Get Out of Debt in Get Out of Debt in Five StepsFive Steps

Getting out of debt is easy. Pay off all Getting out of debt is easy. Pay off all your debt. Simple right? Simple your debt. Simple right? Simple concept-tough execution.concept-tough execution.

Don’t be discouraged. Here’s a step Don’t be discouraged. Here’s a step by step guide to getting it done. Your by step guide to getting it done. Your situation will be different but you can situation will be different but you can tailor it to your specific needs.tailor it to your specific needs.

Step 1: Contact your creditors Step 1: Contact your creditors to negotiate better terms. to negotiate better terms.

Whether you are behind in your bills or Whether you are behind in your bills or not, you need to contact your creditors. not, you need to contact your creditors. Now,  not all debt types are open to Now,  not all debt types are open to negotiation such as car, boat, RV, and negotiation such as car, boat, RV, and other secured loans. But, credit card other secured loans. But, credit card and medical debt are almost always and medical debt are almost always prime for getting better terms including prime for getting better terms including better interest rates on credit cards and better interest rates on credit cards and longer payoff terms for medical debts. longer payoff terms for medical debts.

Call your credit card companies and tell Call your credit card companies and tell them you would like a better rate. Also tell them you would like a better rate. Also tell them to waive any yearly fees. Tell them them to waive any yearly fees. Tell them you will switch to another company if they you will switch to another company if they don’t. This works sometimes, other times don’t. This works sometimes, other times you may have to follow through. With all you may have to follow through. With all the 0% interest deals out there it will not be the 0% interest deals out there it will not be tough. **Note: If you are delinquent are tough. **Note: If you are delinquent are have slow pays, you probably will not be have slow pays, you probably will not be able to get better rates, however, you may able to get better rates, however, you may still be able to get more favorable terms still be able to get more favorable terms elsewhere. elsewhere.

Medical debts are easier to Medical debts are easier to negotiate. Most doctors will allow a negotiate. Most doctors will allow a repayment plan, interest free, and at repayment plan, interest free, and at a low monthly payment. Be sure to a low monthly payment. Be sure to ask for a repayment plan even if you ask for a repayment plan even if you have the money to pay it off. Most have the money to pay it off. Most doctor bills are interest free. Use the doctor bills are interest free. Use the extra money to pay off the credit extra money to pay off the credit cards. cards.

Step 2: Make a spending Step 2: Make a spending plan plan

A spending plan is extremely important. So A spending plan is extremely important. So important in fact that I am willing to bet that if important in fact that I am willing to bet that if you do not have a spending plan, you will not get you do not have a spending plan, you will not get out of debt.out of debt.

So how do you do it? List all of your household So how do you do it? List all of your household necessities (food, utilities, clothing, etc). What necessities (food, utilities, clothing, etc). What you need to survive. Next, list all of your you need to survive. Next, list all of your unsecured (credit card) debts and their minimum unsecured (credit card) debts and their minimum payments in order from least owed to most owed. payments in order from least owed to most owed. Nest, list all of your other debts’ minimum Nest, list all of your other debts’ minimum payments. Then bring-home pay minus total payments. Then bring-home pay minus total monthly bills=(money used to pay off debts). If monthly bills=(money used to pay off debts). If you do not have any left over then go back and you do not have any left over then go back and cut more from your necessities. Still none left cut more from your necessities. Still none left over? Get a second job, sell something, declare over? Get a second job, sell something, declare bankruptcy. Yes this is an option although not bankruptcy. Yes this is an option although not recommended.recommended.

If you do have extra money after If you do have extra money after necessities and minimum payments. necessities and minimum payments. Pay off the credit card or other non-Pay off the credit card or other non-secured loan first. When that is done, secured loan first. When that is done, pay off the next, and next, and next pay off the next, and next, and next until all non-secured debt is paid off. until all non-secured debt is paid off.

Step 3: Pay off car loans, boat Step 3: Pay off car loans, boat loans, RV loans, etc. loans, RV loans, etc.

Pay extra on your secured debts, excluding a Pay extra on your secured debts, excluding a mortgage, until they are paid off. Start with mortgage, until they are paid off. Start with the one you would be most willing to sell. the one you would be most willing to sell. Now I am not saying you have to sell your Now I am not saying you have to sell your stuff but once you start getting out of debt, stuff but once you start getting out of debt, “things” aren’t as important as peace of “things” aren’t as important as peace of mind. For instance, that motorcycle you mind. For instance, that motorcycle you never have time to ride, isn’t fun when you never have time to ride, isn’t fun when you are struggling to make the payments. Sell it are struggling to make the payments. Sell it and buy another when you can pay cash for and buy another when you can pay cash for it. That’s how the rich do it. it. That’s how the rich do it.

Now that all of your credit card debts Now that all of your credit card debts and car payments, RV payments, etc. and car payments, RV payments, etc. are paid off, you can go into super-are paid off, you can go into super-payoff mode. payoff mode.

Step 4: Medical Bills Step 4: Medical Bills

If you don’t have medical bills, first, thank If you don’t have medical bills, first, thank God, and then go on to step 5. If you do God, and then go on to step 5. If you do have medical bills, start to pay them off. Pay have medical bills, start to pay them off. Pay your primary care physicians first. That your primary care physicians first. That vasectomy can go to the bottom of the pile, vasectomy can go to the bottom of the pile, chances are you will not have to use that chances are you will not have to use that doctor’s services again. Pay those bills you doctor’s services again. Pay those bills you owe to your dentist, chiropractor, physical owe to your dentist, chiropractor, physical therapist, etc. first.therapist, etc. first.

Once you’re done with the medical bills you Once you’re done with the medical bills you can move on to step five.can move on to step five.

Step 5: Pay off your Step 5: Pay off your mortgage mortgage

If you don’t have a mortgage, congratulations, you If you don’t have a mortgage, congratulations, you are now done and debt free! Go celebrate.are now done and debt free! Go celebrate.

For the rest of us. Now is when life is going to For the rest of us. Now is when life is going to change. change.

Paying off your mortgage is a huge step. Take all the Paying off your mortgage is a huge step. Take all the money that you are saving each month by not having money that you are saving each month by not having credit card debt and pay down your mortgage. You credit card debt and pay down your mortgage. You may even be able to refinance for a shorter term. Pay may even be able to refinance for a shorter term. Pay a little extra on your premium each month and you a little extra on your premium each month and you can know years off the length of your loan.can know years off the length of your loan.

Though not easy, getting out of debt is doable. Make Though not easy, getting out of debt is doable. Make a plan and stick with it and before long you’ll be debt a plan and stick with it and before long you’ll be debt free.free.