When it comes to the process of wiping out debt, one of the first things that we try to figure out is how quickly we can start getting out of debt. Often we may turn to whatever method seems the best, like getting a get out of debt loan. But, what we don’t realize is that we can get out of debt ourselves and that it really is easier than we think. Today, I want to share how to get on the fast track out of debt so you can begin your journey to being debt free.
Regardless of how you find yourself in debt, remind yourself of this: you can get out of it. Yes, it will take time and effort on your part. But, if you got into it, then you can absolutely get out of debt.
The Fast Track Out of Debt
1. Stop spending excessively!
You will not get out of debt by going further into debt. Stop using your credit cards now. Whatever it is, it can wait. No excuses. It is time to stop making a bigger financial hole, and time to start building a solid foundation.
2. Evaluate your current situation.
It may take some time to do it, but this step is absolutely vital to turning things around. You need to keep track of all of your expenses, down to the last cent. Be brutally honest as you do this, and remember that no one else ever has to see it. Then list all of your income, regardless of source.
Next, write down all of your debts, making sure to record the principal, interest rate and minimum payment. You now have an accurate picture of your current situation–a starting point.
Use this information to create a get out of debt budget to keep yourself on track.
3. Take a breath and prioritize.
There can be a lot of stress that goes along with personal debt reduction, but here’s an easy way to be more relaxed about it. You know how much is coming in and how much is going out, so now it’s time to figure out which expenses are the most important. Generally speaking, anything you need to stay alive or keep the income coming in should be among your highest priorities.
Food, shelter, utilities, medicine, and maybe an automobile are good examples. Low priority items could include cable television, an extra cell phone, cigarettes, and junk food.
4. Get your spending under control.
This is the natural extension of setting your priorities. In fact, if you have prioritized properly, then this step will be relatively easy. Now it will just be a matter of eliminating or reducing the lowest priority items. Keep working your way up the list from bottom to top, lowering each expense by as much as possible.
If your income is extremely limited, then be sure the highest priority items are taken care of first. We’ll also talk about creating a get out of debt budget on a low income and low income budget strategies soon.
5. Attack your debt and work on getting it down.
By now you should have freed up a lot more money by reducing expenses on low priority items. Use this money to start paying off the debt with the lowest balance, and pay the minimum on all other debts. Then, once the lowest debt is paid off, move on to the next one.
Remember, you now have as much as you were spending on the other debt, and that should be added to the next debt’s minimum.
Financial experts call this the snowball method and is one of the most effective methods of personal debt reduction. We’ll talk about the snowball method in more detail soon.
If you’re in debt and feel that it’s too much to cope with, don’t despair. Take it one step at a time and you will see the end of your debt tunnel. And one way to do it is by taking the fast track out of debt.
What easy tips would you add for getting out of debt quickly? Join the conversation and follow Just Another Mom on Twitter.
Kori
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It really isn’t debt I am worried about. We have some debt but it is relatively small. We are wanting to save for a house. What are the best options to do that? Do you have any tips or tricks?
Hi Samantha,
I will actually have a few posts coming up about buying a house starting today!