6 Steps to Work Your Way Out of Debt

Millions of people around the world are struggling to get out of debt. It is a long road, and it definitely isn’t an easy one. If you are one of these people trying to pay off an endless list of payables—don’t lose hope. Focus on being debt free, and take things one at a time.

Here are a few practical steps to help you work your way out of debt:

1. Stop acquiring new debt

The first step to working you way out of debt is to stop acquiring new debt. Yes, this piece of advice may seem obvious, but you need to start realizing that you cannot afford to spend money you don't have. Leave your credit cards at home or better yet, cut them up!

2. Look your debt in the eye.

One of the most difficult things to do is to face reality and total all your debts. Itemize each payable—student loans, medical bills, car loans, personal loans, credit cards and anything else you may need to pay off.

3. Select the first debt to work on.

Look over your list of debts and decide on which of them you’d like to tackle first. Is it the smallest debt or the one with the highest interest rate? Choose to work on a debt that will motivate you, and then continue to create an order for paying off your remaining debts.

4. Start paying.

Pay the minimum payment on all your debts. For the first debt on your list, pay the minimum amount plus whatever extra amount you can afford to pay. Keep doing this on a monthly basis until you have completely paid off your first debt.

5. Keep going.

You’ve entirely paid off one debt—and are definitely making progress! Repeat the process on your second debt on your list.

As you begin to see results, it’s extremely important that you stay focused on your end goal. Do not return back to your old spending habits!

6. Move forward.

Once you are worry-free, start working towards the future. Create an emergency fund, see the world and save for retirement.

The road to being debt-free will take a lot of time and even more dedication, but just remind yourself that your hard work will definitely pay off!

Photo Credit: iClipart

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Comments

  1. Borrowing money to pay off another debt also never solves the problem…