7 Tips to Get Out of Debt by Spending Money

Unless you’re the lucky recipient of a monetary windfall, getting out of debt can take some work. Many common tips on paying off debt concentrate on not spending any money so more of your income can go toward reducing debt. But sometimes, you have to spend money to make a dent in your debt.

Here are seven tips for getting out of debt by spending money—along with the pros and cons of each.

1. Subscribe to Money Management and Tracking Tools

How it works: Apps and other technical tools can help you organize your finances and remember to make debt payments on time. This can help you pay off your debt faster and avoid getting into more trouble. For example, the Tally app can automate your credit card payments and Mint makes it easier to create and maintain a budget.

Pros: Subscriptions to these types of tools are usually relatively inexpensive, making it an affordable option for almost everyone. You can also find dozens or even hundreds of options in your app store. These tools provide an organized structure to help you see the big picture and the details of your debt payoff process.

Cons: Apps aren’t magic. You have to do the work to pay off your debt and use these to help manage the process. If you don’t have the willpower, this added expense probably won’t help.

young redhead woman laughing and holding credit card

2. Use Cashback Credit Cards

How it works: If you can use credit cards with cashback rewards to pay for normal daily expenses, you can turn normal spending into rewards that can be used to pay off debt. For example, if you use a credit card to pay for groceries, gas and your electric bill—and then pay it off that month—you can use the cashback to reduce other existing debt.

Pros: As long as you’re using the credit cards to pay for things you would already be buying, the cashback is like “free” money. Every little bit helps when you’re paying down debt, and it’s nice to have a little money you didn’t have to work for.

Cons: If you aren’t careful about this spending and don’t pay it off regularly, you can end up with more debt than you started with.

piggy bank wearing graduation cap and glasses with books in background

3. Invest in Financial Education

How it works: Many organizations provide financial education, equipping people to pay down their debt and manage debt in the future. Dave Ramey’s Financial Peace University is just one of those products, and you can also invest in books from experts on personal finance.

Pros: Sometimes, debt becomes a problem because someone didn’t have the knowledge and skills to manage it well. Education can help with that. Some programs also provide accountability structures that make it more likely you’ll actually pay down your debt.

Cons: Some of the programs can be pricey, and you may find much of the information online for free if you know where and how to look. Education also has to be put to use; much like financial apps, it’s not a magic bullet for your debt.

two people shaking hands while handing over paperwork

4. Consolidate Debt with a Loan

How it works: You can borrow money to pay off existing debt with an eye towards increasing your cash flow and making your payments more affordable. This can be accomplished by consolidating multiple debts into a single obligation with a monthly payment you can easily afford and remember to make on time.

Pros: Debt consolidation can simplify your debt problem. And if you only have to juggle one debt payment with other life obligations, it can be easier to find ways to throw a little extra money at the debt each month.

Cons: Consolidation loans to pay off all of your debt might not be available to you. In some cases, consolidating debt opens doors to the potential for running up debt again, potentially leaving you with double the debt. Again, willpower and good money management are required to make this work.

real estate sign buy it flip it

5. Purchase Items to Flip for a Profit

How it works: If you have the resources, you might invest money in a house, a car or even some vintage clothing. If you can fix up those items or list them online to sell them for more than you paid, you may be able to use the profits to pay down debts.

Pros: This can be a fun way to earn money to pay down debt while also engaging in hobbies or activities you enjoy. The wide range of online markets makes it possible to earn a profit selling almost anything, so there’s a plethora of opportunities.

Cons: You need money to start with, and buying and selling can be a lot of work. You’re also not guaranteed to make a profit.

two business people looking at data on computer monitor

6. Invest for a Fast Return

How it works: If you’re comfortable in the stock market or with cryptocurrencies, you might buy stocks and other investments you think will generate a fast return. You can reinvest your initial spend and use any profits to pay down debt.

Pros: Some people are able to turn a profit in the markets in as little as a few weeks or months.

Cons: Investments are risky, and options with a potentially fast return tend to be the riskiest. There’s a chance you’ll be left with nothing.

two business people looking over finance paperwork

7. Pay Someone to Manage Debt for You

How it works: In some cases, you might find yourself at a dead end when it comes to dealing with debt. If you’re just not sure what you could do next or feel like you can’t make any headway, you could pay a financial advisor or debt management company to help you pay down.

Pros: Experienced professionals may have resources to bring to the table when negotiating with debt collectors.

Cons: Debt management companies usually can’t do anything you couldn’t do yourself, and you may end up paying a lot for these services. Always get the terms in writing and stay away from companies that offer too-good-to-be-true guarantees.

If a debt consolidation loan sounds like a good idea and is one of the tips from this list you want to try, consider applying for a loan with Wise Loan today.


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