Simple Strategies for Getting Out of Debt

Many people find that getting into debt is not hard; however, getting back out of debt is much more challenging. With hard work, dedication and a plan, getting out of debt can be accomplished by anyone. Create your plan and communicate its points to your family in order to accomplish your goals together and stay out of debt for good.

Total All Debts

Make a list of all of your outstanding debts. Make sure to include all debts, no matter the size. Do not estimate. Get out all loan statements and credit card bills to ensure that you find a correct total amount. This will help you with planning and goal setting, as well to show you the reality of your situation.

Create a Budget

Create a monthly family budget. Be sure to include all expenditures for a full month. Use the last several month's worth of bank statements as a guide. Include your monthly debt payments. If you use cash only, carry a notebook with you for a month and write down all expenses, even small ones, to help you create your overall budget. Divide each expense into a general category, such as housing, entertainment, food and automobile. Total up each category to get an idea of what you have been spending in each area.

Find Extra Funds

Find extra funds to put toward debt repayment. First, analyze your budget and look for ways to cut spending. For example, taking your lunch to work or eating fewer dinners out could make a significant impact on your spending. Analyze your cable, Internet and cell phone bills for ways to reduce your overall bill. Call and compare rates for utilities, insurance and other monthly bills. Sell off unused items around the house in a garage sale or online auction. Take on a second job or find extra ways to earn money through overtime or babysitting. Consider using coupons as a way to decrease your grocery budget. Take all the money "found" in your budget or earned each month and apply it toward debt reduction.

Set Small, Accomplishable Goals

Start by paying off your smallest debt first. While this may not make a big difference in monthly payments, the early success will keep you motivated. Then tackle your next smallest debt and continue paying off each debt in order until all of your extra debt repayment funds are going toward your biggest debt. Set a goal each month of how much money you want to apply to debt reduction and adjust considering your monthly expenses each month. For example, you may want to set smaller goals around Christmas to spend more of your income on gifts to avoid the use of credit cards.