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Having too much debt seems to be a problem that a lot of people today are facing. Debt can be crippling because, the deeper you get into it, the harder it is to get out. The problem is compounded by the fact that having a lot of debt, especially unsecured debt like credit card debt, is more expensive if you have a bad credit score. If your debt situation is particularly severe, you may be asking yourself how you can get rid of debt. The first thing to do to get rid of debt is to admit that you are facing a serious problem that needs your full commitment in order to resolve it. Here are steps to being debt-free: Figure out how much debt you really have First, you need to do what you should do whenever you face any serious problem: determine the nature of the problem and how bad it really is. In other words, you need to take careful account of your debt situation. When in debt, especially if you have multiple sources of debt, it can be tempting to avoid facing the truth about how much you really owe altogether. So, sit down with a piece of paper or a computer spreadsheet and simply add up all of your debt. The number you come up with is what you will target to become "zero" in the very near future. Imagine the relief you will feel when that happens! Put your debt into categories As you add it up, put each type of debt into its own category. The reason for this is that different types of debt should be treated differently. Examples of relevant categories include credit card debt, department store card debt, mortgage, second mortgage, auto loans, and equity lines of credit. Also, if you have multiple credit cards, for example, be sure to list each one separately. Arrange in order of which to pay off first, by interest rate Now, next to each debt instrument you have, write down the amount you owe and the interest rate for each one. Most likely, your credit cards will carry the highest interest rates, for example. Now, re-copy your list in the order of highest to lowest interest rate. Pay off one at a time Put together a plan to pay off each of your cards, one at a time. Each month, start by making the minimum payment on each of your cards, except for the highest-interest card. For that one, pay it down as much as possible each month. As you successfully pay down each card, you will get a feeling of accomplishment that will encourage you to keep fighting your debt monster until it is completely dead. By paying off the highest interest cards first, you will be freeing up more money each month to pay down your remaining debt faster. Work on your credit score One of the smartest ways to get rid of debt that many people overlook is to take the steps necessary to improve your credit score. You could potentially save a lot of money per year in interest payments simply by improving your credit score. The reason is, a better score will mean you will be eligible for lower interest rates, and it is the high-interest rates associated with debt that keeps people in debt longer. Buy what you can afford. If you are an individual who wants to have a debt free lifestyle then you shouldn't spend more than you earn each month. You should use a credit card and think of it as a useful tool to help you pay for things that you can pay off at the end of the month, but not consider it as an extension to the amount of money that you have to spend. Debt counselling. This involves working with a real professional debt advisor. They can show you various methods and possible means you can take to become debt free. An advisor can guide you while lending their knowledge of each step of the process. You will be able to choose the one most suitable for you. Debt Consolidation Debt consolidation combines all your debts into one debt. These companies unite all your debts into a single account. Consequently, you make one payment monthly rather than each time one of your debts becomes due. If you are looking to get a debt-free lifestyle then you will need to keep track of and know what your finances are, and you will also need to resist the temptation to spend more than you have. You should also ensure, as time passes, that you are reducing the amount of overall debts that you have, even if this process is very slow.For more information visit www.debtfreeplace.com
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