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6 Steps to Getting Out of Debt

AngieGentry | Sep 25, 2009 |

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For many Americans, struggling to get out of debt is a way of life. Successful debt management requires a plan, hard work, and patience. Here is a good general outline for eliminating debt.

Write Down Your Plan

The plan you are outlining now is much more likely to succeed if you write it down. Getting your ideas and goals on paper allows you to have a reference to look back on as you go. This will help you stay on track and keep the bigger picture in mind.

Stop Accumulating Debt!

No matter how good your debt management plan is, it won't work if you don't change your approach to debt and money. Lock up your credit cards and watch other types of debt like your mortgage and car loan.

Manage Your Money

This is the other part of the plan that requires you to change the behaviors that got you swimming in debt in the first place. Track your monthly debt payments and other living expenses. You can do this using old-fashioned ledger sheets or with a software like Quicken. When you know what your basic monthly expenses are, you can decide to devote part of what's left over to paying down existing debt.

Live Within Your Means

This is a big challenge for most of us. Learn to establish what you need from what you want. Do you really need a new car or could you just spend a little fixing the old one up? Try to limit the number of times you eat out each week or make your morning cup of coffee at home instead of stopping by Starbucks on the way to work. Look at every aspect of your spending and figure out how you can save. The small sacrifices every day add up and pay off big down the road.

Start a Savings

This is the preventative part of the plan. Everyone has unexpected expenses come up that they don't have the cash to cover. Unfortunately, most of us decide to pull out the plastic when these emergencies hit. But if you make the effort to accumulate a savings or emergency fund, you can keep yourself from racking up additional debt.

Practice Makes Perfect

Debt management is not a single act. It's the repetition of several acts, done over and over and over again. Most likely, you spent a lot of time accumulating your debt. Likewise, it will take you a long time to get rid of it. The important thing is not to give up to quickly. Be patient, stay the course, and stick to your plan.