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How To Get Out Of Debt

Are you in debt? Is it quite mild or very serious? A huge percentage of people around the country are in debt to some degree – and it is only getting worse. People generally feel like they are the only ones, when in fact it is quite the opposite. If you were to ask around your friends and family, you would probably find that almost everyone is in at least a little bit of debt. This is not something that is going to destroy your life, you only need to learn how to manage your finances and clear your debt.

For those with a small amount of debt

If you just have a small amount of debt that you would like to clear, this can be relatively easy. If you do not have debt collectors knocking down your door just yet then you should be able to clear most of your debt without too much hassle. It is all just a matter of good budgeting and will power. If you do not have a budget worked out, then this is the first thing you need to do. Having a comprehensive budget is absolutely necessary if you want to clear your debt. You will need to make a list of all of your incoming money for the month including wages, investments and so on. Then, make a list of all of your current expenses. List EVERYTHING that you spend money on, and be honest! Lying on your budget is only going to hinder you, not help you. Do not forget money that you spend regularly on things like clothes, entertainment and other luxuries. Now, minus your expenses from your income and see what the remainder is. If it is a positive number, that is a good thing. If it is zero or a negative number, then that is not so good! Now, work out exactly how much debt you have, and add it up into a grand total. Determine how long you want to take to pay off your debt, and work out how much you will need to put aside monthly in order to do that. Now you can go through your budget and start to cut out luxuries until you are left with an amount that will help you to achieve your aims.

Sticking to your budget will require will power. You might need to go without the things you like for a few months while you get yourself out of the red, but it will be worth it when you get there. Earning your financial freedom takes commitment and sacrifice, and it is not something that you can just take lightly. If you make a good, honest budget and stick to it, you will likely find that everything falls into place for you financially and you will be much better off.

For those in serious debt

If you are in serious debt, then the steps you take to clear yourself will be more comprehensive. You should start as mentioned above, with a good budget. However, your budget is likely to be much more strict and much more focused on your larger debts. You will need to cut out all luxuries – that means no more clothes shopping and no more holidays until your debt is paid off. You will also need to work out how you can save even more money. Can you do your food shopping at a grocery wholesaler to save on retail prices? Can you cut coupons to save you even more money when you are doing your shopping for necessities? Are there ways to save on travel costs, such as car pooling or taking public transport? Whatever you can think of to do, do it! Even if you are just saving a few dollars, it will all add up in the end. If you have any luxury items that you do not really need, you might like to try selling these things, especially if they are costing you money, for example with a car. The aim is to put every cent possible into your debts so that you can get them paid off as soon as possible. You will need to monitor your budget every single day to make note of savings or any unforeseen expenses. This might all sound like a terrible bother, but you will probably find that you grow so accustomed to this type of money management that you will not return to your old, money-wasting ways even when your debts are cleared!

If you have found yourself in debt, do not just sit there watching it grow worse. Debt is a very common thing in today’s world and it is easier to fix than you think. The one thing that will make it worse is ignoring it – you need to be proactive and take the right steps to sorting out your debt. It is only then that you will be able to achieve your financial freedom.