Fastest Ways to Get Out of Debt

According to a Forbes magazine survey of wealthy people, "the best way to build wealth is to become and stay debt free." For many Americans
struggling under the burden of debt, it may seem like there's no way out.
But as hopeless as you might feel, there are simple things you can do to
ease your financial strain and get out of debt faster.

You Can Live Debt Free

According to a Forbes magazine survey of wealthy people, "the best way to build wealth is to become and stay debt free." For many Americans struggling under the burden of debt, it may seem like there's no way out. But as hopeless as you might feel, there are simple things you can do to ease your financial strain and get out of debt faster.

Pay Off High Interest Credit Cards

Call your credit card companies and ask if you qualify for lower interest rates. Consolidate high interest balances onto a single card with a low rate. And regularly check your credit score, also known as your FICO score. You can view your credit report for free once every 12 months at www.annualcreditreport.com. Any score above 680 is considered good, while scores above 720 are excellent.
If your score is low, you can repair it first by paying your bills on time. If any balances have gone to collections, call the debtor and arrange a payment you can afford. Most debtors would rather get a small amount of money each month than nothing at all. Also, don't close credit card accounts; doing so can damage your credit-to-debt ratio, an important figure in determining your score. Closing an account erases any good payment history you may have had, decreases your available credit and increases your debt ratio.
And by all means, stop charging! Credit cards give the illusion of wealth, and it's all too easy to fall into that trap. Try shopping with cash instead. You will be much more aware of what you're spending when you hand the cashier hard-earned dollars instead of a credit card.

Don't Do Debt Consolidation or Debt Management

You may have seen TV commercials from companies promising they'll help you get out of debt. According to nationally syndicated radio host and financial expert Dave Ramsey, debt consolidation is a con. Yes, they may lower your payments, but all they're really doing is extending the loan term, which means you'll actually pay more over time.
Such programs only treat the symptom, not the disease, which is irresponsible spending. That's how most people get into debt in the first place. Even if you do pay down your debt, if you don't learn from your mistakes, you are likely to get yourself back into financial trouble. Also, parents who spend irresponsibly are more likely to have kids that fall into debt as adults. Set a good example by resisting impulse buys, bargain hunting and saving up for the things you want.

Keep Track of Your Spending

For one month, keep track of every dollar you spend. Categorize your spending, for example, "dining out", "clothing", "automobile" and "groceries". At the end of the month, you'll see exactly where your money is going, and you might be surprised at how many corners you can cut. Those mocha lattes every morning can really add up. So can eating lunch out every day. Just packing a sack lunch and brewing coffee at home can save you more than you might think.
And smart shopping can really save you a bundle. These days there are discount stores for everything from clothing and home decor to groceries and sporting goods. If you truly want to get out of debt, stop overpaying for fancy labels and instead seek out bargains and use coupons.
Gift giving can also take chunks out of your budget, so instead of last minute spending sprees, plan ahead and shop for gifts when you see a good deal. If you see the perfect gift for a loved one on sale in July, why not buy it and tuck it away until the holidays? Take advantage of after-holiday sales; buy wrapping paper or ornaments in January and save them until next Christmas. And don't go crazy with the gifts, especially with kids. Spoiling kids rotten with everything they want won't serve them well in the future and won't help you get out of debt.

Lower Bills

Shop around for lower rates and refinance your mortgage and auto loan; even just a point less will save you money over the long run. Lower your utility bills by using fluorescent bulbs and turning off lights in unoccupied rooms, washing clothes in cold water and bundling up instead of cranking the heat. If you're not using all your cell phone minutes, ask your provider if there's a plan that better suits your needs. And get quotes from several insurance companies to see if you can find better deals on car and homeowners insurance.

Cut Expenses and Save, Save, Save!

With a little effort, you can cut corners and save money every month. And the more you save, the more you can pay down your debt. Tuck some money into savings right when you get your paycheck, before you pay your bills. Decide how much you can save out of each check, even if it's just $50. Don't touch it, and over time you'll accumulate a nice bit of savings which you can invest or use to help pay off debt.
Pay off credit cards and stop charging, spend responsibly, lower your bills and start a savings account. These simple steps can help you get out from under the burden of debt and enjoy a financially secure future.
Sources: www.daveramsey.com, www.goodhousekeeping.com, www.debtsteps.com