February 11

Get Out Of Debt – Step-by-Step Process


Fortunately, debt is not a life sentence. You can make getting out of debt a priority.  When it comes to knocking out debt, there's no such thing as a quick fix.

Follow these steps to take control of your finances and pay off or down your debt, which will get you closer to your goal of financial freedom. Whether you are drowning in credit card debt or a combination of credit cards, student loans, or personal loan debt, there are ways to reduce your debt.

  • Identify the Type of Debt - Getting out of debt and staying out requires that you change the habits or circumstances that led you to debt in the first place.  Understanding the type of debt, you have and how it happened, can help you create a plan for paying it off.
  • Rank You Debt by the Interest Rate - Line all your loans/credit cards debt and rank them by the interest rate.  Rank them from highest to lowest.  Be sure to include the amount for each account.
  • Ask for A lower Interest Rate - Call your creditors and ask for a lower interest rate. Financial institutions want to keep your business.  If they feel you can refinance your loan or transfer a credit card balance to a 0% interest card, they will investigate reducing your interest.  They do not want someone else to collect the interest.
  • Review Your Budget - You are looking to how you can squeeze a little more from your budget that you  can put to paying off your debt. - You are looking to how you can squeeze a little more from your budget that you  can put to paying off your debt.
  • Choose How to Attack Your Debt - (method details: Debt Reduction Methods in MSFLS).
  1. The Avalanche Method
  2. The Snowball Method
  3. The Balance Transfer Method
  4. Debt Settlement
  5. Bankruptcy

In Summary, you can decide to prioritize based on interest rate, balance, or some other criteria that you choose. You can also use additional debt management strategies to reduce your monthly payments or consolidate your debt. True debt reduction is not instant or easy. Just like get rich quick schemes, you should be suspicious of anyone who promised to solve your money problems with the snap of your finger. Debt probably did not become your way of life overnight, so it going to take some time to get back on your feet.  Slow and steady wins the race in the battle against debt. Still, that doesn't stop people from looking for the quick fix, an easy way to speed up the process. That is what keeps debt reduction companies in business.

The bottom line is that debt is bad, but it is not a life sentence and you do not have to live with it for the rest of your life.


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