don’t waste your time pricing them.

With a few hours left in the sale, I started posting big ticket items that didn’t sell to Facebook Marketplace. By doing that I was able to secure a home for almost everything I posted.

I posted midday thinking people would come while we were still selling but nobody could make it until the next day so you could probably wait until your sale is over to post.

Warning: responding to all those Facebook messages was almost more tiring than the actual sale.

What to do After a Yard Sale

Take down the signs so people don’t continue to show up at your house, delete your Craigslist and other ads so people don’t roll by your house trying to get free stuff, and count your money!

We took name brand clothes that didn’t sell to Plato’s Closet and made $15 more. And we continued to post big-ticket items to Facebook Marketplace.

Bring leftovers to a thrift store or call one to see if you can have your stuff picked up. We made around $400 not including the furniture we sold on Marketplace the next day.

For the amount of work we put (and didn’t put) into it, I’m glad we did it. Purging is so cathartic and to get some spending money in exchange is just a bonus.

Tell me: What do you think about garage sales? Do you have any interesting garage sale stories or tips to share?

<img data-attachment-id="4130" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/yard-sale-1/" data-orig-file="https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?fit=1000%2C1500&ssl=1" data-orig-size="1000,1500" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"1"" data-image-title="How to Organize a Yard Sale without the Headache- Even During Coronavirus" data-image-description="

Do you want to sell the stuff you’ve been decluttering while you were at home? Here are some tips to have a safe and succcessful yard sale without a headache!! #yardsale #howtohaveayardsale #moneymakingtips #howtomakemoneyathome #sidehustleideas #howtomakemoremoney

” data-medium-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?fit=200%2C300&ssl=1″ data-large-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?fit=400%2C600&ssl=1″ loading=”lazy” class=” wp-image-4130″ src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-6.jpg” alt width=”587″ height=”882″ data-pin-title=”How to Organize a Yard Sale without the Headache- Even During Coronavirus” data-pin-description=”Do you want to sell the stuff you’ve been decluttering while you were at home? Here are some tips to have a safe and succcessful yard sale without a headache!! #yardsale #howtohaveayardsale #moneymakingtips #howtomakemoneyathome #sidehustleideas #howtomakemoremoney ” srcset=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss-9.jpg 200w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?resize=400%2C600&ssl=1 400w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?resize=768%2C1152&ssl=1 768w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2020/05/Yard-Sale-1.jpg?w=1000&ssl=1 1000w” sizes=”(max-width: 587px) 100vw, 587px” data-recalc-dims=”1″>

<img data-attachment-id="976" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/run-a-yard-sale/" data-orig-file="https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=400%2C707&ssl=1" data-orig-size="400,707" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="Run a yard sale" data-image-description="

Run a yard sale

” data-medium-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=170%2C300&ssl=1″ data-large-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=339%2C600&ssl=1″ loading=”lazy” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” class=”aligncenter size-full wp-image-976 jetpack-lazy-image” src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.png” alt=”Run a yard sale” width=”400″ height=”707″ data-recalc-dims=”1″ data-lazy-srcset=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.png 400w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=170%2C300&ssl=1 170w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=339%2C600&ssl=1 339w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=100%2C177&ssl=1 100w” data-lazy-sizes=”(max-width: 400px) 100vw, 400px” srcset=”data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7″>

<img data-attachment-id="976" data-permalink="https://www.modernfrugality.com/how-to-organize-a-garage-sale-like-a-boss/run-a-yard-sale/" data-orig-file="https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=400%2C707&ssl=1" data-orig-size="400,707" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="Run a yard sale" data-image-description="

Run a yard sale

” data-medium-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=170%2C300&ssl=1″ data-large-file=”https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?fit=339%2C600&ssl=1″ loading=”lazy” data-pin-description=”Do you want to get rid of the stuff you have been purging? It is a perfect time to have a safe & profitable yard sale. #yardsaletips #yardsaleideas #makeextramoneyathome #sidehustles #yardsalehacks” data-pin-title=”How to Have a Safe & Profitable Yard Sale This Year” class=”aligncenter size-full wp-image-976″ src=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.png” alt=”Run a yard sale” width=”400″ height=”707″ srcset=”http://www.hanovermortgages.com/wp-content/uploads/2021/03/how-to-organize-a-garage-sale-like-a-boss.png 400w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=170%2C300&ssl=1 170w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=339%2C600&ssl=1 339w, https://i2.wp.com/www.modernfrugality.com/wp-content/uploads/2017/04/Run-a-yard-sale.png?resize=100%2C177&ssl=1 100w” sizes=”(max-width: 400px) 100vw, 400px” data-recalc-dims=”1″>

Jen Smith is a personal finance expert, founder of Modern Frugality and co-host of the Frugal Friends Podcast. Her work has been featured in the Wall Street Journal, Lifehacker, Money Magazine, U.S. News and World Report, Business Insider, and more. She’s passionate about helping people gain control of their spending.

Source: modernfrugality.com

A Complete Guide to Debt Payoff Strategies

  • Get Out of Debt

Debt payoff strategies are designed to help you clear your debts in a way that suits you. There are many different payment methods available, from debt snowball and debt management, right on through to more extreme measures like bankruptcy. 

There is no “one-size-fits-all” solution. The one that works for you will depend on how far into the red you are and how likely you are to claw your way back into the black. In this guide, we’ll cover everything you could ever want to know about debt payment strategies, helping you to find the right one and quickly clear student loan debt, credit card debt, and personal loan debt.

What you Should Consider When Choosing a Debt Repayment Strategy?

The ideal strategy for one person may be a complete disaster for another. As an example, think about the debt snowball method, which we’ll discuss in greater detail below. This contrives to clear the smallest debts first, giving you the motivation to work towards the bigger ones.

But what if you have multiple small loans and credit cards charging you between 5% and 16% and one massive credit card debt charging 26%? If all your attention and your extra cash go towards your smallest debts, this big one will be left untouched—allowed to run rampant, accumulate masses of interest and do endless damage.

It’s important to weigh up the pros and cons first, to calculate how much one method will save you over another. That’s why we’ve offered up some advantages and disadvantages and have split our proposed debt payment strategies into two options: Credit card debt and personal loan debt.

Credit Card Debt Repayment Strategies

These strategies can help if you have multiple credit card debts, with escalating monthly payments and high-interest rates. But they’re not specific to credit card debt and can help with other forms of debt as well. 

The Debt Snowball Method

We alluded briefly to the debt snowball method above. The idea is quite simple: You clear your smallest debt first and then move onto the next one. 

  • Step 1: Continue to meet your monthly payment obligations.
  • Step 2: Use any extra payments you have to clear the smallest debt.
  • Step 3: Once the smallest debt has cleared, put all those extra payments towards the next smallest one.

The debt snowball method is so-named because as a snowball rolls along the ground it gathers more momentum, picks up more snow, and gets bigger and stronger.

With the debt snowball method, it’s important that you don’t close credit card accounts after they’ve been paid off. Keep them active, but only use them in emergencies. This will ensure your credit utilization score stays high, which in turn will keep your credit score high.

The Pros and Cons of the Debt Snowball Method

The debt snowball method is not without its issues and won’t work for everyone. If you can’t pay down debt or increase payments, what hope do you have?

Pros

  • Your credit score will gradually improve as debts clear.
  • It can motivate you to keep going after you see multiple debts drop away.

Cons

  • High-interest rate debt can remain untouched, gathering momentum and doing damage as you focus on lower interest rate debts.
  • It can neglect other serious debts, such as student loan debt.
  • It may take some time for you to improve your financial situation.
  • Some borrowers will struggle to find the necessary budget to make larger payments.

The Debt Avalanche Method

The debt avalanche method is often mentioned in the same breath as the debt snowball method. There are similarities in the sense that both require increased payments, placing more of a demand on your budget and strain on your financial situation, while also helping you to chip away at your debt one step at a time.

While the snowball method focuses on the smallest debts, the avalanche method emphasizes the importance of clearing the ones with the highest interest rate. By prioritizing interest rate over balance, you’re potentially putting more money in your pocket at the end of the term.

The Pros and Cons of the Debt Avalanche Method 

The debt avalanche method has similar issues as the debt snowball method, but there are some notable benefits as well.

Pros

  • Eradicating debts with a high-interest rate can potential increasing your capacity to make greater monthly payments.
  • Clearing debts one at a time can motivate you going forward.
  • You should pay much less over the term of the loan.
  • It can improve your credit score and financial situation.

Cons

  • Not always easy to find the extra money required to clear high-interest debts quickly.
  • It may take a while to see the benefits.

Tips for Making Avalanche/Snowball Strategies Work

  1. List all of your debts, going from the highest to the lowest and including every credit card debt, student loan debt, and personal loan.
  2. Sell luxury items that you no longer need. The vast majority of American households contain designer clothes and accessories that no longer fit, jewelry that isn’t worn, video games that have been completed, books that have been read, and expensive tech that isn’t touched and becomes more obsolete with each passing day.
  3. Spend less money on restaurants and takeout. American families spend in excess of $3,000 a year just on eating out—this could be used to clear a debt! Sit down for family meals at home instead.
  4. Stop spending so much money on day-trips and vacations and look for cheaper ways to treat the family, from picnics in the park to visiting family in the next state.
  5. Use all of the money that you save to clear your smallest/highest interest debts and continue with your chosen payoff strategy.

Balance Transfer Repayment

A balance transfer moves all credit card debt onto a new card. Balance transfer cards provide 0% introductory interest rate periods, allowing you to focus on clearing the balance without the high-interest rate getting in the way.

As with other strategies, it’s important to leave cards active once you clear the balance, otherwise your utilization score will drop.

The Pros and Cons of Balance Transfer Repayment

Although a balance transfer credit card can provide a quick and easy solution, it’s not without its problems.

Pros

  • A fast way to clear high-interest rate credit card debt.
  • Pay less over the term of the loan.
  • No high-interest rate to cover every month.
  • Pay more of the balance with every repayment.

Cons

  • Balance transfer cards typically have very high-interest rates once the introductory period ends.
  • May be high penalties and other payments to cover.
  • Requires a new card, which means your credit score will take an initial hit.
  • May not be able to help with all credit cards.

Tips for Making Balance Transfer Cards Work

  1. Compare and contrast all cards and don’t simply settle for the first one you find or the first offer you receive.
  2. Calculate how long it will take you to clear the debt and look for a card with an introductory rate that affords you the time you need.
  3. Read the terms and conditions and make sure you know how high the APR will be when the introductory period ends and what additional charges will be levied.
  4. Remember that rate shopping, whereby all hard inquiries are merged into one, only applies to loans and not to credit cards. Read more about this in our guide to rate shopping periods.
  5. Avoid accumulating additional debt on the card. It’s there to help you clear what you have, not to accumulate more.

Debt Settlement

Debt settlement requires outside intervention in the form of a debt specialist. This specialist will work on your behalf to clear your debts one by one. They do this by negotiating with creditors on your behalf, using the money you deposit into a secure third-party account.

There are multiple companies out there that provide this service and the industry is witnessing improved regulation and security, making it a safer place for Americans to eradicate their debts.

The Pros and Cons of Debt Settlement

Debt settlement is often considered to be a last resort solution, one that can cause multiple problems but will ultimately lead to a debt-free life.

Pros

  • Debts will be cleared completely.
  • You will pay much less than you would without debt settlement.
  • The debt settlement company only takes their share at the end of the settlement process and it’s always as a percentage of the money they save you.

Cons

  • It can be a lengthy process.
  • Your accounts may enter collections and you may be sued while undertaking the settlement process.
  • It can hurt your score in the short-term.
  • They may request that you stop making payments and use that money to fund the settlement process, leading to many complications.
  • There is no guarantee that they can settle all debts but they may still charge even if they do not.

Tips for Making Debt Settlement Work

  1. Always be on the lookout for scams. Scams are common in the debt relief sector and the majority of them can be found in the debt settlement industry. Look for certification, accreditations, reviews, complaints and BBB pages. 
  2. Ask the company how much they charge before going any further. Their fee will be a percentage of the total money they have saved you or a percentage of your total debt. Calculate it and use the figure you arrive at to compare with other settlement companies.
  3. Don’t persist with debt settlement companies that try to pressure you into signing up for their program. Look for good customer support and honest advice, as this suggests that they are there to help and not just to sell.
  4. Persevere with your questioning if you’re being given vague answers and move onto the next company if they still insist on ambiguity.
  5. Caution is advised with any company that makes a promise to settle all of your debts for a specific amount. Confidence is okay, but promises are not—there is no way of knowing whether a creditor will settle and how much they will settle for.
  6. Understand the process before you begin and learn exactly what is expected of you every month before you commit to anything.

Loan Debt Repayment Strategies

Personal loan repayment strategies work towards the same goal as credit card payoff strategies. The difference is that they cater more towards lower interest rates and allow for longer repayment periods and more forgiving lenders. 

This is because credit cards are unsecured, which means they are not backed by any collateral and the lender doesn’t have much recourse for action if anything goes wrong. A loan company, however, is often backed by an asset such as a house or car. 

Debt Management 

Debt management is a simple and low-risk way of improving your financial situation. It is designed to keep your budget strong and your finances stronger, and it’s often provided by a credit counseling service. 

Debt management programs follow short credit counseling sessions, during which an experienced counselor will ask questions about your budget and your financial situation, before recommending the best course of action. If they determine that debt management is what you need, they will guide you through the process.

They will then negotiate a plan with your creditors, getting them to agree to a reduced interest rate and a manageable monthly payment.

The Pros and Cons of Debt Management

One of the best things about debt management is that it’s conducted by companies who have your best interests at heart and will always advise as to whether or not this process is right for you. If not, they may recommend something else to help you clear your personal loan debt.

Pros

  • The process is much less demanding and does less damage to your credit score than other payoff strategies.
  • It can help you to manage all your debts.
  • It does not have a direct impact on your credit score but may hurt it in other ways.
  • It can reduce the rate of interest you pay in personal loans and credit card debt.

Cons

  • It’s not free and there is both a start-up fee and a monthly fee.
  • You will be required to close all but one credit card, which can damage your credit utilization rate.
  • If you miss a payment, the lender may cancel the agreement and you’ll return to paying your previously high-interest rate.

Tips for Making Debt Management Work

  1. Always deal with reputable credit unions and credit counseling services and don’t trust any company that doesn’t have accreditations.
  2. Use a free consultation in the first instance to make sure that this service is right for you.
  3. Hang-up on any so-called credit counselors that are only interested in trying to sell you resources or expensive plans. You need a counselor, not a salesperson.

Debt Consolidation Loan

A consolidation loan can be acquired by yourself or via a specialist company. In the first instance, you acquire a personal loan that is large enough to cover all your debts and earn and a lower interest rate, and you use this to turn multiple debts into one.

As for the latter option, this can come with numerous issues, as discussed in our pros and cons below.

The Pros and Cons of Debt Consolidation

These pros and cons refer to debt consolidation via a specialist company or provider, which is the most popular way to consolidate debts today. Read our guides to the best debt consolidation companies and avoiding debt consolidation scams to learn more about this deceptively complicated process.

Pros

  • You will pay less money every month.
  • You will have more money in your pocket to go towards other expenses or to clear more of the debt’s balance.

Cons

  • Your monthly payments will reduce at the expense of a longer loan term.
  • You will pay much more over the course of the loan.
  • The terms are not always as straightforward and beneficial as they first seem.

Tips for Making Debt Consolidation Work

  1. Look at the bigger picture as these companies rely on you focusing on the short-term. 
  2. Remember that debt consolidation companies are there to turn a profit, not to help you.
  3. Don’t assume that a lower interest rate is always better. APRs are calculated based on daily compound interest and greatly increase with age, so the term length is just as important as the interest rate.
  4. Prepare for your credit score to take a hit but don’t despair as it will improve in time.

Other Debt Repayment Options

The above options can help you to clear multiple high-interest rate debts, but they are not the only solutions afforded to you. There are two we didn’t mention and these sit either side of the scale: From the least extreme to the most; the first resort to the last.

Credit Counseling

As the name suggests, credit counseling is designed to help you manage your debts, guiding you through the chaos and providing solutions that help you attain financial freedom. This service is provided for free by credit unions and non-profit financial agencies and it’s also offered as by debt settlement and consolidation companies, who provide it during an initial consultation.

It’s free and if you work with a non-profit credit counseling company, it should also be honest. They will help you with budgeting and money management and if they deem that you need further assistance, they will recommend some of the strategies and the services that we have already discussed in this guide.

Bankruptcy

Bankruptcy is often seen as an easy way to escape the clutches of debt, but it can have a devastating impact on your credit score and leave a mark that remains for between 7 and 10 years. 

There are two forms of bankruptcy available to individuals: Chapter 7 and Chapter 13.  You can discuss which option is right for you with a bankruptcy expert or lawyer, but Chapter 7 is by far the most popular. This will liquidate all property and then distribute the money to creditors. Some property is exempt, but most will be liquidated by a trustee.

Chapter 13 can seem a little more manageable and less destructive as foreclosure is not a necessity. The focus is more on creating a repayment plan that allows the borrower to clear debts in a way that doesn’t destroy their finances.

Summary: Choosing a Debt Repayment Strategy

We’ve discussed all popular debt payoff strategies in this guide, giving you the information you need to make an informed decision based on the pros and cons and your own personal finances. If you’re still struggling to find the perfect strategy, contact a credit counselor and they will guide you through. 

It’s important to remember that there is always a solution, a way to escape debt and to usher in a brighter financial future, one where you don’t stress every day, struggle to fall asleep every night, and worry about every single expenditure. Millions of Americans die with substantial debts and for many, those debts are a direct cause of their death, but thanks to the industry’s improving regulations and increasing opportunities, it’s an issue that many are escaping from.

Source: pocketyourdollars.com

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Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.