Tips for Removing Debt

Tips for Getting Out of Debt

The recent economic downturn has led to job losses and increased bills for many, creating a situation where credit card debt might seem inevitable. Although it does take some work and self-discipline, it is possible to take steps to get out of even the heaviest debt. These tips can assist in getting out of debt.
1. The obvious first step is to create a budget for yourself. A monthly budget is best, even if you are paid biweekly, since it allows you to easily keep track of what you can spend and save for the month instead of living paycheck-to-paycheck. Make sure that your rent, bills, and groceries take priority, and then calculate what you have left as spending money, and how much you would like to set aside to save or pay off your debt.
2. Prioritize which credit cards you pay off first. Pay off your bills down to below 50 percent of the credit limit, to safeguard your credit score. Next, pay off the cards with the highest interest rates. As you pay off cards, close the accounts until you are left with just the credit card with the lowest interest rate. If you can't pay off a credit limit quickly, don't accept any increases on your limit for this card.
3. While you are paying your cards off, get used to paying with cash for purchases. This will make it easier to keep track of your spending and stick to your budget. Even when you are down to one credit card, make sure that you set it aside for emergency purchases only.
4. Talk to your employer about direct deposit for your paychecks. This will help you avoid check cashing fees, and you can talk to your bank about setting weekly or monthly limits for cash withdrawals so you can stay within your budget.
5. Seek out additional employment or ways to procure income. You can hold a garage sale, do freelance work online, or take on a weekend part-time job to get some extra money for spending and paying off additional debt.
6. Take time to review what you spend money on, and see where you can cut back on spending. If you don't have unlimited minutes on your cell phone plan, make sure you aren't exceeding your monthly limit. Eat at restaurants less and do more cooking at home, you'd be surprised at how much you can save this way.
7. You may want to review your living expenses. Seek out lower mortgage and insurance rates, or more favorable utility plans. Including property or homeowner's insurance, property tax, and your mortgage, you should not be spending more than a third of your income on living expenses.
8. Don't borrow money at interest, including credit card debt relief loans, to pay off your debts, since they ultimately will end up costing you more. If you don't have enough money to pay off a debt for the month, try to borrow from a friend or relative, or talk to your creditors about setting up a different payment plan. Many creditors will be receptive to this as an alternative to collection agencies.
9. If you have already been taken to collections, to contact them as well. See if you can work out a repayment plan that will allow you to get negative marks erased from your credit history if you make your payments on time. Only contact debt reduction services if you must, as many have high rates.

10. Be on the lookout for sales and bargains. Clipping coupons might seem cliche, but it is an effective way to save small amounts of money that add up over time. Similarly, when you have to make purchases, wait until you can find the item you need on sale, and avoid excess purchases. Often, you can find what you need at a lower price online than you would in a brick-and-mortar store.
Susan Anstrof is an author for HamiltonDebtRelief.com