ABCs of Getting Out of Debt

Many people find themselves struggling to eliminate debt in their personal budgets. These debts may occur as a result of job layoffs, unplanned medical expenses or living beyond their means. Debt payments require the consumer to forgo purchasing other items they may need or want. By following their ABC's, these consumers can find their way out of debt and into financial freedom.

Acknowledge The Debt

Acknowledge their debt. Many consumers prefer to make their monthly payments and ignore the impact the debt has on their budget. These consumers consider these payments as bills or monthly expenses rather than debt payments. When these consumers face the reality of their situation and recognize the debt, they are more likely to move forward with paying off the debt.

Budget Realistically

Create a realistic budget. Many consumers create a budget and forget to include items they regularly spend money on, such as an occasional movie night or clothing needs. These consumers also underestimate their fuel needs or grocery expenses. These consumers need to consider their spending realistically and document these costs. After documenting these expenses, the consumer can determine the amount of money left over to pay on the debts.

Cash Only

Use cash. At each payday, the consumer should pay the bills first using cash. After paying the bills, the cash that remains is available for other purchases. If the consumer runs out of cash, she should not make additional purchases until her next payday.

Destroy Credit Cards

Destroy the credit cards. The consumer should cut up the cards and throw them out. The consumer also needs to write a letter to each bank from which he held a credit card requesting that the account be closed. This eliminates the temptation to use credit cards after the consumer runs out of cash. Note that this step could have a short-term negative effect on a credit score.

Eliminate Unnecessary Shopping

Eliminate unnecessary shopping trips. Each time the consumer visits the store, sale items and aisle displays entice her to buy. If the consumer never sees these items, she eliminates the temptation provided by these displays. The consumer needs to plan shopping trips and not stop in the store just to browse.