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10 Ways to Get Out of Debt

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Faced with record high personal debt levels and ultra-low savings rates, it may be worthwhile for Americans to consider taking the hard way out of debt.

When people talk about getting their personal finances in order, they usually try to find the easy way to reduce debt and increase savings.

There are a number of steps that you can take that are relatively pain-free and low-cost that will help get you on your way to a better financial position, but this is taking the long term approach. Little steps over a long period of time will add up to big amounts, but it's not the only way to achieve financial freedom.

Another option is to take the hard route.

Instead of making small changes, make big changes which can have a large impact. The advantage is that you can put a huge dent into any debt you might have or supercharge your saving rate, with large increases over a short period of time. Here are 10 hard ways to get your finances in order.

10. Downsize your house.

Instead of buying the biggest house you can afford, live in the smallest house you can find. Sell your current house and buy one that is half the size or even smaller. Challenge yourself to find the smallest space that you can stand to live in.

Take a chapter out of your college days and think one-bedroom or studio apartment (or a lot of roommates). Though it's not easy to live small when everyone around you is living large, your finances will be healthy and well in no time as those around you struggle to make their mortgage payments.

9. Save 50%+ of your income.

Saving 10% of your income is the common recommendation, but you can do a lot better than that. Shoot for saving 50% or more of you take home pay. With a bit of effort, anyone can save 10% of their income, but it takes discipline and effort to live on only 50% of your income. By doing so, you will ensure you don't have any financial problems and that you can retire years, if not decades, earlier than your coworkers.

8. Eliminate your gadgets.

Think about this for a second: 30 years ago you didn't have Apple (AAPL - Get Report) iPods, cellphones, computers, DVD players and a lot of the other gadgets that are deemed "essential" today. Throw in the big, flat screen TV and get rid of them all.

You can get your news from a newspaper at your local library, where you can also check email or use the computer. Not only will you save hundreds a month on subscription costs, you'll save thousands of dollars a year on hardware costs. While there is no doubt that many of today's gadgets are convenient, it is readily possible to live without them if you are committed.

7. Eliminate your car.

The truth is that you don't really need your car. Yes, it's a lot more convenient than not having one, but it's possible to get by without one. You will have to adjust your schedule around others that do have cars and learn to love public transportation.

On the occasions when you do need a car, renting is one still possible. Not only do you eliminate car payments, gas costs, repair bills and insurance costs, the extra movement will slim you down while it fattens your wallet.

6. Only buy used.

New is nice, but there are very few items that you need to purchase new. Learn to buy everything you want used or don't buy it at all. eBay (EBAY - Get Report), Craigslist, second-hand shops, flea markets and garage sales will be your new shopping grounds. This should reduce your spending by 50% or more and with a bit of work and a good eye, you'll be the only one to know you didn't pay retail prices.

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