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Get Out of Debt With A 6 Step Plan

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.

5 Simple Ways to Get Out of Debt

February 27th, 2008 Subscribe To Our Feed

Dealing with debt can be a stressful task, especially when the debt is large. It can taint everything we do and lead to anxiety and depression. It is a form of chronic stress because it cannot be dealt with but has to be chipped away until it becomes more and more manageable.

It may seem impossible to get out of debt. But if the problem is recognized early on, it can be fairly simple to do so. Essentially, getting out of debt means getting organized. This is often difficult for people when it comes to money because, although we like to spend money, after that it gets pretty boring. People can’t be bothered doing their monthly accounts. They may have a cursory glance at the monthly bank statement but that’s about it. Changing this attitude to your finances and money is half the battle when trying to get out of debt. Here are five ways that build on this idea and help you eliminate your debt for good.

1. Pay more than the minimum payments. Ideally, we should pay off our credit card balances every month, but sometimes we don’t or can’t. Paying more than just the minimum payment will allow us to pay off our debts much faster. It also has the potential to save us a lot of money, because the quicker we pay credit cards off, the less interest accrues.

This also holds true for mortgages, car loans, and any other type of loan. Some loans have prepayment penalties, but it’s best to avoid them anyway. For any loan that doesn’t, paying it off early is a good thing.

2. Cut back on your expenses, and put the extra money toward paying down your debt. If you examine your budget closely enough, you will likely find many areas where you could save money. Just taking your lunch to work instead of eating out can save you a substantial amount.

3. Sell things you don’t need. Do you have an extra vehicle, or anything else of value that you don’t use or need? Even just gathering up some things and having a yard sale could help you raise money to put toward your monthly payments. Every little bit helps.

4. Find ways to make extra money. You could take on a second job, do some babysitting, or sign up with a direct sales company. If you put all of your extra money toward paying off your debts, you shouldn’t need to do this for very long.

5. Consolidate your debts, but do so wisely. The best way to do this is to transfer all of your balances to a low-interest credit card. That will usually result in lower minimums, but keep on paying as much as you can to get the debt paid off. Avoid using home equity loans or other secured loans to consolidate if possible, because that will put your property at risk unnecessarily.

Getting out of debt may be easier than you think. Often a few minor adjustments are all that’s needed to eradicate a debt problem, especially if it is attended to early on. After you have made these changes the key is to stay consistent. Don’t splurge out or revert to old bad habits once the debt has been reduced. Stick with the rules you set yourself to get out of debt and you should be debt free for a long time to come.

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