Tips to Get Out of Debt Fast

Debt can easily and quickly overpower a family's budget. While it is easy to get into debt, it can be hard to get out of it. With a combination of discipline, budgeting and planning, a family can get out of debt and get back on the road to financial stability. Not every method will work for every family. Each family should tailor debt reduction tips to fit their financial needs.

Reduce Expenses

The first and most important step in the debt reduction process is to reduce your overall expenses. Review your checking account statements for the last few months. Identify ways to reduce spending. Bundle utilities, such as telephone, internet and cable into one bill to reduce costs. Turn off unnecessary features, such as movie channels on your TV or internet on your cell phone. Ask yourself before you purchase something: Is this a want or a need? Shop for groceries instead of eating out. When shopping for groceries, use coupons and purchase sale items. Simply restructuring the way you shop could save you a lot of money.

Avoid New Debt

Stop all new debt accumulation. Place your credit cards in a desk drawer and use cash for purchases. Stop spending once you have run out of cash. Make a vow to yourself and to your family that you will not procure any new debt until you have completed the debt reduction process.

Increase Income

Take on extra shifts at your job or get a second job to quickly earn more money for debt repayment. Sell unused household items in a garage sale. Find ways in your neighborhood to make extra money by babysitting or doing basic household or car repairs for neighbors.

Budget

Create a family budget. Use the last few months' checking account statements to create a workable budget for your family. Categorize and monitor your spending. Funnel any funds saved to debt reduction. Request input from family members when making the budget. The more input from the family, the more likely the family is to join you in the debt reduction process.

Repayment Plan

There are two different methods of debt repayment. In both, the debtor needs to list all debts to be repaid. With each debt, he lists the amount owed, the monthly payment and the interest rate. One method recommends paying down the debt with the highest interest rate first, while making the minimum payments on all other debts. Once it is paid in full, tackle the next lowest interest rate debt and so on.

A second method is known as the snowball method. Touted by Dave Ramsey, a financial expert, the theory is that by quickly paying off a small debt, the debtor has motivation to continue the process which makes full debt repayment much more likely. Look at the debts listed. Tackle the debt with the smallest monthly payment first with extra payments, while paying the minimum payment on all other debts. Once it is paid in full, continue paying that same amount on the next smallest monthly payment debt, and continue to snowball the payments until all debts are paid in full.