Learn How to Get Out of Debt

While many today strive to live the American dream, they are struggling to find it. For most, the American dream has gone awry somewhere between money and happiness. Why? Unfortunately the term "money" has become synonymous with the word "debt." While most people do not want to be in debt, they cannot seem to help themselves.

The average American carries over $9,000 in debt. The reasons for such large debts are about as numerous as there are credit cards for which to apply. Many people claim they want to get out of debt but they do not know how to even begin such a process. It's like quitting smoking, you know you should but you can't.

While getting out of debt is not for the faint of heart, it is achievable for most people, no matter how bad your circumstances are. By following a few simple guidelines, you can go from living on credit to living in the red.

Decide you want to get out of debt.

It is surprising how many people say that want to get out debt but are unwilling to make any changes in their life. One thing about debt that remains constant: it will either grow or decrease. Make a conscious choice for the latter and stick to it.

Share your desires with your family and get them on board. If one member of the family doesn't see eye to eye with you this, you will fail. Why? While you are living a life that strives to be debt free, they are digging a deeper hole. Your efforts might minimize some of the damage, but there will still be debt. Be up front and honest with the whole family and come to a consensus that getting out of debt is best for everyone. For the reluctant participant, a reward incentive might help them see the light.

Evaluate the scope of the problem

Lay out all your debt and add it up. Does the amount scare you? Maybe it should. You won't be successful in getting out of debt if you aren't honest about the depth of the problem. When you see the full picture, you can begin to make a plan to change your circumstances.

Make a road map out of the forest

Once you know what you are dealing with, make a plan to change it. Start by getting rid of all but one or two of your credit cards. Cancel them so you are not tempted to use them again. The one or two cards you keep should be low interest and reserved only for emergencies. Make sure you set a definition for emergency from the beginning. A sale at Macy's on a pair of boot that make your legs look ten inches longer is not an emergency. A broken down car on the side of the road that requires towing is.

Transfer as much debt as possible to the low interest credit cards to avoid paying unnecessary interest. Frequently your credit card will send you checks with your monthly statement to use against the card. Use those checks to consolidate. If you can't transfer the money this way, call your credit card company you want to transfer the debt to and see what they can work out. If they find out you want to transfer more debt their way, you can almost bet they will do back flips to help you out.

Create a budget

A budget is a standard tool in getting out of debt because it works. Before you start, spend a month recording everything you spend. Yes, even record that 3 p.m. candy bar you sneak from the office vending machine every afternoon. By doing this exercise, you will see where your money is going. You will begin to see your spending habits. This will help you allocate what amount you need in each portion of your budget. It will also have the added benefit of showing you spontaneous purchases that you make on a regular basis that you can cut out. There are many online resources that can help you with this process. A great start is a budget worksheet at http://www.consumercredit.com/budget-sheet.

Pay, Pay, Pay

No matter how hard it is, make a payment on your debt each month. Paying the minimum payment does not count. The minimum payments are not created to help you, they are made to hurt you. By paying the minimum, it can take you 30 years to pay off a credit card. Even if you cannot pay much above the minimum, pay as much as possible. It will help in the long run.

Another important factor is paying your bills on time. Otherwise, you will be spending money you could be using toward become debt free in late fees. Do not fall into this vicious cycle. Once one payment is late, it can become a snowball effect. Be a responsible consumer and pay bills on time, no matter how hard it may be.

Create a New Way of Life

Instead of living above your means, seek to live below your means. What does this mean? It means spending less than you take in each month. While this seems impossible for some, nearly everyone has some changes they can make to save money. Do you have every cable channel available? Do you have the fastest speed of Internet on the block? Do you shop at the trendiest stores? Do you drive the nicest car in town? Sacrifices are hard but they are worth it in the long run. Find creative ways save money and watch your debt begin to disappear. Then, maybe you can stop struggling through each month with debt and start to pursue the real American dream: love, money and the pursuit of happiness.