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Help Me Get Out Of Debt - 7 Tips To Success

April 13, 2012 | Comments: 0 | Views: 155

Help me get out of debt..

This is a plea that many people have had over the past several years. Debt is with us and it is a burden that weighs us down. Been there, done that and I understand your debt problem. There is relief though, but getting out of debt is not easy and does not happen quickly. This is what worked for us and how we did it.

I read recently that a Consumer Reports poll indicated that 53 percent of consumers used a credit card to pay for all or some of their holiday gift purchases. At one time or another, I think all of us have run up our credit card bills and ended up paying exorbitant interest rates to pay for it.

If you're struggling to pay off credit card debt or other debts you've been carrying for some time, don't despair. It is possible to pay them off without going consolidating or walking away from them. The important thing is to recognize the debt, find out what you are spending money for and cut your expenses. Then make a plan, a "Get Out Of Debt Plan", to pay off your debt and follow the plan.

It looks rather simple on paper, but is a little more difficult in practice. We always start getting out of debt, but sometimes we need a little more information and guidance to make it happen.

If you are not already in default, here are some tips that can help you make a realistic plan to get rid of your credit card debt sooner rather than later.

1. Find out what you really owe and what you are paying.

Guessing about how much you owe and how much you are paying for bills is kind of like shooting at a target with blinders on. You might get close, but you will never know if you hit it. And kidding yourself or ignoring your credit card bills won't make them go away.

Here is what you can do instead.

Get every statement and credit card bill and make a list of everything you owe and everything you pay so you can tally up your debts. Sort this list and identify essential expenses and unsecured (think credit cards) debts. You want to tackle each category of debt separately to cut your expenses and pay off or down your debt.

Then sort it again to list your credit card debt lowest to highest balance, payment or interest rate. Sort any way you like. Personally, I like to sort by the lowest to highest balance. That way, when it is paid off, the money can be diverted to the next lowest until it is paid off.

2. Set some attainable goals

Avoid making a general statement or a New Year's resolution to just "pay off my credit cards" or "get out of debt". Generalities are not specific enough and make it hard to devise a plan that will work. Be very specific about which bills you want to pay off and when you want it to happen.

Your goal might be to pay off a credit card debt by a specific time. Or pay a certain amount toward a card until it is paid off. What is really necessary it to devise a plan that will work to cause you to become debt-free. Being very specific about your objectives can help you realize your goals that much faster - and might help you recover from a crushing debt load sooner than you think.

Paying the minimum amount due will not get you out of debt. But it is a great way to give more money to your credit card company and keep you in debt to them for many years.

Consider this tip: When you set your goal and select your method, try paying the minimum due or a specific amount, plus accrued interest, plus any fees or charges. This will make the entire minimum payment go toward the principal and you can actually calculate when it should be paid in full.

If you can only afford to do this with one credit card, make it happen. Pay off your credit card with the lowest balance or highest interest rate, then transfer that money to the next card or debt in your get out of debt plan.

3. Stop buying things with credit cards

As obvious as it seems, you cannot get out of debt when you continue to create debt. Yet, that is the way a lot of people choose to eliminate their debt. Consolidation might work, but you should give yourself a chance to get your budget and get out of debt plan on track by stopping the debt cycle dead in its tracks.

Cut off the credit card spending and focus on using cash as much as possible. This will cause you to question every purchase and help you spend more wisely. That being said, keep in mind that most people will use credit in an emergency. But stop all credit card use for everyday expenses.

Whenever you are considering spending money on anything other than essentials or to pay a debt, ask yourself this question, "Is this a want or a need?" If it is a need, spend the money. But if it is a want, then you probably do not need to spend the money for it. What we are asking you to do is to change your spending habits. Think about what you are buying and why you are buying it.

4. Transfer your balance to a low rate card

Consolidation or borrowing money to pay off debt very seldom works and is not one of my favorite things to do. But, a lot of banks and credit card companies are making zero or low interest rate offers on balance transfers. And you might be able to save a considerable amount of money if you can transfer a balance from a high interest credit card to one with a low-interest or zero-percent interest rate. This can help you reduce the total balance much faster.

Two things though:

Before you sign up for a zero or low interest card, talk to a real person and make sure you can transfer the entire balance to the new card. Many times, the new card company will just transfer part of the balance. If you cannot transfer the entire balance, pass on the card. All this does is spread your total debt over more cards and will not save you any money.

Make sure you know what the interest rate will be after the promotional period is over. The rate could higher than what you are paying now and may make it more difficult to pay off the debt in the long run.

Check out websites like, a free credit card comparison site, to shop around for the best credit cards offers based on your credit rating and spending patterns.

5. Overhaul your budget

This could be the second step in the plan. You may have two goals in mind. Paying off your credit card debt and reducing your living expenses. Saving money on living expenses and fixed debts will free up some money and will help you pay off your debt.

If you want to save money, you should re-evaluate your budget to see if you can reduce some essential expenses, like utilities, insurance and groceries and any non-essential expenses, at least temporarily. Non-essential means different things to different people, so you have to decide what a non-essential expense is for yourself. Any expense you can reduce will free up extra cash that can be used to help make your get out of debt plan successful.

If you find it difficult to save enough money by revisiting your essential and non-essential bills, then you might consider taking on a part-time job to increase your income and use the extra money to help pay off your debts.

6. Keep the basics of the plan in mind:

  • List all your debts and expenses.
  • Prioritize them. Learn what is essential and non-essential.
  • Eliminate credit card spending so you can shift your focus to cash-based spending and stop the debt cycle in its tracks.

7. Take time to let the plan work

You did not get in debt overnight and you probably will not get out of debt overnight. It may take some time, but with a good plan and realistic goals, you will see a big improvement in your financial situation.

Above all, do not be intimidated or discouraged by your debt. Debt did not happen overnight and will not go away overnight. But overhauling your budget and your spending priorities can help you get ahead of your finances and pay off your debt forever.

Debt is something that seems to be with most of us all our lives. And a lot of us never learn how to control or use debt to our advantage simply because we were never taught how. Click Here and get more information about mastering your debt and improving your life. It is time to get in control.

Source: EzineArticles
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