Total Debt Recovery

Total recovery from your debt requires planning, dedication and perseverance. Like making new year's resolutions, you may launch your debt elimination plan full of energy and excitement. However, in the middle of the payment process, you may find it difficult to see the light at the end of the tunnel. By concentrating on the freedom that total debt recovery will bring you, you're more likely to experience success in the long run.

Budgeting

The first step to gaining control of your finances is to understand where your money is going each month so you can create a plan that puts you back in control. Often, people don't like to face the reality of their spending, but it's crucial to be completely honest with yourself about how you're using your money so you know where to make adjustments. The Liberty Mutual website suggests logging all your expenses for one week, including meals, gas, movie tickets, books, groceries and anything else. At the end of the week, multiply the total by 4.3, which provides an estimate of your monthly out-of-pocket expenses. Add in your recurring monthly bills for an estimate of your grand total monthly spending.

Cutting Expenses

Once you understand how you're using your money, you are equipped to make decisions about where to cut back. You may be surprised to find that your frequent small expenses quickly add up. For example, if you spend $7 on lunch every weekday, that's at least $140 per month. By bringing your lunch each day, you can use the savings to pay down the balances of your credit cards. For example, assume, you have a card with a $2,000 balance and 18 percent interest rate. Paying the minimum balance of $50 each month will take 182 months to pay off, and you'll pay over $2,400 in interest. That's more than the total balance. By using that $140 you're saving on lunches, you'll pay off the card in 17 months, with just over $267 in interest payments. Whenever you lose motivation to pack your lunch, consider the nice dinner you can have once the card is paid off, using some of that money you've saved.

Self-Help

If you want to recover from your debt through debt payments alone, you have two options: paying off the debt with the lowest balance first or paying off the one with the highest interest rate. Dave Ramsey on his website suggests that by focusing your efforts on paying off the debt with the lowest balance, you give yourself a psychological boost by seeing your balance dwindle quickly. However, you'll save money by paying off the debt with the highest interest rate first, because you're minimizing the amount of time the high interest is accumulating on your balance.

Credit Counseling

Overwhelming debt issues may be too big to handle on your own. Contact credit counseling organization approved by the National Foundation for Credit Counseling to understand your options for eliminating your debt. Credit counselors assist in budget creation and also help clients make decisions for their personal debt situations. Debt consolidation, debt settlement, debt management plans and bankruptcy are among the options a credit counselor may present to you. Credit counselors also help you create a plan to stay out of debt, so that you never allow debt to become a heavy burden again.