Things You'll Need:
- list of your debts
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Step 1
Make a list of your debts - Before you can start to get out of debt, you must first know just how bad it is. Make a list of every debt that you owe. Document such information as creditor name, address, interest rate, amount borrowed, and minimum payments due.
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Step 2
Prioritize you debts - Organize your debt into two categories; priority and secondary. Priority debts include those debts that are secured, backed by some form of collateral, or imposed by legal rulings. This could include any mortgages you may have, court imposed fines, or income tax owed. Secondary debts may include credit cards, student loans, and money that you owe your friends or family.
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Step 3
Create a budget - Calculate your income and expenses. Any excess income should be applied towards your priority debts first. If, and only if, there is any money left, then you will begin to send money to your secondary creditors. Once you are current on you priority debts, stay that way.
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Step 4
Get a second job or add an additional source of income - One of the most effective ways to get out of debt fast is to make more income. You can get a job bagging groceries, delivering pizza, tutoring students, etc. Do whatever you need to in order to satisfy your obligations.
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Step 5
Do not ignore your secondary creditors completely - Even though it can be argued that paying your secondary creditors is not as important as paying your priority creditors, you should not ignore them completely. Write them a letter explaining your situation and ask for payment deferrals. Let them know that you intend to pay your debt but currently you are unable to do so in a timely manner. Ask them to waive any late fees and/or reduce your interest rate to 0% during the deferral period.
Comments
dlcass said
on 1/1/2009 It's an uphill battle getting out of debt, but a battle worth fighting.
maryellen1001 said
on 11/24/2008 Good tips and sound advice.