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Steps On How to Get Out of Debt In 1 Year

July 09, 2012 | Comments: 0 | Views: 155

Becoming debt free in as little as one year is perfectly possible. Of course, this usually depends on exactly how large the total amount owed is, but in most cases, careful budgeting and determination are enough to wipe out liabilities within 12 months. In fact, there are individuals who have managed to do this exact feat, providing themselves with a brand new lease on life. For those who want to find out exactly how to get out of debt, following are the steps on how to do this.

Assess all the Debts

This is the first and most important step on how to get out of debt. Figure out exactly how much is owed and how much payment would be needed per month in order to pay them all for the next 12 months. Note that one year is the best length of payment plan, but it isn't the only choice. If individuals find that the total amount of debt is too much for one year, then don't be afraid to plan for a two or three year "get out of debt" project.

Calculate Minimum Funds Required per Month

Find out how much the family is actually taking home every month and deduct all the expenses that are vital. These include grocery, utilities and various expenses for day to day living. The remaining amount would be the ones used to pay off the outstanding liabilities of a person.

How to Get Out of Debt - Minimum Payments

Figure out how much still needs to be paid and figure out the target date for the completion of payment. Although it would be great to wipe them all out in 12 months tops, the truth is that this is relative to the size of the liability. Figure out how much needs to be paid every month in order to clear all the outstanding liabilities.

Cut Back on Expense or Earn More

The most common method of how to become debt free quickly is to pay more of the liabilities often. To do this, individuals would need to cut back on their expenses or earn more money for payment. Some of the expenses individuals can cut back on include luxury items such as gym membership, facials, nail spas and others.

Create a Plan

The technique on how to become debt free in 1 year is by creating an efficient repayment plan and sticking to it to the letter. Prioritize the debts and pay off the creditors that are charging the most in interest while making minimum payments in low-interest liabilities. This simple plan would allow debtors to pay off the liabilities that are eating up too much of their income.

Seek Professional Help

One of the best methods on how to get out of debt that is too severe by going to a professional. They would be able to perform a more thorough assessment of the financial problem and provide a realistic solution to the severe problems. Some debt solutions that professionals could provide include settlement, consolidation, counseling and even filing for bankruptcy.

You can learn How To Become Debt Free by checking our free resources on Freedom From Debt for your own information.

Source: EzineArticles
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