With all the articles, books, and other things that have been written about how to get out of debt, one would think that it is a difficult process. However, the reality is that while it may be a long process for some, depending upon the amount of debt that they have, it is not that difficult. It just takes time and patience.
The first thing that you will have to do, and probably the hardest, is to sit down and figure out exactly what your debts are. This may require that you pull a copy of your credit report as well. Don’t forget to include cars and houses as well. Although there are many people that do not consider their houses and cars when considering their debt, they most definitely are debt. This will give you a realistic view of exactly where you stand.
Once you have determined how much debt you have, you will need to figure out how much extra you are paying to have that debt. Figure out your interest rates, and determine which are the highest, and which are the lowest. As you look at your interest rates, call the banks to find out if you can lower those interest rates. This is one of those tactics that sometimes works, and sometimes does not, but it is always worth a try. Even if they do not lower your interest rates the first time, you can still keep trying until they do lower your rates.
When you have determined how much debt you have and what your interest rates are, now is the time to determine how much you can pay toward your debt. You can pay off one debt at a time and make minimum payments on the rest of your debt. There are two ways that you may want to do this. Some people choose to pay off the smallest debts first, so that they can have that sense of accomplishment that comes from paying off each debt. Others choose to pay off the debts with the highest interest rates first. Either is an acceptable way to pay off your debt. Just make sure that you stay disciplined. You can even pay off your house and car as much as possible this way.
It is important to remember that you do not have to pay so much toward your debt that it leaves you destitute. If you have to sacrifice so much that you are destitute in order to pay off your debt, bankruptcy may actually be the better way to get out of your debt. While this is not as simple a solution as many will make it sound, it is far easier than getting caught in an endless financial death spiral.