What Is the Best Way to Get Out of Debt?

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The best way to get out of debt is to come up with a monthly plan of attack by making a list of all bills, writing down how much is owed along with the interest rate and chipping away slowly at the smallest bill or the bill with the highest interest rate. Create an organized plan, setting aside money each month for bills, with advice from a licensed financial planner in this free video on personal finance.

Part of the Video Series: Debt & Debt Consolidation
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Video Transcript

Hi, my name is Bill Rae, I'm with HBW of Florida. I've been in the finance field for well over 20 years and the interesting question, how to get out of debt? Well the best way to avoid debt is not to get in there in the first place. But once you're in, it's not as difficult and is not as stressful as most people really make it. Getting out of debt can be as easy as getting in debt. Actually easier, to get in debt you had no plan whatsoever, you just spent. To get out of debt, you need a plan. So let's assume that you don't have anybody breaking down your doors and you've got time to think this out. You don't necessarily need to pay companies to help you do this. All it takes is simple common sense. What you need to do is sit down with a regular pad and a pen or a pencil and simply write down everyone you owe money to. Then next to that, write down how much do I owe them. And after that, how much am I committed monthly to pay them. Another piece of advice or another excuse me, another piece of knowledge I like to know is what's my interest rate that I'm paying for use of that money. Once I know all this, it's very easy to come up with a plan. Sometimes it might be better to start what I call the feel good plan. Let's look at the lowest amount of money I owe. Let me pay that one off as quickly as I can so I can feel good that my plan is working. But let's just say you add up all of your bills and the total monthly outlay is say 1,000 dollars. The ideal way to get out the fastest is to say OK, I'm going to add another 100 dollars a month to my 1,000 and I'm going to attack either my lowest bill or my highest interest which is my highest cost one. Simply make that payment plus the extra 10%, 100, whatever you can afford. Continue to make payments until that's gone. After that, take all that money and don't cheat, take all that money and roll on to the next one. Most people can get out of debt within 3 to 5 years without changing or dramatically affecting their lifestyle whatsoever. However you do have to understand, you either have to cut spending or increase your income. Those are the two easiest ways to get out of debt. It's not that hard, take a breath, sit down and do a little a thinking and then take action. And as always, seek out side counsel whenever possible from companies such as ours. My name is Bill Rae, I'm with HBW of Florida and we're helping you build wealth.

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