How to Get Out of Debt Systematically

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By Brenda Holm
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Get Out of Debt Systematically

It is now more important than ever that people learn how to get out of debt. That can be extremely difficult if you are paying the minimums and making payment arrangements on all your bills. Here are a few tips for getting out from under the mountain of bills.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

Determination
online bill pay
cash flow
calculator

Step 1

Before you can even think about what to do to get out of debt you must first know exactly how bad it is. Sit down with your spouse and all the bills and calculate your bills. Make two lists one is your everyday expenses like house, utilities and food. These are the bills that must take priority. The second list will be everything else you owe like loans and credit cards.
Step 2

Stop right here for a minute. Do you make enough to pay your current bills that are a necessity? You would be surprised how many times people find themselves unable to cover everyday bills, and that number is growing. If you are upside down when it comes to your home and basic needs you can not make forward progress to get out of debt. Before you can proceed to get out of debt you must make your income exceed your basic bills.
Step 3

Tips For Bill Pay:
Look at your income to bill ratio as a battle you must win. This mentality will make it easier to do away with non essential things. For example can you trim the food budget by purchasing fewer prepared meals? Or buy the cheaper laundry detergent? Look at every dollar differently. You can also ask for overtime at work or maybe take a second part time job. These are hard things to do but when you realize you are at war to get your finances under control and get out of debt it will motivate you.
Step 4

When you have begun to see some light at the end of the tunnel you now must protect the ground you have taken. Keep monthly bills in check by estimating their cost and paying a portion each pay period. For example if your light bill is currently $150 a month and you are paid every two weeks, then out of your next pay check send in a payment of $75. Many companies have online bill pay or payment centers where you can do this instantly. Calculate all monthly bills and divide them by the number of pay periods you have in a month, then pay them a little at a time instead of waiting for them to come in. This does two things, one you will be paid on time and two you have a better concept of how much extra money you have each week or month.
Step 5

Now you are ready to get out of debt. Calculate the other outstanding debts you have and their minimum monthly payment. Now begin paying extra on the smallest debt you have. Say you have a credit card with $1000 balance and minimum payments of $20, pay as much extra per month as you can until that debt is cleared.
Step 6

Once your first debt is cleared rejoice! Now you can take the minimum payment plus the extra and add it to the payments you are making on the next largest debt. You have successfully snowballed your efforts and will get out of debt faster and faster.