There are People Without Debt

It’s hard to imagine, but there are people who have no debt. And these individuals did not win a lottery to get there. They used some very basic financial management strategies. These are not big secrets, and even you can solve your debt problems to gain financial freedom.

Get a Clear Picture of your Debt

Most people cannot tell you the exact total of their debt. They simply pay the bills and move on to the next month, knowing that those credit card and revolving debt balances are high. It is somehow easier to ignore the nasty balances and order a pizza for dinner. People who live like this will be in debt for the rest of their lives and never really know the sense of freedom and security that comes with being debt free.

Begin your quest to be debt free with a realistic financial picture. Take a look at each balance and get a true total. Divide you gross monthly income into that total. If the result is .50 or higher, you have too much debt right now. If it is lower than .50, you do not have dangerous debt, but eliminating it will give you a much brighter future.

Getting the Debt Paid Off

The first step to a debt-free life is commitment. To muster up that commitment, list the things you would like to have and do if you only could afford them. Most people have several dreams they believe to be unreachable, and this is the first myth. Put your list in prominent places as reminders of your goals. Look at this list everyday as you work to eliminate your debt.

The second step is to develop a realistic budget that involves paying down the debt as quickly as possible. Spend a month recording everything you spend money on. This includes that pizza mentioned above as well as the morning bagels and lattes, the lunches out, the impulse purchases you make while strolling through stores, etc. You will find at the end of the month that a lot of money was spent on non-essentials, and this is the money you are now going to use to pay off debt. You have your debt totals. Begin with the smallest and work your way up, putting every bit of excess money on each debt until it is eliminated. Put up a list and cross through each debt as it is paid. Reward yourself with each pay off, and tell others what you are doing, so that you can receive the support you need.

When the Debt is Overwhelming

If your debt is so high that you do not have any excess money to apply to it, you need more drastic solutions, and they are out there. Among your options are the following:

1. Consider consolidation. This option involves getting one large loan to pay off all of the existing debt, getting you one lower monthly payment. If your credit is still good, these may be available through a credit union or bank. If not, you may need the help of a debt consolidation professional who can provide a number of important services.
2. If you have equity in a home, you can access it with a home equity loan or a complete refinance, taking the cash out to pay off your high interest debt. These are good options for someone what can practice excellent self-control and cut up those credit cards. The interest rates are typically lower than consolidation loans.
3. Borrowing from a 401 K is another good option. Your re-payment is going back into permanent savings, and that is always a good thing.
4. Debt consolidation and settlement professionals can negotiate with your creditors to get lower interest rates, elimination of late and over-the-limit fees, and a lower total debt amount. You may then have one lower monthly payment which includes their fees.

Whatever your circumstance, there is a realistic solution to debt. Take the path that best fits your situation. It will lead to a highway of freedom.