How To Get Out of Debt Easily

As financial times get harder, many of us are finding ourselves more and more in debt.  The debt may accrue slowly from small purchases and spending here and there, or it may be the result of one extremely large purchase like a new car or a tropical vacation.  Either way, once you get into debt, it is important to know how to get out of debt easily.

Step 1

Determine how much debt you really have.  This step can be terrifying because you'll have to face the harsh reality of your debt, but it is absolutely necessary.  Without knowing how much debt you have amassed, it is impossible to make a plan to get out of debt that will work.  Sit down with your spouse, a trusted friend, or a financial advisor and make a list or a chart of exactly how much money you owe.

Step 2

Find out who you owe and how much interest you are paying.  When getting out of debt, it is important to determine who you owe: credit card companies, bank loans, your parents, etc.  It is also essential that you find out how much interest you are paying on each of these loans so that you can decide which loans to pay off first and get out of debt easily.

Step 3

Begin paying off the loans with the highest interest rates.  While you are figuring out how to get out of debt, you are going to be making payments on your loans anyway.  Pay the minimum amount on the loans with the lower interest rates and pay as much as you can on the loan with the highest interest rate to avoid getting further into debt.

Step 4

Create a budget.  Sticking to a budget is an essential part of getting out of debt fast.  Make sure you first allot money for rent, food, utilities, and other necessities.  Only then should you budget money for fun and luxuries.  If you have trouble creating a budget yourself, find a trusted friend who is good with money or hire an accountant.

Step 5

Pay off the bad debt first.  "Bad debt" is debt that generally has an interest rate of over 10%.  Student loans and home mortgages are not bad debt.  Many credit cards are.  To get out of debt fast and easily, pay off the bad debt as soon as possible.

Step 6

Live below your means.  Making a budget will help you with this; to get out of debt, you must spend less money than you make.  It's a simple concept, and will help you get out of debt, but it is not easy.  Don't use your credit cards except in emergencies -- if you can't pay for it today, don't buy it.

Step 7

Get rid of most of your credit cards.  Choose the credit cards with the lowest annual interest rate and keep them -- for emergencies only!  Cut up the rest of the credit cards so that you are not even tempted to use them, so that you can get out of debt.

Step 8

Don't miss payments!  Missing payments or paying them late can raise your interest rates, getting you farther into debt.  To get out of debt, make sure you pay all of your bills on time.

Take a moment to congratulate yourself, not only when you get out of debt completely but along the way as well.  Each time you pay off a credit card or a loan, remember to savor the feeling of accomplishment and think to yourself that you are one step closer to getting out of debt!


Share this article!

Follow us!

Find more helpful articles: