To get out of debt, you need to:
Jump start your debt reduction efforts by figuring out just how much debt you have to deal with, and how you re going to deal with it. Here s how:
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A well thought out budget will help you to get out of debt and stay out of debt. Spend a couple hours going over your finances; then, create a budget that severs your reliance on credit cards. Cash-only is the goal from here on out.
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To free up money for debt repayment, you ll need to cut your spending. Look for ways to lower your electric bill, phone bill, homeowner s insurance, auto insurance and all of your other bills. Challenge yourself to eat out less, cut your grocery bill and to take up free or low-cost hobbies. Then, apply your savings directly to your debts, and enjoy the knowledge that you re one step closer to a debt-free lifestyle.
Getting out of debt is as much about paying off debt as it is about avoiding new debt. That s why it s important to prepare for the unexpected – car repairs, medical bills, time off from work – basically any expense that could cause you to pull out that credit card and start spending again. Estimate how much of a cushion you ll need to shield yourself from surprise expenses; then, set that amount aside in an emergency fund. If you can t afford to fully fund the account now, that s okay; just set aside a small amount each month until you reach your savings goal.
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Once you ve completed all of the previous steps, it s time to start attacking your debt. Take the money that you ve freed up with your new budget and spending cuts, and apply it to your debt. Then, keep at it, until all of your debt is paid in full. It may take a while; but if you stick to the plan, you ll arrive at that finish line a stronger, happier – and most importantly – DEBT-FREE person!