How to Get Out Of Debt?

Getting out of debt is tough. It is a long journey replete with obstacles and setbacks. But it doesn't mean it is an impossible task. If you really set your mind to getting out of debt, you will be able to find ways to do so. There are countless people who have done it, probably owing thousands of dollars more than you do. How did they do it?

Below we list some of the ways to get out of debt. These are not specific actions but more like guidelines and pieces of advice to get you started.

Curb your spending This is quite basic but it's where many people fail at. It may sound easy (and cliché) but sometimes, the simplest things in theory are the most difficult to do in reality. Reducing your spending usually doesn't happen overnight, and knowledge on how to reduce your spending doesn't translate into action right away. It's against your natural tendencies, which are the spending habits you've built over time. The challenge is to re-establish another set of habits that will be a precursor of a better financial health. You wouldn't know, however, if you've already reduced your spending if you have no idea how much you spend every month -- you're just aware that you live paycheck to paycheck. So first thing you can do is analyze your spending: get a notebook or a spreadsheet; write down your income and expenses and see how much you have left at the end of the month. Are there any expenses or necessities where cost-cutting is plausible? If yes, then please do it as soon as possible.

Increase your income There are two ways to increase your income: (1) reduce your expenses and (2) earn more from your active income, i.e., you job. It is an unsurprising fact that a low income is one of the leading causes of debt today. Because of a low income, many people use credit cards to make ends meet and purchase

necessities. But because of low income and high interest rates, many of us have trouble paying credit card debts in full...and this is where the debt trap often starts. One solution then is to increase your income. Consider moving to a higher paying industry, or getting a better paying job. If you have time to kill, don't just sit and watch TV all day. Sell unused stuff -- those things you bought that are gathering dust at the corner. Get a side job, market your skills online -- you'll find people willing to pay for what you can do for their families or their businesses. If you strike oil, you could double the rate at which you pay down your debt.

Stop taking on new debts Deliberately put yourself on a disciplinary action. Send your credit cards on a winter vacation, i.e., to your fridge. Freeze it literally. Credit cards are not your allies this time, they are the ones that put you in this situation. Stay away from them-- in fact, don't carry a credit card at all. Many people may find this silly yet little slip ups, from time to time, add up and become part of a bigger debt problem.

Pay aggressively When you're in debt, you're in a race against accumulated interest so you need to be aggressive in paying off your debt. Whatever amount you save after deciding to cut expenses, use that amount to pay your debts. There are probably two popular methods to execute this aggressive payment process: the debt snowball and the debt avalanche. In debt snowball, you establish a specific payment amount and start with the lowest balance first while paying just the minimum on the rest of your accounts. (To learn more about debt snowball method, click here.) In debt avalanche, you start paying off accounts with the biggest interest rates first. There is a debate which is better between these two methods but whichever you choose, just do it and waste no time. More time wasted means more money lost (in interest).

Consider getting debt relief If you think paying off your debts the way we described above is not possible for your situation right now, consider getting a debt relief program. There are several types of debt relief, namely debt consolidation, credit counseling, debt settlement and even bankruptcy. To learn the difference among these options, click here. Getting out of debt requires hard work and patience and discipline and commitment. It is not easy but all efforts will definitely be worth it. Becoming debt-free is priceless, unlike the things that cause us to get into debt.