Six Debt-Busting New Year’s Resolutions for 2015

Want to start the year with a bang? Work on destroying your debt. Photo:

Welcoming the New Year invokes a lot of emotions for people. It’s a time to look back on the past year and reflect on mistakes we’ve made and lessons learned. Along with that, it’s a time to hope for a better year ahead. We want to do things better and become better people. Enter New Year’s resolutions.

Right up there with dieting and getting into shape, getting out of debt is a likely resolution for anyone dealing with that burden. “Managing debt” ranks among USA.gov’s . And rightfully so. Debt can cause denial, fear, panic, stress, and depression, according to Debt.org. Regardless of its size or how you got into it, debt can also affect your marriage or other relationships.

Here are six debt-busting resolutions to help you start off this New Year right.

1. Stop Those Unhealthy Bad Habits

There is a good chance your worst habits cause, or at least contribute to, your debt. For smokers, the average cost of cigarettes is $5.51 per pack, according to Lung.org. And the Centers for Disease Control and Prevention — in what is probably not news to you — warns that smoking can lead to cancer, stroke, heart disease, reduced fertility, and more. One in five American deaths results from a smoking-related illness. Check out to start your journey to quitting smoking.

Drinking in moderation is fine, but how much are you spending on booze? The National Institute of Alcohol Abuse and Alcoholism offers an to figure out what you’re spending on alcohol per week, month, and year.

Another bad habit that could be costing you is junk food and unhealthy fast food. In abundance, these can lead to high blood pressure, obesity, diabetes, heart disease, and poor cognitive function.

Eliminating cigarettes and reducing alcohol and non-nutritious food purchases can immediately help free up more money to pay down your debt. This could also mean less medical-related expenses and lower health or life insurance premiums. Not to mention the priceless benefits of a healthy life.

2. Manage Your Time Better

A common resolution is to de-stress and get more organized, which could whittle down your debt.

Take your morning routine, for example: If you had more time, maybe you could pack your lunch instead of paying much more during the day, or make your own coffee instead of purchasing one for triple the cost. If you weren’t running late, you could opt for public transportation or a carpool instead of shelling out the dough for gas, parking, and wear and tear on your car.

With no time to cook, you’re overspending on fast food or restaurants. Or if you do get to the grocery store, odds are you didn’t take the time to research what’s on sale, what you already have at home, or search for coupons. There are a number of free tools out there to help you get organized.

3. Eliminate Unnecessary Purchases and Overspending

One of the main things you can do to reduce your debt is spend less. Go through your past purchases by looking at your bank and credit card statements, or even by glancing through your planner to get a reminder of what you spent. Highlight the purchases you make often that you can eliminate.

Cancel that magazine subscription and read the online version. Stop spending so much on dining out and cook at home instead. Opt to use the clothes and accessories you have before running out to buy more.

To help control overspending, go through your bills to see if you can reduce costs. Maybe you can find a cheaper phone plan, or shop around for a lower rate on your car insurance.

4. Find a Way to Increase Your Income

While trimming your spending is a good way to reduce your debt, there’s nothing quite like cutting back while earning more to amp up your payments. Regardless of your situation, there is most likely something you can do to increase your earnings in the New Year. Here are some ideas:

  • If appropriate, ask for a raise, if you’re salaried. Offer to take on more responsibility and come ready with evidence of how you’ve excelled at your position.
  • If you are paid hourly, try to take on extra hours. Let your supervisor or manager know that you’re willing to work extra hours or cover shifts.
  • If you’re already unhappy with your current position, try to find a higher-paying job. Before you start looking, consider learning a new skill to give your resume a boost.
  • Take on a part-time job. You can search for part-time work by narrowing your search on sites such as , , or . To make things easier, start by searching for a part-time job that is near your home, near your full-time job, or somewhere in between to make commuting easier.
  • Use your skills to make extra money as a freelancer. Offer your writing, photography, accounting, graphic design, marketing, or any other applicable type of service to make extra income. Find jobs on websites such as or by searching for “freelance” or “contract” positions on job search engines. Check out our articles on ways to make money with your passions and 50 side businesses to start on your own.
  • If you’re unable to do a part-time job, consider other ways to make extra money, such as tutoring, giving music lessons, teaching a skill or talent, pet care, child care, home repair work, or whatever else you can do to increase your income.
  • Sell the stuff you don’t use anymore. Sell furniture, home décor, and housewares at consignment stores or on Craigslist. Your clothes can be sold online or at secondhand or consignment stores. Sell your old electronics on or find nearby stores that buy old cellphones, computers, iPads, tablets, or other devices. Find a bookstore that buys used books and DVDs or list them on Amazon. Use the proceeds to make a big, early dent in your debt.

5. Brainstorm a New ‘Outside-the-Box’ Way to Reduce Debt

New Year’s resolutions are generally about big changes that will make an impact. So if you’re looking to get out of debt, why not try a big resolution that is going to really work?

  • Transfer a portion of your credit card debt to a zero-interest card. This isn’t too out of the box, but some of you may be apprehensive about it, since your credit may initially take a step backward; anytime you’re applying for new credit, your score generally goes down a bit. But if you’re able to avoid interest for an extended period of time, all of the money you’ll pay toward your debt will go straight to the principal balance instead of toward interest charges.
  • Consider student loan forgiveness options. If student loan debt plagues you, consider something drastic to get a portion or all of your loans canceled. Depending on your industry and career path, you may be able to change jobs to take a position that offers loan forgiveness. If that’s not an option, consider joining AmeriCorps or finding other ways to volunteer that offer student loan forgiveness. Consider moving to a place that’s willing to help pay down your student loans, such as Detroit or Kansas. Another move — and this is a big one — that could help reduce student loan debt is joining the military.
  • Downsize. Is there something you can do to drastically downsize? Buying a smaller, cheaper home or moving to a tinier apartment with a much lower rent could significantly reduce that debt. If you can utilize public transportation, walking, or biking, sell your car. A study by AAA estimates the average cost of owning a car is almost $9,000 per year, and that doesn’t include payments. If you can’t go to that extreme, consider canceling cable. The average person pays $86 per month for cable, according to the NPD Group, so even that is $1,032 per year you can put toward your debt.

6. Create a Budget and Stick to It

The Federal Trade Commission’s  is to create a budget. Start by writing down your income from all sources. Include what you’re actually taking home, not what is withheld. If your income varies, you can opt to do an average of what you earn or use the bare minimum of what you earn.

Next, factor in your fixed expenses — the bills that don’t fluctuate, such as your rent or mortgage and specific bills you pay every month. Just because these are “fixed” doesn’t mean you can’t try to reduce them. Maybe you can downgrade your cellphone plan or change carriers to bring down the monthly cost, for example. Then you want to put an average on items that can change depending on the month, such as food, transportation, entertainment, and gifts.

Organize your bills. Getting organized is a high priority for many people to start fresh during the New Year. Organizing your bills isn’t only going to reduce your stress level, but it can help you get on track with managing your debt.

Find a method of organization that works for you. Whether it’s a calendar in your office or on your cellphone, mark when bills are due each month. This is going to help you avoid late payments, which increase your debt.

Consider making a separate e-mail account for your bills that you check regularly. Make all of your bills go to that account instead of spreading them between your personal account, a work account, and your spouse’s e-mail account. This will make it easier for you to keep track of any e-mails you receive from your creditors.

If possible, sign up for automatic payments on your bills. This will help you make your payments on time, and you may even get a perk for signing up, such as an interest rate deduction.

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