This article will show how to  get out of debt and remain debt free for life.

In these tough economic times many are feeling the pinch with reduced income and job opportunities, combined with the increase in everyday expenses like utilities and transport costs.

Now is the time to take action with a few simple steps to help you through the difficult times.


1. Find Out Where Your Money is Going

It's not fun, it's not sexy but it does work.

The first step in controlling your finances is to find out where they are currently going each month.

You need to write where you spend every dollar in a month. That's utilities, rent, gas, magazines, child care, parking metre charges, religious donations , everything. Every last cent.

The results of this for some can be quite shocking. It's amazing how much the 'odd' coffee comes to or how much you can spend on going out to lunch.


2. Set a Budget

Clearly Set Your Spending Limits

You must have a budget. 

Start by writing in the essentials. Food, Utilities, Transport costs etc. These are everyday things that you must pay every month and cannot avoid.

Secondly, See what areas you could cut back on. As mentioned before how much are you spending at Starbucks every morning for the coffee? Do you have magazine subscriptions that you never read?Are you paying for a gym membership and haven't been in months?

Be ruthless.This is your financial future we're determining here.

3. Reduce Costs

A Penny Saved is a Penny Earned

The next step is to look at your budget and see if you could get the same products/services for less money.

Do you really need a $40/month cell phone contract? Have you compared utility companies lately for the best offer or have you been loyal for years without out checking the prices?

Does your credit card have the lowest interest rate?

Investigate and if it's cheaper switch.

4. Reduce Debt

Get Out of Debt Faster

Once you have set your budget and reduced costs you should have a little extra money each month and if so...WELL DONE!

Typical families find they will have anything from $100-$300.

But wait, this isn't going to be spent on a celebratory dinner or a rewarding yourself by going on a shopping spree. No, this is going to be spent on reducing debt.

For this next stage you need to list all your debts, the percentage interest rate and the monthly payments you spend on them.

For example, it may look something like this,

Loan Borrowings   Interest Rate   Monthly Expense
Home $100,000   6%   $600
Student Loan $12,000   4%   $150
Car Loan $7,000   5%   $175
Credit Card $4,000   15%   $110
Store Card $2,000   19%   $100


 Now take this extra money you've now got and use it to pay off the loan with the highest interest rate. 

Let's say for instance that you saved $100 in the budget and reducing debt exercise, then your new monthly payment for the store card would be:

$100 (original payment) + $100 (from budget and cost reducing)=$200

Keep paying this extra money every month until the entire loan in repaid.

Next, take the second highest interest rate loan and add the new payment to that.For example,after the store card has been paid off the next payment on the 'credit card' would be,

$110 (original payment) +  $100 (from budget and cost reducing) +$100 (original store card payment)=$310

Continue making these payments until the credit card is paid off and continue this process or 'rolling over' the debt payments on the new loans until you are completely debt free.


Stick to the Plan it Works 100% of the Time

You may feel after a few weeks that you've put all this effort in and you can see little improvement but stick with it.

This plan ONLY works 100% of the time.

Avoid temptation, don't take out any new loans and you too can be COMPLETELY DEBT FREE FOR LIFE.

Good luck on your path to financial freedom.