5 Tips for getting out of debt online

Jan 5, 2010 at 3:45 p.m. ET

You see that dress in the window and you just have to have it. You hesitate, thinking I really shouldn't. But next you find yourself in the store admiring the feel of the fabric and notice the price tag. Instead of making a fashion statement for the moment and paying for it the rest of the year, make a debt-reduction plan and stick to it. It will feel a lot better than last year's dress, anyway!

You've been down this road before, jotting down your monthly expenses, planning a budget and hoping it sticks. Unfortunately, the end of the month comes and you're left wondering where in the world your sticky notes went! This new year resolve to get out of debt and on to the road to financial independence.
Luckily for us we have technology to help us. At the very least you can create a spreadsheet to track and automatically calculate expenses. Don't forget to set up e-mail or calendar reminders before a bill is due so you're always on time with your payments. Online sites like MoneyDesktop.com are another option. This site offers an affordable budgeting and debt elimination program that gives you the big picture of your finances and counsels you to make wise decisions. We spoke with them to get their top 5 tips for getting rid of debt.

Just get started. Make a budget that really works.

Start by making a realistic budget that is based on how you actually spend your money (ahem, daily lattes and mani/pedis!). Review your budget every day or at least once a week. Review your credit card purchases and bank statements on line. It has been proven that a person will spend 10 percent less if they frequently review their purchases. It's called accountability!

Build a plan to pay off high interest debts first.

With your 'realistic' budget in place, decide how much of your discretionary income can be dedicated to paying more than your minimum balances on credit cards and other debts. Build a debt pay-off timetable and review it frequently. This will keep you motivated as you see your balances begin to decline.

Review your discretionary expenses and living arrangements.

With a budget and plan to pay off high-interest debt in place, you are on the road to financial independence. To accelerate your plan review how much you pay in rent. Is a roommate an option? If so, use that extra money to pay off your debts. How often do you eat out? Ditch the high calories of restaurant or fast food for a healthy meal that you prepare yourself. It is amazing how much money you can save with simple lifestyle changes.

Use cash instead of credit cards.

Keep one or two of your lowest interest credit cards and cut up the rest. Credit cards are a part of life these days and necessary for an emergency. But make it a habit to pay for your daily expenses by cash. You'll become much more aware of how much money is leaving your hands each day.

Be a savvy shopper.

Look for the things you need on sale. Or buy at the end of the season for the things you'll need next year (jeans, boots and blazers rarely go out of style). And clipping coupons may not be your idea of a fun Friday night, but at least give it a try on a week night and you'll be pleased at the cash register. Again, go online and look for savings at sites like commonsensemoney.com and moneysavingmom.com.

Looking for more tips on getting rid of debt?

12 More steps for getting out of debt
7 Financial New Year's resolutions