How do I get out of debt?

This question is being asked more and more these days. In fact, it appears that people have reallly taken this to heart. Appartently it looks like credit card balances have declined overall in the US. That is a good thing.

It means that we are saving more and more these days. Afterall, we are not sure what is going on with the economy, and for many it is better to save than spend.

If you are saving and are able to get out of debt, then good for you. But, for some, especially those that have bad credit, and others that have very bad credit, it may seem pretty daunting.

Well, if you are trying to figure out how to get out of debt and how to get back on track to building your credit again, have no fear.

4 Ways to Get Out of a Debt Cycle

Since the President and Congress are already taking their own steps to decrease national debt, maybe it is also time for you to do the same thing. Here are four ways that you can take to lower your debt or get yourself out of a debt cycle.

1.) Try refinancing at a lower rate
Transfer your balances from a high rate credit card to one with low charges or zero interest. But, make sure to take caution with the balance transfer fees and the rates after the expiration of the introductory balance transfer. You may also opt to borrow from home equity or retirement plan as these options usually comes with lower rates.

2.) Monitor your expenses and decide where you can cut back
You can start doing this by reviewing your credit card and bank statements for the last three months. Then, record your expenses if you can. It may also be helpful for you to keep receipts and list down your expenses to monitor your cash spending.
If you see that there’s not much room to cut down your spending, decide on what to prioritize. Begin with your basic needs such as food, housing, utilities and transportation. Remember that it is better to miss a payment to your credit card than to go through a foreclosure, repossession or eviction.

3.) Begin paying your debt
Start with high interest bearing debts and make minimum payments with the low interest ones. If you still have difficulties with this term, talk to your creditor and negotiate a payment plan. Tell them that you are trying to avoid bankruptcy. If you cannot come up with a good deal, ask a credit counseling agency to negotiate for you. As your last option, consult a bankruptcy officer. This may hurt your credit for several years but it will give you a fresh start.

4.) Focus on you budget plans
Take out a loan only for things that can increase in value or provide you with more income. These include a home, education or car. Do not get tired of tracking your expenditures so that you are able to stick on your budget. Divide your non-monthly expenses such as insurance bulls, holiday funds and vacation to a monthly amount and put it in a savings account. Finally, make sure to keep some for emergency bills by saving at least 3 to 6 months’ worth of your monthly expenses.

When you take a look at these tips for getting out of debt, you will realize that there is no secret answer or magic bullet. A great deal of the answers come from being disciplined and also budgeting and planning.

If this is new for you, know that you can do it! Start small and gradually work your way up.

If you make a mistake, do’nt be too harsh on yourself. Identify that you made the error and get back on the wagon!

Over time you will be surprised at how you were able to improve your credit score, get out of debt and save money!

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