It is always easier to get into debt than it is to get out of it. No one needs a plan to build up a huge debt, but one may be needed to find your way out of it. This step-by-step guideline will lead the way out of debt and into a world of comfort for you.
Calculate Your Debt
The first step to take when you are trying to get out of debt is to understand just how much debt you have. Write it all down, listing each of them so you can see the biggest debt and the smallest ones. Be sure to add the interest rates beside those numbers, too.
Create a Cash Flow Calendar
The next step is to list all of your monthly income and when you get it. Put it on the calendar. Then put on the calendar when each of your bills is due. Time suggests that you also put each of your regular weekly expenses on it, too, so that you can get a very realistic picture of where your money is going.
Look to Reduce All Extra Expenses
Take a close look at every place money is being spent. It is a good idea to write down all of your expenditures for a couple of weeks. You may be surprised. Be sure to add in the cost of eating fast food, buying cups of coffee, meals at restaurants, etc. Then, see what you can do without.
Many families have extras that they pay for each month. This may include gym memberships, cable TV, subscriptions, taking trips, going to movies, etc. See which ones can be eliminated right away to create some extra money to put toward the bills.
Pay Off Smallest Debt First
Put the extra money toward the smallest bill first. Be sure to also pay the minimum on each of the other bills so you do not get hit with late fees and extra interest. As each bill gets paid off completely, take the money you were paying that bill with and put it on the next largest bill – until they are all paid. Do not use credit to buy anything else; pay cash instead.
Sell or Trade Things You Do Not Need
You can pay off your debt even faster if you sell what you can do without. Have a yard or garage sale and get rid of those things you are not using. You might even downgrade to a cheaper car or sell an extra one.
Get an Extra Income
In an article at Huffington Post, it is also suggested that you find a way to bring in more income. There are often many ways to do this, but being willing to put in more hours, or have your spouse work, may be just the solution you need to end your financial woes faster.