Getting out of debt ought to be easy.  To reduce your debt, you need to either earn more money, spend less money, or some combination of both.  Although it may sound simple, it’s easier said than done.  It’s certainly possible, though, if you follow a few easy steps.

Follow this process and start climbing out of debt today:

​Create a monthly budget.  It’s impossible to get out of debt if you don’t know how much you’re spending versus how much you’re earning.

• Figuring out how much you’re earning each month can be determined by looking at your pay stubs from your job.  Then, add in any additional income you might have, such as dividends or interest payments from investments.
• To figure out exactly how much you’re spending each month, make a list of all of your regular monthly bills.  For expenses that vary from month to month, such as groceries or entertainment, try to estimate the amount as accurately as possible.
• After knowing how much you earn and spend, you can create a monthly budget.

2.  Discover what things you can live without. This requires you to differentiate between wants and needs.

• It’s easy to determine that you need food, clothing, and shelter.
• Be prepared to sacrifice some things like cable television, eating out at restaurants, travel, and entertainment.

3.  Realize that not all money-saving methods require great sacrifice.  There are some things you can do to save money without giving up the things you love.

•  Use coupons when you go to the grocery store.
•  If you need to buy clothing or other items, wait until they go on sale.
•  Bring your lunch to work rather than eating out.

Some Tips for Paying off Your Credit Card Debt

After making a budget and finding some ways to save money, it’s time to use that extra money to start paying off your credit card debt.

Implement this plan and start paying off those credit cards:

1.  Pay off the cards with the highest interest rates first. With these cards, less of your payment is going toward paying off the amount you owe.  By paying off high interest cards first, you’ll be saving money that can be used to pay off other cards.
2. Contact your creditors.  If you get in contact with your creditors, you may be able to negotiate a lower interest rate or better terms on a repayment plan.
3. Consolidate your debt. You can save a lot of money by taking multiple high interest rate credit cards and rolling them into one loan with a lower interest rate.

• Do your homework before choosing a loan consolidation company to work with. Research the company online to ensure that there are no complaints against them. You can find both positive and negative reviews from other customers.

4.  Keep the credit card accounts open after you pay off the balances.  Closing the credit card accounts as soon as you pay them off may seem like a good idea, but it can actually lower your credit score.

•  One of the factors that helps determine your credit score is the amount of available credit you have compared to the amount of debt you carry.
•  If you close the accounts as you pay them off, the ratio of available credit to debt will go down and adversely affect your credit score.

The only other thing you can do to accelerate the process of paying off your debts is to earn more money.  If you can get some overtime at your job or take on a part-time job you may be able to earn some extra income.  If you have extra things lying around the house that are just taking up space, you could sell them on eBay or have a garage sale.  Every little bit helps.

The first step is the hardest one to take when you have to make a change.  But, you’re now armed with the information you’ll need to climb out of debt and into abundance. Start today for a brighter tomorrow!