Get Out of Debt: 5 Simple Steps

Posted by on March-21-2009 under Save Money

Step 1: Break Debt into Small Pieces
Instead of looking at the total debt, divide it into smaller pieces. Start with the ones that carry highest interest rates. Generally, credit-card debt carry the highest interest rate, so target them first. Also try to focus on your smallest balance first, so that number of pending debt are reduced and you do not feel overwhelmed. Click here to be notified via email when a similar article is published.

Step 2: Track Every Bit of Your Spending
Wrote down each penny that you spend. Then question whether you actually need to spend that. Tighten your belt. Start living as frugally as you can the minute you’re in trouble. Cut down on everything: newspaper, cable, cell phone, eating out, utility costs, shopping, Car Insurance (Save up to 20% on Insurance, Free Quotes! ) etc. Remember – every penny saved is penny earned.

Step 3: Don’t Miss Any Payments
Very closely track which payments are becoming due, and plan in advance that how are you going to pay them off. In case of a credit card debt, pay at least the minimum by the due date. You can also ask your lender to change your payment due date to work with your payday schedule.

In case of a late payment, not only will you have to pay late fees and a higher interest rate, but your insurance rates may also rise and you’ll have a tough time qualifying for better loan rates. This would impact your credit score as well, and that can make your problems even worse. Click here to be notified via email when a similar article is published.

Step 4: Boost Your Income
Try to increase your income by working extra hours, or picking some part-time job. You can also try some legitimate work from home job, but do not get stuck into some scam (check out: Work From Home Scams ). This additional income will give you some additional cushion to quickly dig yourself out of the debt.

Step 5: Get Help as Soon as You See Trouble
When you sense you are in trouble, it is better to take professional help as soon as possible. You can get in touch with a credit-counseling agency or a financial planner. They can tell you about many options you may not know about. Such agencies can also work with your lenders to eliminate late fees and lower interest rates. You can find a credit-counseling agency at www.nfcc.org or www.aiccca.org. These websites also have some free resources that explain all the options.

To pay off the debt, this is the golden mantra that you need to remember and follow: Start slow and stay steady.





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5 Responses so far.

  1. J. Money says:

    hell yeah to #2! pretty easy to do via credit card too if you can master it like that :)

  2. Ishan says:

    @J.Money – well said. Spending can be easily tracked via credit card. Just need to ensure that credit card itself does not becomes a part of the problem, instead of solution :)

  3. Jonathan says:

    Thanks for writing a thorough article about personal finance management. I learnt something new and hope to test drive your ideas soon. Awesome article!!

  4. Ishan says:

    @Jonathan – thanks for visiting, and I am glad you liked this article.

  5. […] Related Article: Get Out of Debt: 5 Simple Steps […]


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