Get Out of Debt With A 6 Step Plan
Thursday, June 5th, 2008 Subscribe To Our Feed
Digging yourself out of a huge mound of debt is a daunting prospect. The first issue might be as basic as what path to go down to remove the debt. Should you go for credit counseling and debt consolidation. There are lawyers offering to have your debt reduced for a fee. There is even bankruptcy but this should be seen as a last resort. With all of these choices available it may be easy to fall into the trap of looking at ways to get out of debt without actually doing anything. Well, this article offers you a six step plan to get out of debt that you can start today, without resorting to outside help or bankruptcy court.
The truth is that it is quite possible to get out of debt with no outside help. Even those who don’t think there is room in their budget to pay down their debts are often surprised. It takes willpower and determination, but you can usually get out of debt on your own.
How do I get out of debt on my own?
Are you too far in debt? If so, in order to get out of debt on your own you will need to develop a plan and stick to it. Here is a good plan to follow:
1. Stop accruing new debt. Put the credit cards away, and refrain from taking out new loans or refinancing old ones to borrow more money.
2. Create a budget. You need to know where your money is going each month, and in which areas you can cut back to free up more money to pay off your debts. If you’re not sure where your money is going, write down all of your expenses for a month and then make your budget.
3. Cut the unnecessary items out of your budget, and cut back anywhere else you can. Set this money aside to pay down your debts.
4. Determine which debt needs to be paid off first. If you have secured debts other than a long-term mortgage, you may want to pay them off first. Debts with high interest should also take priority, unless you have lower interest credit cards that charge exorbitant annual or monthly fees.
5. Pay the minimum payment each month on all of your debts except the one that you have given top priority. Put all of your extra funds toward that debt, and continue to do so until it is paid off. If you get a bonus at work or unexpected money from some other source, consider putting it toward your debt as well.
6. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.
Paying off debt on your own is often easier than you think. By taking a realistic look at your finances, you can find ways to come up with the money to pay debts off. By sticking to your budget you can live within your means and ensure that your debt doesn’t increase.
Once you get your finances and lifestyle expenses under control you can start looking at ways to increase the speed at which you pay the debt off. For instance, consolidating your credit card debts under one credit card can save you money. Look for a credit card that has an introductory offer of no interest on balance transfers for six months.
You will have six months in which to pay off these debts without any interest to be paid. This will make it easier to pay off the debts but make sure you clear the debts, or at least get the bulk of the debt paid, within the six months or you may be paying a high interest rate on this debt. And don’t use the credit card to get new debts that will have interest charged on them. Stay focused and disciplined on achieving your goal of being debt free.
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