Get out of Debt

Do money troubles keep you awake at night?  If so, you’re not alone.  In 2009, CNN estimated that an estimated 1.5 million people simply gave up and declared bankruptcy.  If you don’t want to be part of that statistic this year, follow these steps to grab control of your personal financial situation.

 Write down all overdue bills. 

This is an eye opening first step to many people.  Having the pulse of your situation at all times is the first step in confronting the reality of the situation.  You’ll find you spend less, look for new strategies more, and generally stay in better control. 

Create a budget. 

Lots of people with money problems make it complicated.  It doesn’t need to be.  Here’s the issue:  somehow money out was more than the amount of money you had coming in.  To get back on top of your situation you need to reverse course and money in must be more than money going out.  Here’s how to make that happen:  write down all of your income and then list every penny you spend.   

Now focus on the bottom line.  Is there money left over at the end of the month in your budget?  If so, set up direct deposit to a savings account (without ATM access) to get this money saved.  You can’t afford to leave this money in your checking account.  It will go away quickly (it always does).  Move it to a safe place that’s difficult to access.  If there isn’t money left over at the end of the month, are there expenses that can be cut to create a surplus?  Look at your insurance payments, tax refund, utilities (including cell phone), and cable television as first areas to focus on to find money.  If you can’t find a surplus, you have an income problem and it’s time to find a second job.

Create a debt repayment strategy. 

Don’t try to pay a little extra to every debt.  Focus on one at a time and pay minimum to the rest.  Where do you start?  Highest interest rate cards are generally the best place to begin, but if you have a couple of small balance cards you can knock off quickly that’ll free up cash flow for your budget and give you a quick win (something everyone needs with their first budget).

Find a coach.    

If you have a friend who is good with money ask them to help you stick to your plan.  Review your strategy and ask them for ideas to improve.  Meet frequently at predetermined intervals so you know that you’ll stay on track.  It’s nearly impossible to solve severe money troubles without ongoing help and guidance! 

Track your progress often and look for wins. 

You’ll need to remember that you’re making progress to stay on the path. 

Some great websites to help: – many great ideas to solve debt problems on this site – a free site to help you stay on top of your money

These steps will help you quit being a victim and begin taking control.  If you’re dodging threatening phone calls, overdue bills, and disconnection notices, you probably haven’t had time to get a plan.  To get out of trouble you have to get control.