Having a clear strategy of the steps to take to help get out of debt is, prudent advice.  Sometimes the hardest part is taking that first step.

1.    What do you owe?

The first thing to do is to acknowledge the full amount you owe.  This is easily done by going to www.annualcreditreport.com, where once a year you can get a free credit report from all 3 bureaus.  Take a close look at your credit report as the majority of all credit reports have errors that may impact your availability to get future credit.  Now that you have your credit report, make a list of debts owed and their corresponding interest rates.  The objective is to go after the highest interest rate accounts first.

2.    Budget

Step two is to make a monthly budget.  This is easier said than done, as it will require discipline.  Write down all of your income and expenses.  If your expenses outweigh your income, then something has to give on your expense side.  If, after paying all of your bills, there is some leftover then put that toward the debt with the highest interest rate.  The more you pay off, the quicker you can be debt free.

3.    Make a plan

Now that you know how much you can afford to pay on your debt per month, you can realistically see a clear path to make your debt go away.  Look really hard to see if there is anything you can cut out of your budget to help pay your debts down faster.

4.    Negotiate with your creditors

What else can be done to help pay off your debts faster?  Have a friendly chat with your creditors.  Let them know you are having a difficult time paying your debts and that it would help you tremendously if they could lower your interest rate.  When your interest rate is reduced, more of your monthly payment goes toward the principal.

5.    Follow through

The more you stick to your budget, the more addicting it will become to get out of debt.  Document your improvement.  So many folks are going through this right now.  Your experience can help someone else.  Like the people of the Great Depression, we are learning the ills of our ways and will be more fiscally responsible.  Once your debt is gone, you will want to start saving for retirement.