How to Get Out of Debt

Get out of debt.

Is Being in Debt Threatening the Life You Want?

If you are in debt, and working outside your home, you may be desperately trying to find a way to come home to your children for good. You might even be at home already, and searching for a solution to get you out of your debt so you can continue to stay at home.

Don’t give up. Getting out of debt is more possible than you think, although it does take time, dedication, and a crash course in debt management.

The solution suggested by many advisors in this country is organized debt consolidation in the form of a home equity loan. This is actually one of the least desirable things to do; despite popular opinion.

Your house is not an ATM!

For most people, dipping into their home equity to pay off consumer debt does nothing to correct the habits that ran up the bills in the first place. Many will charge their credit cards right back to the limit, and end up with the same or worse debt than before in addition to putting their home in jeopardy.

If you are serious about getting out of debt, Mary Hunt’s website Debt Proof Living is one of the best sources for information and game plans for getting out of debt and staying debt free. It is a membership site, but there is plenty of good solid debt advice in the free sections of the site as well.

The Steps to Take to Get Out of Debt

There are several steps in the process of getting out of debt.

Keep in mind that this is a process that involves discipline and may take some time. There are no quick and easy steps to becoming debt-free, but the following method is simple, straightforward, and successful if done properly.

Track Your Money
This is something you and your spouse will have to co-operate on. Both of you will need to write down everything you spend money on, no matter how minor. You will quickly become aware how often you make impulse buys that have no real value to your life.

After a few weeks you will be able to see where your money is going. Now it is time to set up some type of weekly or monthly budget and trim those extra expenses. See the page on Budget Systems for more information.

List Your Debt
Make a list of all your debt. Not your minimum payments, but the total debt you owe on each account. You want to eliminate your debt, not just hold your place. If you have two similar amounts, a good debt management practice is to pay off the one with the higher interest rate first.

Eliminate Expenses
Review your notes, and look for expenses that could have been avoided. Fast food and take-out are common culprits, as are daily morning cups of coffee. You can eliminate these costs and use this money to get out of debt!

Make Payments
Each month, be sure to make your minimum payments on time to all your creditors – except for your smallest debt. Take the funds you have saved by eliminating excess spending and add them to the normal minimum payment for that debt.

For example, say you have been saving $50 a month by cutting unnecessary spending. Your smallest debt is $200 owed to ABC Tires with payments of $10 per month. Add the $50 and pay $60 per month until your account with ABC Tires is paid in full.

Now that the ABC Tires debt is satisfied, you have extra funds each month to work on your next smallest debt.

Your XYZ credit card requires a minimum payment of $25 per month. Add the $60 you do not have to allocate to ABC Tires anymore, and pay $85 on your XYZ credit card account until paid in full. Then take that $85 and add it to your payment on your next smallest debt, and so on.

It Works!
This is a proven method, and it works. It may take time, but be patient and you will see results! You will have to be disciplined and so will the rest of your family, but the results (being debt-free, being able to be a stay-at-home mom) will be worth it.

If you are deeply in debt and seriously past due on all accounts (several months), have no income, or have already cut your expenses to the bone and have no excess funds to help pay your debts, it may be time to contact a consumer debt counseling service (such as Consumer Credit Service).

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