Six Crucial Steps To Get Out Of Debt

These days everyone is concerned with finances. Thanks to modern technology we are able to control our spending and track our debt payments better than ever. Financial literacy is a very important skill in the game of life, and if you follow the next few steps you will be in excellent shape to play it.

Cut Your Credit Cards Up

This is extremely important. If you have any credit cards at all you should cut them up, including department store cards and gas cards. One credit card for emergency purchases is okay, but emergency purchases should not include buying a pair of jeans on credit. If you can pay off the purchase with this card with cash before the next billing cycle then that is okay.

Track Your Spending

Sites like are excellent for tracking your money and where it goes. This idea sometimes seems painful because it gives you an idea of just how much money you spend on things you may or may not need. This is a very important step in getting out of debt. Avoiding debt begins with knowing exactly where your money goes.

Get Organized

Organize your daily, weekly and monthly spending habits. is good for this, and many personal banks have online programs that will do this for you as well. Knowing the difference between needs and wants is much easier when you are able to see them in lists. Labeling NEEDS such as food, gasoline and medications will help you distinguish them from WANTS such as movie tickets, new clothes and vacation expenses. When you do this you are able to identify what sort of expenses you can trim back.

Many people don’t realize that credit card debt is toxic because the interest on the principle becomes overwhelming. It may take you years to pay down the debt and by the time you are done you may have paid more than the original amount just in interest alone.


Allocate a specific amount of your monthly income to pay off your debt. This will help you pay the debt off sooner because you will be committed to a certain amount every month. A payment to your debt burden intermittently is not a good plan. It’s important to be firm, yet realistic. Pay what you can afford, but do it regularly. Consistency is the key.

Track It

Organize your debt with a spreadsheet and include the terms of repayment. It can be quite overwhelming to be in debt, and it helps relieve that stress when you know exactly what is owed and to whom. Gym memberships, car loans, mortgages and student loans should all be included, along with your personal credit card debt.

Build Momentum

Increase the amount that you pay as time goes by. If you only increase the amount you pay towards your debt, then you will have things under control much faster. Decreasing the amount you pay makes it take much longer over time.

If you follow these six simple steps, then you will soon be down the road to getting out of debt. Paying off debt is very important to a healthy financial life. And just like diet and exercise, the more you do it, the better you feel.