Man holding a credit card and stressed

We’re well into the new year, and you might have already ditched some of those New Year Resolutions. But if getting out of debt was one of them, you may want to reconsider and get back on track with these simple steps.

  1. Examine the behaviors that got you into debt. People don’t get into debt overnight. Getting out of debt and staying out of debt is possible if, and only if, you take a good look at what got you there to begin with. Are you an impulse buyer who has trouble standing still in the long lines at the store without throwing things into your basket? Do you have a hobby that costs you more cash than you can afford? Are you an emotional spender who avoids dealing with a life crisis or issue by diverting your attention and diving into online purchases? Are you overextending yourself to keep up with appearances or to fit in? Looking at where your money is spent is a critical part of understanding where you came from and helping to make a new financial path to freedom from debt.
  2. Decide NOT to borrow any more money. Getting out of debt and staying out of debt means stopping those debt-inducing behaviors immediately. Make a conscious decision not to utilize credit cards for anything. Even small purchases accumulate over time, so a few trips to the store can cost you as much in interest over time as the purchase of a new refrigerator. If necessary, give the cards to a trusted friend or family member for safekeeping, especially if you find it difficult to overcome the impulse to reach for the credit instead of the debit card, checkbook, or cash.
  3. Make a realistic budget and stick to it. Write it down. Look at what you spend each month on essentials such as housing and food. Then consider items that are technically unnecessary and may be negotiable. Cell phone plans, cable TV, and even transportation may be reduced or changed or eliminated altogether. Make a budget that is based on the reality of your income and the requirements of survival.
  4. Start an emergency fund. Most people have little or no savings on which to fall back if something should happen, and credit cards serve as a backup plan when the furnace goes out or the kids go through a growth spurt. One aspect of your budget should consider future planning, so developing a way to put aside some cash for that potential emergency is critical to staying out of debt.
  5. Consider transferring credit or debt consolidation. If you have several cards or are struggling with high-interest cards, consider consolidating your debt in one way or another. Transfer balances from several cards to one low- or no-interest card or search for an offer with better terms. A one-year no interest card can seriously improve your chances of getting that debt under control. If your debt is really out of control, you can look into the ways to bring all of your debt (including credit cards, medical bills, personal loans, etc.) under one roof and avoid the penalties, late fees, and errors in payment amounts made from juggling too much.
  6. Generate extra income. While no one wants to take on a second job, consider other means by which you may generate extra income. Selling things you don’t want or use anymore, starting an online business, or providing goods and services are just some of the ways you can create income and ease the temporary burden of working toward your goal of getting out of debt. Keep in mind that a second job will likely not remain a necessary state of affairs.
  7. Throw excess cash at debt. It goes without saying that the more you are able to pay on debts, the sooner they will pay off. Most people, however, do not think about the cumulative effect of paying even $10-20 extra on credit cards over the course of a month. There are realistic ways to do everything from pay off a car a year early to save tens of thousands of dollars on a mortgage by making simple adjustments to how much, how often, and how we make payments.

Getting out of debt does not have to be a painful and difficult process if you plan ahead and make a conscious decision to do so. Follow these few simple steps, and move toward the freedom of a debt-free existence.

What strategies are you taking to get your debt under control in 2018?

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