Guide To Getting Out of Debt

The guide to getting out of debt will take you through a few different steps and techniques you can use to help you get out of debt and pay off your credit cards and consumer debt.

So between car payments, credit cards, payday loans, and personal loans to family members a lot of people in this country are carrying a lot of recurring consumer debt. Using this guide you should be able to get out of debt on your own and pay off these credit cards and even though it's family you will be able to pay them off as well.

So how big of a hole are you in that is the first question? So for the next month I want you to spend as normal and write down every dime that you spend, seems kind of daunting at first but after the first week it will become pretty normal and easy for you to do. How much did you spend this month over the amount that you earned in income?? This is the thing that drives consumer debt spending more than we make. I know we all know that but we don't really think about it.

Okay now you know where your money is going in your regular spending let's figure out how much consumer debt you really owe, so let's make a list and check it twice in honor of Christmas. This is what should be on the list...

1. Who the bill is for Visa whatever

2. The percentage rate that you pay

3. The total amount owed

4. The minimum monthly payment

First things first stop buying anything with credit of any type. That means credit cards or loans from family, no more credit.  This may be a pretty difficult step for some. A lot of people go into debt only during certain times of year say Christmas and then pay it off over the year or when they get their tax return. A debt problem like this is easier to solve than a systemic debt problem where you are consistently every month spending more than you earn and putting the extra on high interest rate credit cards which only makes the problem worse. Now you know where your money is going and how much you owe everyone in your life. That was the easy part. The hard part is to come up with some extra money to pay to one of the credit cards. I know what your saying come on justmike i don't have extra money. Well, let's look now at that list you made up above of all the money you spent the month before you remember every dime that's where we will find some extra cash.

On that list of all the things that you spend your money on. Where are some places you can save money? Now we are not talking about a couple of dollars a month here if it was only that little you wouldn't be looking at the hub. we need some real cash maybe fifty to one hundred dollars and more maybe, depending on your situation. So how much do you spend on your tall lattes every month if you figure four dollars a day times twenty days a month that's eighty dollars a month. Okay what else can you do. If you make a sandwich at home each day or take leftovers for lunch how much will that save you a month? Let's say 6 dollars times twenty workdays a month you saved one hundred twenty dollars a month. Wow now we just found two hundred dollars extra in your pretend budget what can you find in your real budget?

So you take this extra money that you found and you start paying it towards the principle of your lowest total owed credit card. I know, I know maybe you should pay it towards the one with the highest interest right. Mathematically that's correct but I want you to have some fast successes so you can see that this will work and you will stay with the plan. That first card you pay whatever the minimum payment is, say fifty dollars plus the two hundred until you pay it off. Now you take the two hundred and fifty dollars that you have and you pay the minimum payment on the next card plus the minimum payment on that card and you just keep rolling until they are all paid off in this manner. Now back to that family loan. People tend to borrow money from family and never pay it back. Pay back your family always because they are the ones who will always help you, and they will be surprised when they get that check.

Now your cards are all paid off you have the original two hundred dollars plus you have all of the minimum payments from all of your cards. What do you do with all of this money? First of all if you have made it this far and have followed all of the steps congratulations, and good job. With all of this extra money maybe five to seven hundred extra dollars coming in every month with no place to go I want you to establish an emergency fund of six months of your salary, only to be touched in an emergency.

Now that you have your bills paid off and you have your emergency fund in place I want to see you put half of your extra money in savings and half of it can go back into your budget. Now this is not an easy accomplishment. These last steps are very important the emergency fund and the savings will keep you from going into debt at Christmas but also when the water heater goes out. So good luck and stick to the plan.