How to Be Debt Free Quickly

Debt is a way of American life. It's easy to fall into the trap and hard to escape from. Through disciplined budgeting and consistency in your lifestyle, you can work your way out of debt quickly -- although it won't be easy.

Instructions

1

First, analyze what got you into debt. Either sign up with an online budgeting tool, such as Mint.com, Quicken.com, or Quickbooks.com, or analyze your spending by hand. If you go the online route, download your bank and credit card or loan statements into the individual program you choose. If you are doing it by hand, get the paperwork together.

2

Look at your bank statements first. Where are you spending your money? Create a column for each category of spending (such as food, gas, rent/mortgage, medical, clothes, entertainment, cable, etc.). Put each line item on your bank statement into a column. Total each column. Is there any column where you could reduce your spending? Try to find where all of your money is going and see if it's going to necessities or to extras. The online budgeting software will analyze this for you with a click of a button.

3

Next, make a list of every debt. Make a column for the total debt owed, the monthly payment and the interest rate. List them from the smallest monthly payment to the largest. Again, the online program will do this for you with a click of a button.

4

Look back at your budget. With the extras you have cut out, how much more can you apply to paying down your debt each month? Even if it's just a few dollars, every little bit helps. Take that extra and add it to your smallest monthly payment. Pay on that loan with the increased payment until paid in full.

5

Next, take the monthly payment of the first paid in full debt and add it to the second lowest monthly payment, along with any monthly overage you have left. Start making that higher monthly payment on this loan each month until paid in full.

6

Now, apply the monthly payments of the first two loans and any overage to the third highest monthly payment and so on. This is the debt snowballing method and is a great way to methodically get out of debt. It takes a little while on the first loan, but once it is paid in full the momentum builds.