Some Simple Debt Solutions

Getting out of debt does not have to be a long, grim march fraught with sacrifice, pain and lowered living standards. It can be an opportunity to connect with what really matters in life--relationships, fulfilling work, responsibility, self-esteem and healthy pride. There is no need to resort to complex financial machinations, lawyers or counseling services. Debt solutions begin with a firm commitment to get out of debt through consistent actions.

Significance

Many families find themselves buried under mountains of debt, with ever-increasing portions of their income being devoted toward paying interest, minimum payments and fees. Often, many get trapped in a slippery slope of taking out more debt to finance other loans, sliding down a mountain of plastic cards and paper contracts. The first, hardest and most effective step toward getting out of debt is to stop taking on new loans and credit cards. Commit to reducing debt load or at least maintaining it at its current size every month.

Function

This action helps to stop a habit of viewing new debt as a solution to old debt. Earning more than you spend and paying off debt regularly is the only reliable way to reduce debt. Create an action plan for paying off the principal on your highest interest loans first. Create a budget and stick to it, cutting down on nonessential costs as much as possible. The most common sources of budget bloat are eating out at restaurants and purchasing expensive entertainment products. Eliminate as many recurring costs as possible.

Features

Carry around a small notebook and pen with you wherever you go. Every time you make a purchase, record it in your notebook along with how much it costs. This simple solution will help you get an idea of how much you actually spend on a regular basis. Writing up an abstract budget is not nearly as effective as actually recording your real expenditures. Tally up the real results and see if you notice any spending patterns that you could reduce or eliminate.

Considerations

Write in debt repayment to your regular budget. Many people assume that they will pay whatever they have left over for a certain pay period to debt repayment. A budget is more effective as a planning tool if it is as specific as possible. Even if the amount of debt repayment that you can afford every month is small, a symbolic payment can have a powerful effect on your financial thinking. Even $5 paid toward getting out of debt is a $5 increase to your net worth.

Benefits

Enacting these simple debt solutions will not launch you out of debt immediately, but committing to at least getting started on it will convince you that you are not helpless in the face of your debt. Even the lowest wage-earners can start to throw dirt into the pit of debt that they have dug for themselves. The real trick to it is getting addicted to the positive emotional reward that is near universal upon paying off a debt. It is interesting that so many people feel very anxious about debt, but when they start to pay it back, the emotions that come up are almost always those of relief from their tension. Getting hooked on this positive emotional feedback is a bit like becoming addicted to a drug that makes you healthier.