Setting a Plan to Eliminate Debt

Whether you’re starting a diet, exercise routine or a strategy to eliminate personal debt – the plan is the easy part. Following the plan, not so much. It takes commitment and discipline to become debt free, but the reward is well worth it. Being debt free will allow you to build wealth. So keep your focus. You may not realize how much your debt is hurting you until you pay it off.

How to Get Out of Debt in 4 Steps:

First, make a list of your debts, the amount that is owed, as well as the interest rate associated with each loan. Then order your list from the highest interest rate to the lowest interest rate. This is the order that you will use to pay off your debts.

Second, create a household budget, and then stick to it. Cut out most of the luxuries in your budget. Get it down to the bare bones. Try to keep your spending on groceries to essentials only.

Third, work on paying off the first debt on your list. Pay off one debt at a time so you are putting more power into your money. Building momentum debt-by-debt is a method commonly taught on how to get out of debt. Some financial advisers suggest this method in place of debt consolidation. On the other hand, if you find it difficult to pay multiple bills on time, debt consolidation may help in your specific situation.

The final step comes after you have been working on your debt reduction plan for some time. If possible, try to speed up the plan even more by finding extra money to apply to your debts. Consider, picking up extra time at work, getting a second job or having a garage sale and using the proceeds to help you to eliminate your debt quicker.

Once you have worked hard to get out of debt, make a commitment to stay debt free. Plan for your future expenses and save for them. A solid financial plan will help you reach your goals. Take the time to set your financial goals and talk to a financial planner so you stay on the right financial path.