Simple Strategies to Get Out of Debt

Author: Simon Volkov

Many Americans want to get out of debt. It is estimated that U.S. consumers carry an average of $8,000 in credit card debt. This does not include mortgages, automobile loans, student loans, medical debts or delinquent taxes.


It takes financial fortitude to get out of debt, but with patience and persistence it can be accomplished. While many people turn to bankruptcy to resolve debt issues, this oftentimes backfires and causes more harm than good. Prior to tackling money problems, it is smart to research all available options to determine which is best suited for your needs.


The type of strategies required to overcome debt problems depend on the type of debt owed. Many people have accrued mountains of credit card or mortgage debt because of long-term unemployment. Others have excessive debt due to education loans or medical bills. However, the primary origin of too much debt stems from over spending.


There is no doubt that American consumers have been brainwashed to buy an abundance of material things. From fancy gourmet coffees to cars that parallel park on their own, we are bombarded with marketing messages that convince us our lives will be improved by purchasing things. The easiest way to overcome debt is learn how to tune out advertisements that are stealing our financial future.


Budgeting is by far one of the most effective ways to get out of debt. It's simple and doesn't cost a dime. The formula for success is to spend less than is earned. People often complain they don't have enough money, but the truth of the matter is they don't realize how much money they waste. Budgeting sheds light on careless spending habits and encourages smarter spending.


The only tools required to create a household budget include a piece of paper, pencil, and calculator. Draw a line down the middle of the paper and list all sources of income on one side and all fixed expenses on the other.


Fixed expenses refer to bills that must be paid each month regardless of earnings. These usually include: mortgage or rent payments, utilities, insurance premiums, transportation costs, and food. Other fixed expenses can include: daycare, child support, spousal alimony, taxes, and Chapter 13 bankruptcy payments.


Next, create a list of other items you regularly purchase throughout the month. These might include: cell phone bills, newspaper or magazine subscriptions, clothing, dry cleaning, fast food lunches, and recreational activities.


If you are uncertain of where your money goes, carry a piece of paper in your wallet and write down every penny spent for at least 30 days. Chances are you will be shocked at the amount of money being wasted.


The first step of overcoming debt problems involves eliminating impulse buys. A good question to ask your self is, "Is this purchase going to improve my life and allow me to retire easily?" If the answer is "No" then you don't need it.


The second step involves creating a budget that allows you to have more money than month. Extra income should be placed into a high yield savings account or invested into products that generate money.


Pulling in the reins on excessive spending can be painful in the beginning, but the sacrifices made will provide peace of mind knowing that you can pay all your bills on time and start saving for the future.


Budgeting is an affordable way to regain control over personal finance, but sometimes it is not enough. Debtors may require credit counseling to learn money management skills. Others may be forced into bankruptcy in order to reorganize debts and pay them back over an extended period of time.


The Internet offers an abundance of money management tools and budgeting resources. Just use caution when searching online and avoid spending money on get out of debt programs that require you to buy a course or enroll in subscription-based programs.
Article Source: http://www.articlesbase.com/personal-finance-articles/simple-strategies-to-get-out-of-debt-5324867.html

About the Author

Real estate investor, Simon Volkov, specializes in helping individuals facing bankruptcy and foreclosure. He provides an extensive get out of debt article library offering information and resources to help consumers pay off credit cards, develop household budgets, understand the pros and cons of filing personal bankruptcy, and more. If you need help overcoming debt, visit www.SimonVolkov.com today.