Five Steps to Get Out of Debt

If you have been in debt for some time and are having a hard time making ends meet, or are possibly even facing bankruptcy, you are probably looking for solutions. While various debt solutions are available, you need some real ways that work to become debt free.

Decide to Become Debt Free

The first step in getting out of debt is making a deliberate decision to do so. Until you are sure that getting out of debt is what you really want to do, you are not likely to stick to it for long.

This is why when people borrow money for a debt consolidation loan they often end up in debt again. They have created a cycle of debt. You must be determined not to go into debt again, except perhaps for major purchases, such as for a house, car, or appliances.

Create a Realistic Budget

Although a budget may sound restrictive, when you consider that it will help you understand where your money needs to go each month, you will see that it can become an excellent guide and enable you to avoid overspending. It also shows you where your spending priorities ought to be, and lets you see how much you have left in each category after your major bills are paid.

When you keep a budget up-to-date, you can also see how much money you have for spending on extras. Of course, your real goal will be to pay down your bills and get out of debt quickly, but having a little leeway will let you have some fun.

Find and Eliminate Unnecessary Expenses

Most people are often spending money without being aware of how many of their purchases are really unnecessary. For instance, if you eat at a lot of fast food restaurants, or buy a latte every day, you are probably spending more than you realize for these luxuries. Cutting down how often you buy these things will enable you to put more money toward your debt every month.

You may also be paying money each month for some kind of regular service – such as for TV and movies, for a gym membership you may not be using, cigarettes, energy drinks, and more. Get rid of them if you can, or reduce the cost and get a simpler plan. Instead of buying a fast food meal, eat at home much more for savings on your food costs.

Reduce Your Debt As Fast As Possible

Instead of just paying the minimum amount on each bill, you want to pay as much as you can on each one. Paying extra will enable you to lower the amount of interest you pay over the life of the debt. Be sure to pay your bills on time, too, which will help maintain and even improve your credit score if you do it consistently.

Aim to pay off the smallest bill first. Then, when it is paid, put that same amount of money toward your next largest bill, etc.

Save Money and Pay Cash on Future Purchases

Instead of using your credit cards and building up your debt again, learn to save money and use cash. You should also stop carrying your credit cards around so that you will not be tempted to rebuild your debt. This will help you to learn better money management and put money into savings.

A debt solution is only as good as you are willing to follow it. Once you obtain debt relief, you will understand the joy and wisdom of it, and likely never want to get into debt again.

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Mike Valles is a freelance writer who is available for writing projects. He Most often writes about personal finance topics, and he writes articles, blog posts, eBooks, and books. Learn more about his writing services by following the link.

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