Most people will at some time in their lives find themselves in debt. Buying a house, a car and those credit cards can easily put you knee deep in debt.

Debt has a bad rap and it's because people have never been taught at school how to work with their personal finances. Debt can be leveraged to create passive incomes beyond your dreams, but we would rather use debt to buy liabilities instead of assets that could create the casflow to buy our luxuries.

There is bad debt and good debt. Good debt can be used to buy houses that you rent out to create capital growth and a passive income.

Bad debt is created by credit cards and car loans. People use bad debt to create the illusion of wealth. Although they appear to be financially in charge, because they drive the latest model car, live in the right area of town and buy from the most exclusive shops, they are actually drowning in debt.

I have some tips that can help you get out of debt:

Create a budget and spending plan

The first thing you need to do is to create a budget. To create a budget you need to know what your spending habits are per month. You need to take all your expenses over the past couple of months and work out what your average expenses have been per month. Then decide on the minimum amount of money you need and create a spending plan.

List your assets

Write down all your assets or things that you can sell to help you towards getting out of debt. Selling assets that you don't need can help you out of debt quicker, since you will be saving on interest payments.

List your liabilities

Make a list of your liabilities with the amount of debt and interest rates you are being charged. The interest rate is important because paying off the debt with the highest interest rate will get you faster out of debt.

Repayment schedule

Create a repayment schedule to pay back the debt you owe. Pay the minimum fee of all your creditors except the debt with the highest interest rate. The debt with the highest interest rate is costing you the most money, so you need to get rid of it first.

Pay as much as you can manage on the debt with the highest interest rate and when you have paid it back in full, move on to the debt with the second highest interest rate. And so on, until you have paid of all your debt.

Save and pay cash

We live in a society of instant gratification. We want something and don't have the patience to save for it. When you have paid off your debt, start a savings plan. Invest the money or use the savings money as a leverage to invest in property. Get the money to work for you.

For any budget to work you need to practice self control and stick to the plan. You will be bombarded with messages that try to sell you things that you don't need. Stay strong and free yourself from debt.

Decide to make changes to your lifestyle that fits your income. You don't need to spend every cent you earn, save some for a rainy day or a holiday on a tropical island.