Becoming debt-free is a dream for many people who are thousands of dollars in debt. Whether it's credit card debts, student loans, mortgage loans, medical bills or other types of debt, the idea of owing money can be a depressing issue that hangs over your head and negatively affects your life. Here are some of the ways in which people can get out of debt fast.
Cut Down on Spending
When trying to get out of debt, the most important thing you can do is to cut down spending money. Of course, you still need to pay your bills, buy groceries and take care of your family, but it's important to evaluate your spending habits and spend only the money that is necessary for that purpose.
One way to halt your unnecessary spending is to cut up your credit cards and destroy the numbers so you are not tempted to buy something you do not need.
Also, look for items around the house that you can sell. If you have expensive car payments, maybe you can sell the expensive vehicle and get something that is more affordable. If you have some potentially valuable items, sell them on eBay or have a big yard sale to bring in some quick money. In extreme situations, consider selling your home and moving into a smaller one or renting an apartment for awhile while you are paying off your debts.
Create a Written Budget
Once you have halted unnecessary spending, sit down with your spouse or family to make a plan for every dollar you spend each month. Make a list of the bills and their amounts. Also, predict how much income you will have for the entire month. Spend every dollar on paper by dividing your income among the bills and necessities such as groceries, gas and others. Do not spend money on anything that is not in the budget.
List Your Debts
Making a list of the debts you owe will give you a visual indication of how much you owe. Start with the smallest debt and continue listing until you have written your largest debt on the paper. If you are like most families, your largest debt will be your mortgage. Make copies of the list and put them in places where you can see them to keep you motivated about getting them paid off.
Debt Snowball
Financial guru Dave Ramsey suggests that you pay off your debts using the debt snowball model. If you are making minimum payments on your credit cards and other debts, the debt snowball is a simple concept. Look at your smallest debt and get serious about paying it off by taking up another job or finding a way to bring in more money so you can pay off the smallest debt as quickly as possible. Once that debt is paid off, take all the money that you were applying to that debt and apply it toward the next largest debt. This will help you pay off the second debt faster than just making the minimum payments. Once you have paid off the second debt, take the money you were applying to that one (which would be all the money from the first debt and now the second one) and apply it to the third. Continue this pattern until all your debts are paid off. You will be surprised at the effectiveness of this debt management plan.
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