Getting Out Of Debt

If you are in debt, then you are most likely paying interest on your debt  every month.  Every month it is costing you your hard earned cash to pay  the interest on the debt, money that you could be using to pay for  enjoyable things in life.  But now you have taken action to get out of  debt – reading this article.

So how do you get out of debt?  To solve this problem, you first need  to determine the reason for you being in debt.  Although we may not  like it, the reason for most people is that we are spending more than we  are earning.  If we earned enough to cover our expenses, we wouldn’t be  in debt.  For many people, they see the problem as being that they are  not earning enough, if they could earn more, they would pay off the  debt.  For many people who get into debt though, if their earnings rise,  their spending will also rise.  The key to reducing your debt is  reducing the amount you spend.

Is that new car really necessary when there is nothing wrong with the  old one?  Do you really need another pair of jeans?  Should you really  be borrowing money to pay for a holiday?  Whenever you are about to  spend some money, ask yourself whether you really need what you  are about to buy.  It is likely that you don’t, unless it is keeping  your family fed and sheltered.  The money that you save can be used to  pay off your debts and reduce the amount you are paying every month in  interest.

That credit card should really be called a debt card.  It’s a measure  of how much you spend that you can’t afford to pay for yourself.   Unless you pay off the full balance every month, that borrowing is going  to cost you a lot of money.  And if you are already spending more than  you can earn, how are you going to pay the interest as your debt grows  and grows.

Once you have addressed the reason for you being in debt.  What can  you do to help you get out of debt?  One easy tactic you can use is too  move any ‘debt card’ debt to a new 0% debt card.  This way you can start  paying off the debt without having to have part of your payments go  towards paying the interest on the debt.  It is vitally important though  that you either cut up or close the old credit cards after you have  moved the balance from them to your 0% card.  If you have a habit of  pulling out your credit card when you don’t have enough in your current  account to pay for something, you really don’t want a bunch of empty  credits cards close at hand.  It is also important to keep track of when  the 0% period runs out. Set yourself a goal of paying off the debt  before it runs out, but if you don’t manage it, you probably want to  move the balance again to a new 0% card – but do remember to cut up the  old 0% one!

If your debts are large and you have a property, you may consider  re-mortgaging your property to access money to pay off other debts.   Borrowing on your house is known as a secured loan, and its is cheaper  than other non-secured loans, because the lending party can take away  and sell your property if you stop making payments – this secures them  from bad debts, reducing the risk which means they can charge a lower  interest rate.  A mortgage is the only form of debt that is really  necessary; very few people are able to just buy a house with their  savings.  If you move credit card debt to a mortgage debt though, as  above, it is vitally important that you cut up or close the credit cards  so you don’t just end up spending the balance on them again, getting  yourself further into debt than before.

So you first need to reduce your spending level, then look at how you  can reduce the amount you are paying in interest every month, keep up  your payments in reducing the debt, and before you know it you should be  well on the way to becoming debt free.