There is always a way to get out of debts especially if you organize your money and know how to and when to pay. If you follow the steps below, you can help yourself by 90% to become debt free.

  1. KNOW what you owe. You must know and identify clearly what you owe; the best way is to create a debt list with details. Identify which payment has the highest rate thus allocate the highest priority to it.
  2. Avoid creating new Debts. When you are already in debt, do NOT create a new debt. Try your best to create savings strategies for the expenses that you do not pay monthly, for example some bills are paid quarterly. Even though, this bill is paid quarterly, keep aside the amount aside each month.
  3. Decrease your expenses by developing a clear strategy and try to increase your income.
  4. Do not always use your credit card.
  5. Always create a list of items you plan to purchase and know the amount you are planning to spend. 
  6. As soon as you develop a plan with your monthly income and expenses, you can set the good amount for paying your debts. Remember, as we discussed previously, adding an extra amount to your monthly debts payment can decrease the interest payment and save time. When you have money with you, and you really do not need them as an advice add this amount to your monthly payments.
  7. Being debt free is not only, a way to manage your money, but also a negotiation part. Try to find the alternate with a lower rate. Use negotiations, pretend to your current creditor that you’ve got lower rates with another one; this might help reducing rates to keep you as a customer.
  8. Think before you buy! Sometimes you buy for an item and later on identify that you do not really need it at the moment. Think well before planning to buy. Ask yourself “do I really need this item?”
  9. As we mentioned in Chapter 1, we have good and bad debts, stay away from bad debt. Stay away from:
    • High interest credit cards
    • High interest items
    • Big mortgage
  10. Do not buy a brand new car when you cannot afford to pay it. As an advice get a used one and keep it for many years.
  11. Be smart and reasonable.

Those are some steps toward being debt free, but getting out of debt is challenging but for sure it can be done especially with dedication and perseverance. When you are asked to decrease your expenses, cancel your credit cards, develop a plan, etc… you are changing the way you live, and especially the way you think. Following the steps mentioned above is not a rule to follow, you must change the way you think to be convinced with that.

Always pay off the smallest bills at first, this way you will save some money and add it to the highest bill. This work in most cases when you have for example 5 bills. You pay the small then allocate an extra payment from the saved amount into the higher bill.

Always make a monthly budget for yourself, if possible do it weekly or even daily; being financially organized is the key to success. You must include details in your budget. Add foods, bills, entertainment, transportation, shopping, miscellaneous and other and this way you will see how much you really need to spend and which is higher in priority… If you can make changes to your way of life and save some money, do so. Use that money to pay back debts and in the meantime you should stop adding to your borrowing by surviving only on cash or debit cards

If you are in debt, it is a given that you are spending more money than you make. You are in the red. There is no way to play games with yourself about it. Live within your means. If you can’t afford to pay cash, you can’t afford to have it. Pay off highest interest debts first. 

Usually, when you have less free time, you spend less money on nights out or shopping. When you are in debt, do not go out for shopping or for entertainment until you are managing your financial life the good way. Find something beneficial to do with your rather than going to the mall. This way, you’re reducing your debt, and most importantly, not adding more to your debt. If you cannot keep up, you may enter a debt consolidation program. Do not ever work with private forms or lawyers with these issues. There are plenty of non-profit agencies who are glad and ready to help you anytime by negotiating maybe a lower interest rates or by plans on improving you financial situation.

Even though you do not like to have an third party agency help you get our of trouble, remember it is 100% better than bankruptcy and you will have a debt-free date to look forward to.

Be honest with yourself, this way you are on the road to freedom. Ask yourself how this happen to me and why it happen.

To get rid of the debt stress, you will have to give up many things you consider needs. Believe it you can live without new clothes for awhile, without buying the latest smart phone, the cable TV, the higher bandwidth internet connection, and much more, believe it or not. You have to face the responsibility and the consequences. 

When your debts are high and your monthly income is not enough to cover the payments, there are ways to solve your debt problem. But the road to financial recovery takes a total commitment. You must decide you want to be debt-free. You have to discipline yourself to take the necessary action to pay back your debts. Only you can determine if you are willing to make the necessary sacrifices to achieve this goal.

Finally, it is inadvisable to take out new loans to pay off old ones. So-called consolidation loans are often offered at very high interest rates, quite often all they do is saddle people with new debts they can ill afford.