How to Defeat the Debt

Defeating your debt problem can seem overwhelming, but ignoring it allows it to worsen. With discipline and a plan, it can be chipped away at. Success at getting and staying out of debt requires focus and dedication. However, in the long run it will make you feel better about yourself and allow you to start saving for retirement and big purchases such as a house. You'll have to make sacrifices, such as not eating out or not going to the bar every weekend. Acknowledging your unnecessary expenditures and cutting back is a sound start to getting out of debt.

Instructions

Create a Plan

1

Acknowledge your debt problem so you can begin to move forward and get out of debt. Evaluate your weaknesses with money, and brainstorm ideas that will work for you to stop unnecessary spending. Allot one hour a week to focus on your finances.

2

Identify and cut back on non-essential expenses. Write a list of items you can cut back on, such as eating out, stopping for morning coffee, magazines, buying clothes or going to movies. Instead of spending on these routinely, use them only as rewards when you have reached a milestone in eliminating your debt.

3

Record and categorize your spending. Set up a financial-monitoring program to link your bank account and monitor spending more closely. Sign up for electronic statements so they can be transferred easily to your personal-finance software. Categorize spending, such as rent, phone, Internet, groceries, car repairs/payments.

4

Make a budget. After categorizing your spending, calculate how much of your paycheck needs to go to each bill, and pay your bills first. Account for a percentage of your budget to go to debt repayment.

5

Cut up your credit cards and stop using them. Do not take out any more loans out from the bank; rely only on your paycheck. Consider taking an extra, part-time job or doing free-lance work on the side to speed up the debt-repayment process.