A Magic Formula for Getting Out of Debt

The title of this article implies that there is a magic formula, or hocus pocus way to eliminate debt before ones' very eyes. Unfortunately, nothing is further from the truth! (Sorry to get your hopes up!) The good news, however, is that with hard work, discipline, and a plan, debt can be eliminated over time. Here are some ways to do just that.

1. If you are in debt due to undisciplined use of credit cards, get rid of them, or at least make them hard to get to. click here to read some creative ways to do just that.

2. Create a budget to avoid going further in debt. If you can't afford something, don't buy it!

3. Bring in some extra income for a season and apply all the extra money you make to your credit card debt. A part-time job, freelance writing, babysitting, mystery shopping, and selling used items either at yard sales or on places such as eBay are all ways to bring in some extra money.

4. Determine a set amount to pay on your debt each month and pay it consistently, even when your minimum payments decrease. Don't use decreased minimum payments to lead you to believe that you can pay less on your debt this month than you did last month. If you pay only the minimum amount required, it may take twenty or thirty years to pay off your credit card debt.

5. Pay off your credit card debt systematically. Some financial advisers suggest focusing on paying off your credit card with the lowest balance first (while still making the minimum payment on others), and other experts recommend a focus on paying off the card with the highest interest rate first. There are advantages to both methods, however, if you focus on paying off the card with the lowest balance first, you'll gain a sense of accomplishment each time a card is paid off. The adrenaline rush that comes from paying off a card may be just the motivation you need to continue on the journey of becoming debt free.

6. If you find you just can't seem to get rid of the credit card debt on your own,try a service such as Consumer Credit Counseling Service (http://www.cccsatl.org/). In the long run, it generally cost more to go through a service, as there are often fees associated with the service. Using a service also obligates you to pay a set amount of money each month, even when a difficulty such as job loss strikes. Because of the negatives, I would recommend this option only if you find it impossible to pay off your debt without someone policing your efforts.