Monday, February 20, 2012

10 ways to Eliminate Debt

It’s been a while since I have last updated. I have been busy with work, life and trying to keep up with all my social activities. I have barely had any time to attend meetings with my cooking club or my investing club lately. However, I was fortune enough to go to my investing club meeting this past Valentine’s day and I got some great advice from a guy who does credit counseling and helps students with massive graduate school get out of debt. He gave a wonderful lecture and told us ways to live frugally and simple ways to cut costs to pay back student debt. If you are a college graduate or a law school graduate with heavy student loans (over $100,000 in debt), there are some ways you can cut your expenses and find ways to save money to pay back student debt sooner than you think.

If you are overwhelmed with student debt, here are some ways you can drastically cut your costs and save money to pay back those massive student loans:

Tip # 1.     Move back in with your parents after college or law school.

I know that this is a total blow to personal freedoms, and it’s hard to move back home after you finish college and grad school. This tip applies mostly to single professionals, because if your parents let you live rent free, you can knock out a good chunk of student loans instead of paying rent. You can easily put an extra $1,000 or more towards student debt per month if you aren’t paying rent and you can live for free with the parents. I know it’s tough on the social life, but it would only be short term and it will help you save a fortune. The speaker said that one guy paid of $24,000 in loans by living rent free at home with parents, and he only made $55,000 a year. He put every penny towards student loans and they were gone in a year.

Tip # 2.      Only go shopping with Cash.

Whenever I go to the grocery store or drug store, I always bring cash. I will not bring more than maybe $50.00 in cash. If I want to buy more things and “splurge” it will force me to think twice, because I won’t have enough money to buy the things I want, but don’t necessarily need. I can't spend more money than I have, and it will help me save money and not splurge.

Tip # 3     Drive a good used car.

The best advice I ever got was to not have a car payment in my youth. Think about it, a car is a DEPRECIATING asset: You are paying principal and interest on something that is LOSING value. He told us that a good way to get money for a used car is to use your tax return (For example $4,000-5,000 dollars) and buy a used car, and drive it until its dead beyond repair. Good used cars are Toyota Corollas, Honda Accords, Civics, etc. You should shop around and find a low mileage used car with a CARFAX so you know your car is in good condition. By not having a car payment you will have another $300-500.00 a month in your pocket. You can use that money to pay back loans and other debt.

Tip #4    Cut unnecessary costs and little expenses

Do you really need all those catalogs in the mail? Do you need to spend a lot of money on expensive pet food and pampering your pet? Are you paying for premium gas, but do you need it? Check your cell phone bill, you may be paying for more than you really should. Double check your utility bills and bank statements.

Tip #5   Drop the Store Credit Cards.

Do you really need a dozen credit cards? It’s good to have a Visa, MasterCard and/or American Express but you don’t need credit cards for every store in the mall. Unless, you really use a store credit card, then you should really think twice. Yes, you should have credit cards for emergencies, but are there really any emergencies at luxury department stores? The half yearly sale at Nordstrom doesn’t count.

Tip #6   Change your eating habits!

A friend of mine recently decided to stop eating out completely, except for on the weekends. He brings his lunch to work every day and avoids eating out during the week. Of course, he may eat out here and there, but he tries to only eat out on weekends. He has more time and money to enjoy dinner with friends on the weekend, rather than spending so much on lunch. Another friend became a vegetarian because of his girlfriend, and saves money by not eating meat.

Tip #7     Don’t buy fancy brands for generic items.

To me, hand soap is hand soap. I don’t buy all the weird smelling fruity anti bacterial hand soaps and hand sanitizers you see in the mall. I only buy the general hand soap in a big gallon bottle, because it lasts forever. Also, I don’t buy expensive brands of generic goods: Bleach, some cleaners and detergents, dry spices, greeting cards, Milk, and toilet paper. There is really no difference in quality when it comes to generic goods, and you shouldn't pay more money.

Tip # 8       Find a  Second part time job.

If you are working 14-16 hour days, I know how hard it is just to find time to sleep and do laundry. It’s not easy, but if you have some time free in the evenings or weekends, then you should find another job. Get creative, maybe start a business? I used to work as a bouncer for a lesbian night club. The money was good and it was only 2 nights a week. Be creative, think of ways to make money.

Tip #9           During the holidays, ask for “productive presents” whenever you receive gifts.

You will likely receive a lot of presents for your Birthday, Christmas, Hanukkah, Eid, Wedding, or whenever. When people ask you want or what’s on your “wish list” think of things that you actually need. During my holiday party last year, we had a “Secret Santa” and my co workers thought I was crazy. Everyone asked for money, clothes, chocolates, etc., but I asked for a Costco membership. My Costco membership expires in December, so by getting a membership as a gift, I save money. It’s a productive present, because its something I know I will use for the whole year.

Tip #10        You need to get educated!

Find out more about personal finance from online websites and figure out ways to keep track of your expenses, and find out ways to cut your debt and new legislation regarding student debt and changes in student loans that you should be aware of. Some great websites are :

Wise Bread's motto is "Living large on a small budget," and its community of bloggers informs and advises readers on a variety of personal finance topics. This is a very resourceful site to learn more about managing your debt, credit cards, and how to live frugal.

This is a website that is devoted to helping you live debt free and they have an email they send out every day called “The Everyday Cheapskate” with tips and tricks to help you save money and life a fulfilling life, without excess debt and even include shopping tips and recipes.

The U.S. government has built a site to help assist and teach all Americans the basics about money, saving, getting out of debt, loans, and retirement. It’s a great resource to learn more about the personal finance and government resources that are available to you with up to date news information.

Well it’s late and I have to get up early tomorrow. I hope these great tips will help all of you save money and help you pay off those high interest loans faster than you think.
-The Poor Paralegal


  1. Tip 1 is where the real money is saved. The major expense most of us have is on housing. But a word of caution: you may think that it's "free" to live at home with parents, but your parents are paying for that extra room, extra utilities, and extra food while you're at home with them. If they can afford it, great. If not, moving back in with parents is merely shifting the economic burden elsewhere in the family.

  2. ^To the above comment, you can still help out here and there while you're living at home with your parents. I'm doing so myself, and I do small things like pick up laundry detergent, coffee, etc. while doesn't cost a whole lot but it makes everyone happy. Plus if your parents have the means, they are happy to take the economic burden for you for a couple years while you get established and pay down your loans.

  3. With respect to Tip #4, do not get a pet if you cannot afford one. An animal shouldn't suffer in the quality of its food and care, because someone took on a responsibility he or she couldn't afford.

  4. The local news station is doing a feature on how college grads moving back in with mom and dad will likely become normal, for decades. But the corporate pigs didn't make the connection between SKYROCKETING tuition and this phenomenon.

    Tip 11. Have positive thoughts - "because positive things happen to positive people, network, "work hard" and win the lottery!!

  5. Thanks for all of this. Great Blog!

  6. The first thing you need to do is to make a quick review of all your expenses. If possible, make a distinction between necessary and unnecessary expenses. From this list of expenses, you will have a clear idea where adjustments can be made to efficiently balance your earnings and expenses.

  7. And you will not find most of them on this blog. These tips are reserved my loyal subscribers.
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  8. Pretty hard to move back in with the parents when they think that you are leech and parasite. My parents have told me that I better learn to live in a cardboard box or my car before I ever consider coming back to live with them. My mom had to move back in with her parents when she divorced by dad back in college. My stepdad lived with his parents till he was 27 years old.

    The best part is when other family members are willing to let you live with them and your parents call to tell them to not let you stay. In fact, my parents both called one of my aunts and tried to convince her to refuse to let me live with her.

    The funniest part was they were convinced that I had suggested it. My parents were shocked when my aunt said that she had suggested the idea. In fact, they were so horrified that they gave her a laundry list of things that I needed to do to make sure I don't get comfortable.

    Just in case anyone wants to know, I only lived with my aunt for two years because I was going back to school for an associates in accounting. I moved out and found a place after I found a job. Gotta love parents who basically treat you like a criminal or convict.

  9. Great article! I've always been the more "frugal one" out of my group of friends, but I do tend to spend on clothes and food that I really don't need to splurge on all the time. I'm starting to be more accountable of my funds, especially since I'm paying loans each month, gas about every week, and a credit card bill. My parents have been very supportive and allowed me to move home and bear a lot of my expenses. I'm fortunate to have parents who can afford to have me at home until I get on my feet, which I now see is the best decision I could have made after graduation last year. Sometimes I foot the bill for dinner or items we need for the house. Hopefully, I can manage my money better and start paying a major bill to help them out.

    I agree with the poster who added a tip about being positive. Positivity goes a long way. Ive had a rough time after graduation finding work, and while I'm not working in my field, I'm in a great working environment and I enjoy my job.

  10. I agree with your tips. This is true in any situations and time. The reeducation is especially important because if yo have new set of skills then you will have a the capability to earn a lot more.

  11. I think your readers and followers wouldn’t mind the late updates since you’ve given them a pretty informative and useful post. And your write-up is worth reading. A lot of students are having a hard time dealing with their finances, especially with their student loans. But as what teachers say in school, “Knowledge is power.” And having the right knowledge and attitude to solve your financial crisis can be a way to get you back on the money track.

  12. Similar to other careers, being a paralegal has its own share of areas of advancement. The yearly pay of this profession is determined by the responsibilities that one is tasked to do. Newly hired paralegals usually have an average annual wage of $30,000. But if one excels in the assignments that is given to him or her, then it is possible for this person’s pay to increase up to $50,000 in just a matter of 12 months. Paralegal Wage

  13. I've been a student before, and just like most college students, I left my parents and decided to live on my own. Truthfully, it was tough to be alone in the real world. Budgeting is the hardest thing for me to do. For this reason, I decided to move back to my parents. I learned that, in order to avoid debt, it's important to be thrifty at all times. Budget everything, and refrain from using a credit card when purchasing items. Self-control is very important if you want to keep to a specific budget.

  14. I make 63k a year and had about 40k in student loans. I transitioned into a consulting job where I was always travelling. I moved back home and within a matter of 2 years I had not only destroyed my student loans and paid off my car but also saved 20k in a Roth IRA account. Yes, the social life was very rough but I just abhor the idea of debt. I lived my with my uncle and aunt who were more than happy to have me. They liked having me around and I always helped out with the chores around the house and bought groceries and other items without being asked. I think moving back is a good idea and you can do so without losing your dignity. If you dont have a job then help out by doing things like the dishes, cleaning or lawn mowing.

  15. Nice article and informative discussion too...

  16. I'm actually going to school for paralegal, and your blog has made me question my decision, haha! No but really, thank you very much for these money-saving tips! They're extremely useful (I'll probably be moving back home)! Also, another thing that was incredibly helpful for me in the very beginning was attending a Community College for the first two years, then transferring to the "big university" for the last two. Thanks again for your blog!

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  21. I'm fortunate to have parents who can afford to have me at home until I get on my feet, which I now see is the best decision I could have made after graduation last year. Sometimes I foot the bill for dinner or items we need for the house. Hopefully, I can manage my money better and start paying a major bill to help them out. weight loss calculator by calories per day

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