How to Get Out of Debt

Getting out of debt is challenging, but it can be accomplished with dedication and perseverance.

Difficulty: Challenging

Instructions

Things You'll Need:

• Calculators
• Personal financial software

1. Cut up your credit cards except for one or two to use for emergencies. Throw away the pieces.

2. Cancel all of your credit lines and request a lower interest rate on the debt you have left.

3. Transfer as much debt as possible to the credit card that has the lowest interest rate, or get a debt-consolidation loan from a bank at a lower rate.

4. Use cash for all your purchases, and only buy what you can afford.

5. Commit to start paying off your debts one at a time and do it. Pay off the credit card and loans with the highest interest rate first.

6. Double your payments on the next debt by taking the payment you made on the first debt and adding it to the current debt.

7. Triple your payments on the next debt by combining payment amounts. Continue until all your credit cards and other debts are paid off.

Tips & Warnings

• Invest in personal finance software to accurately track your spending and identify problematic habits.
• If you have investments that are paying 6 to 10 percent but a credit card debt with an interest rate of 17 to 21 percent, cash out your investments and pay off your debt.
• Ask your creditors how much repayment is needed before they are able to send a favorable report to credit agencies. Sometimes they will accept less than your total debt.
• Use consumer credit agencies to arrange repayment of debt. Many are free.

[lilolladystuff]

on 6/8/2009 Good article and helpful tips. Thanks.

[tell2]

on 5/27/2009 Thanks for the tips. For those who are keeping their cards. Do not forget to continue paying the minimum amounts on all your cards, as this keeps your rating in good standing.

[goneill]

on 5/23/2009 First I would set out an income and expenditure sheet to identify areas for savings then follow the very sensible steps outlined in the article. For more similar articles visit http://debtcontrolblog.comRegardsgoneill

[alyayala]

on 5/18/2009 If I were any of you DON'T CANCEL YOUR CREDIT CARDS. You can cut them up by all means. If you cancel your cards them it will lower your credit score. Then in the future if you are trying to buy a house or get a loan of any kind it will come around to bit you.

[cchitnarain]

on 5/4/2009 Great Tips! I'm working on my debt right now =(