How to Get Out of Debt

The first trick to eliminating debt is to get everyone to agree it's a priority. You will need to stress the fact that it will require some short term sacrifice. However, the long term rewards will make up for what you have to give up for now. If you could put the money you currently pay towards credit cards every month towards something more interesting (investments, vacations, that new house), what would your life look like?

2) Find out where you are at.

Now it's time to take out all the bills. Write down the amounts, the interest rate, and the monthly payment for everyone of your debts. How much is each one costing you per year (monthly payment x 12 then subtract what goes towards interest).

3) Stop digging.

A wise man once said, "When you find yourself in the hole, stop digging!" This is great advice. You can't get out of debt when you keep accruing it. Resolve here and now, you will not use your credit cards for anything other than absolute dire emergencies. It might even be helpful to give your cards to someone you trust, such as a friend or family member to hold, with strict instrutions to not give you the card back except in emergencies.

4) Make the smallest one the highest priority.

Often you will find you have a few small balances on some cards. Start with these cards. Focus on putting any extra cash (you may need to create some extra cash) towards this debt. The idea is to see that paying a debt off is possible. Once you have paid off the first one, use the money you would have paid toward it, and apply those funds to the next target. This is in addition to the payment you are already paying on the new target debt.

5) Reward yourself.

The month after you pay off a debt, use the money you would have used for that debt to do something fun with your family. At first it might be a movie or a dinner. As you pay off more and more of your debts your rewards will get bigger and bigger, motivating you even more.

6) Now hit the big ones, highest interest first.

Now that you have eliminated your smaller debts, it's time to focus on the big ones. Always remember to put the money from the past debt towards the next debt you are working on. This extra money adds up fast. Just maintain your discipline and stay consistent.

7) Chart your progress.

Keep a visual record of your progress every month. Remember, every dollar you spend is an opportunity to get your debt behind you. If you don't falter, you can do it remarkably quickly. Keep your eye on the prize. Your efforts will be worth it!