How to Get Out of Debt
Whether you're in major credit card debt, seeking debt
reduction or just need credit debt help, we'll see what it takes to
get debt free. Debt consolidation loans, debt negotiation
services, and debt relief have all become popular, but are they
right for you? We take a look at the keys to getting out of debt.
The number of Americans that are in debt continues to grow at a rapid pace. Using credit cards to finance
flat panel TVs and $6 caffe lattes has become the norm. According to recent statistics, some 43% of all
American families spend more than they make each year. This "spend first and save later" mentality can be
equated to some of the worst of addictions, with similar consequences. Much like curing a dependency, the
first step to eliminating credit card debt is admitting that you have a problem. It may sound like a typical
cliché, but if you can do that, you can take the most important step of all—action.

Once you decide to take action to eliminate your credit card debt, you can start planning for a debt free
future. Doing so will require much more discipline than what got you in debt in the first place. There is no
magic or easy solution to credit card debt elimination; it takes sacrifice. A steady plan with some
determination can get you there, but you have to want it. Are you tired of being a slave to debt? Are you truly
ready to do what it takes to eliminate debt? Are you ready to make it happen? If so, read on.

Stop using your credit cards
The first step you should take is to stop using your credit cards. This should be done at just about all costs,
effective immediately. Purchasing things like gas and food with your credit card sure is convenient, but debt
reduction is about sacrifice. Your credit card isn't a free
gift card, so don't treat it that way. Start using your
debit card or cash for these purchases. Individuals tend to be much more frugal when they see it as their
money that's being spent. You'll find that you spend much less with this method. And if you can't afford to put
it on your debit card, you probably shouldn't buy it.

It's convenient to have a credit card set aside for emergencies, but an
emergency fund can be
accomplished by putting a small amount of savings away. So, when your car breaks down or that inevitable
emergency strikes, you're not tapping your cards. Adding to your debt is the last thing you want to do when
fighting the credit card battle. If you have to cut up your credit cards to stop spending, then do so. This is a
fight.

Reduce your interest rates
Many credit card companies charge in excess of 20% interest rates. These excessive rates can often be
negotiated down to lower rates. Call your credit card company and ask for lower rates. They'll often work
with you to lower these rates. Getting rates down to 10% to 12% is not unusual when seeking debt help. If
they give you trouble tell them you'll have to transfer to a credit card company with more attractive rates.
There are plenty of decent credit card offers online that would love to have your business.

Don't just pay the minimum balance
When you just make minimum balance payments you're barely keeping your head
above water, if at all. This is what gets most people into trouble and where the
credit card companies get rich. Most of your minimum balance payment goes to
interest and not principal. Making just the minimum balance payments (
calculator)
is a losing battle. If you have more than one credit card, focusing your efforts on
paying off one card at a time while making minimum balance payments on the
others is fine.

Should you pay off your highest interest rate debts first?
Many financial planners will advise a steady payoff method, which recommends
that you pay off your highest interest rate credit card debts first. While it's the
most logical approach, resulting in the lowest interest paid when followed strictly,
it's not always the best solution for all. Psychologically, some individuals are
more productive when utilizing the "bottom up" approach. By paying off the lower
owed amounts first, regardless of the interest rate, these individuals get the
gratification that comes with progress. Also, it's not at all uncommon for your
largest debts to have the highest interest rates. Paying off these amounts first
can be particularly discouraging for some, since progress is often slow. Choose
the method that best suits your personality and will help you reach your goals, as
the critical thing is paying off the credit card debt.

Consolidate your debts?
If you have some high rate credit card companies that won't budge and don't
seem to have your best interest in mind, it often makes sense to transfer to one
of your existing low interest rate credit cards. This assumes that you haven't
maxed them out and you have the room to do so. Debt credit card consolidation
can be helpful, allowing you to consolidate debt at long-term low interest rates.

When it comes to debt consolidation loans that involve lines of credit or home
equity loans, you should tread with caution. Many families who took home equity
loans to pay off credit cards over the last few years ended up with even more
debt. To make matters even worse, some of these families are doing all they can
to
stop foreclosure. By taking on a home equity debt consolidation loan, you're just adding another creditor
and spreading out payments. Adding creditors and paying minimums over time is what got you in this mess
to begin with.

Spend less or make more
Spending less takes discipline, but it puts you at a big advantage when it comes to paying off credit cards.
Chances are you're like many of us you spend money on frivolous items you really don't need. A bit of
frugality won't make a drastic change in your lifestyle, but it will help you reach your debt relief goals.

Obviously, making more money will allow you to speed up the credit card debt reduction process. This may
sound a lot easier said than done, but you don't need a huge raise or a winning lottery ticket to do so.
Whether you get a second job in a vocation you enjoy or you sell your old baseball cards on Ebay, every bit
helps. Just do something to increase your income. Any surplus of income or lower spending can be applied
to a rigorous debt elimination plan.

Debt negotiation
You've probably seen the commercials: Debt negotiation claims of debt elimination for just pennies on the
dollar. The age-old law applies here, if it's too good to be true, it often is. Many debt negotiation or debt
settlement companies will cost you much more than just pennies. These debt services charge rather large
fees with the real cost being the destruction of your credit. Debt negotiation or debt settlement is often
pitched as an alternative to filing and
avoiding bankruptcy. But, you're often better off claiming bankruptcy,
as debt negotiation services can result in lawsuits from your creditors, a ruined
credit score and fraud from
the debt settlement company. Fortunately, the
FTC has put a stop to many of these unscrupulous debt
negotiation schemes.

Don't be tempted by quick or easy solutions in paying off debt. Getting out of debt takes hard work,
planning, and sacrifice. If you're truly willing to give it your all, you'll not only better yourself, but you'll achieve
your debt free dreams. Few thing in life are as liberating.
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How to Get Out of Debt