Tips for Getting Out of Debt

Experts are now saying that the recession is over. Really? Because last I looked, millions of people still needed some help. I used to be like you; wondering if I would ever be getting out of debt. From what I remember, the monthly bills were all over the place, popping up like weeds. It was a chore keeping up with everything. Here are some of the moves I made for getting out of debt; hopefully, they can help you do the same.

First, understand completely what you need to do before you get out of debt. Getting out of debt means understanding what your debt is. Obtain a free credit report from all three credit bureaus to see exactly all of your accounts in collection and outstanding debts. How can you get out of debt if you don't even know who and what you have to pay?

Next, you need a game plan for the actual "getting out of debt" part. Needless to say, you will probably have to find ways to increase your income or decrease your expenses. Using debt to get out of debt won't work, so clip those credit cards - but don't close the accounts once you've paid them off (unless they have an annual fee, then, by all means, clip away). A second job, getting rid of monthly clubs or luxuries (yes, cable is a luxury), find a way to start making more money than you spend. Then spend it on your credit card balance.

When I was getting out of debt, I used the smallest loan first policy: I paid the monthly minimum on all of my outstanding debts except the smallest. That one I threw all the money I possibly could at it until it was gone: aggressively trying to pay it off with whatever extra money I had each month. Once that was paid, I could take that aggressive money to the next smallest debt, and so on. It wasn't easy, but I was surprised at how quickly I was paying off some of my debt.

Getting out of debt can seem like a monumental task, but you have to start somewhere. Find a way to cut expenses and remove luxuries. Don't take on new debt until it is all paid off (or, better yet, start paying in cash). Following this same formula that I used, you can get out of debt in no time.