Simple Ways To Get Out Of Debt

Ever feel like your debt is consuming you? Here are some simple tips on how to get out of debt quickly.

Financial analysts state that Americans are in, possibly, the worst financial shape than they have ever been. One of the main factors of that is the overwhelming debt that many families have put themselves in. Some reports state that the average household credit card debt falls somewhere near $8,000 and that is JUST credit card debt. This does not include the mortgage, car loans or student loans. Many people feel helpless as they pay the minimums on their credit cards and find that it barely nudges the principal the following month. Others love their cars but hate that it will take them anywhere from three to six years to pay off.

Some people find it difficult to pay that monthly debt. But do this. Imagine your life without any debt whatsoever. Pretend your house is paid off, your credit cards are finished with and your cars are yours, free and clear. How wonderful would that be? The great thing is that it is very possible as long as you have some self-discipline and motivation. For starters, use the idea of financial freedom as your motivation. Keep that thought in your mind that one day your paycheck will be yours to keep and not go straight to your mortgage and credit card companies.

If you are able to, find a financial analyst that will help you get a clear picture of your debt and income ratio and to build you a financial plan that you can stick to. There are, indeed, companies out there that will charge hundreds of dollars to get a financial plan for you, but there are a few that will do this for free, so search for those companies. In the meantime, use the following concepts to get out of debt quicker. You must keep in mind that in order to get out of debt you can not allow yourself to continue using your credit cards. These concepts will not work if you are continually getting deeper and deeper in debt.

Debt Stacking

The concept of debt stacking is so amazingly simple, it's a wonder that many families do not employ its use. Gather all of your interest-bearing bills (mortgage statement, credit card bills and any other loans you may have) and write down your balances and your monthly minimum payments. List all of your credit cards first (you may want to start with the credit card that has the lowest balance or the highest interest rate), your car and student loans next and your mortgage last. Many people choose to pay a little extra on some of their debt; for example, if you pay $50 a month extra over your minimum payment for one of your credit cards, list that to the side. Add up how much you pay extra on all of your debt and write that down. What you will do is use this "extra" money to pay off quickly one single debt at a time. For example, just say that spread across all of your debt you pay an extra $150. Put all of your monthly payments to their minimums and attack that first credit card on the list by adding that extra $150 to the minimum payment. Meanwhile, be paying the minimums on your other debts. You will pay off that first debt on the list much quicker because you are using more "ammunition" on it. When that debt is paid off, take the entire amount you were paying on that debt (including the extra $150) and attack the next debt on the list. Keep this going until all of your debt is paid off. The idea is that instead of paying off one debt and letting that money you were using to pay off that debt get sucked back into your normal living expenses, you can use it to attack your other debt.

Fixed Interest Rate Loans

Many companies out there will allow you to get a fixed interest rate loan to help consolidate your bills. However, you will usually only want to consolidate your credit card bills because they have what is known as "revolving interest." What this means is that your interest is calculated daily so that, essentially, every single day interest is calculated on top of interest. This is why your principal never seems to go down on your credit cards when you pay the minimums. By consolidating your credit cards that have revolving interest and replacing it with a loan that is at a fixed interest, you will be doing yourself a favor. Make sure to speak to a financial advisor, however, before getting yourself into any type of loan.

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