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To get out of debt efficiently involves better managing the effects, through consolidation and other approaches. Get out of debt and stay out of debt, by addressing and examining the cause of the problem in the first place.
There are numerous circumstances that can place a person in debt, and in some cases this may even be a strategic choice, however most often the consumer debt scenario is symptomatic of the following:
- Spending more money each month than comes in.
- A buy now and hope to pay for it later culture.
- Poor money management in regard to the servicing of or repayments against the debt.
- Lack of a budget and personal financial control over expenditure.
Get Out Of Debt Free
Ready to put an end to debts? Get out of debt free by following your own do-it-yourself strategy. Ending debt fast is an ideal situation and certainly the faster one is free of the burden the better. But the truth is that very often freedom from debt takes some time to achieve.
Paying off debts immediately, without incurring new borrowing is the fastest way to get rid of the effects (but still does not address cause). This may seem obvious, but stopping to think how monies could be accessed through sale of possessions or liquidation of savings is part of the process.
Often people look to get out of debt with the help of an outside service. This site explains in detail. To get out of debt with the help of a service provider is equally a long-term proposition and once again, all services deal with the effects but not cause.
This site discusses the three core service options that fall under the broad definition of Debt Consolidation:
Consolidation is about better managing the effects of debt. For example, reducing the monthly outgoing on repayments, shortening the life of the debt or reducing the total cost of the debt (the total amount repaid by the time the debt is paid off fully).
No service should be signed up for without first exploring the pros and cons together with a clear understanding of what is involved.
Get Me Out Of Debt
This site explores options in detail. Help get me out of debt is a common cry. You may find outside help appropriate, but always personal effort is required. Often, help from a service provider is inappropriate to the situation and any notion that one can get out of debt by offloading the problem to a service should be dispensed with.
To get out of debt requires a broad action plan that addresses cause and effect. Assistance from a third party service provider is not always necessary.
The above three consolidation approaches (Loan, Plan/Program and Settlement) are long term commitments, typically associated with a service provider, but each has a do-it-yourself ability. For example, in addition to a Debt Consolidation Loan, also known as get out of debt loans there are other types of loans that can achieve the same result.
Remember, consolidation services do not address the cause of debt, merely the effect. There are also Credit Counseling Services, that offer free advice and support. These services often provide materials to help with self-education about cause and budget control, but not the best way to manage effect.
Get Out Of Debt Summary
A simple summary. To get out of debt in the most efficient manner entails the following and all should be done simultaneously.
1. Stop further borrowing (this includes the use of credit cards).
2. Deal with CAUSE:
Budget Overhaul - a detailed examination of income versus expenditure. All monthly expenses need to be listed down by category:
! Use a free monthly Budget Planner template
Fixed Cost: e.g. mortgage, rent, car payment, insurance...
Semi-Variable Cost: e.g. utility bills, gasoline, phone...
Variable Cost: e.g. food, entertainment, repayments on debt...
Take time to think about and record every type of expense. When you have identified each type of cost, next populate the list with actual dollar amounts or best calculation/estimate of the average monthly expense. Add it all up.
Once you have established what your current average monthly outgoings are, you need to identify the best ways and areas where you can cut down the expense - and start doing it immediately. To get out of debt requires that you 'know your numbers'.
Get out of debt goal of the budget overhaul:
a) 'Save' Money - reduce your cost of living, by cutting out or down on expenditure wherever possible.
b) Redirect Money To Debt Repayment - the money 'released' from cutting down expenditure should be used to increase the amount routinely assigned to debt repayment.
c) Tailor your budget as best possible to 'live within your means'. Put simply, you should be able to pay all your expenses with cash and still have some funds leftover.
For more information, see our article: How To Get Out Of Debt
3. Deal with EFFECT:
a) Explore Debt Consolidation options if appropriate, including do-it-yourself approaches.
b) Explore other Non-Consolidation Options, ways to access monies to pay off the debt (e.g. liquidate assets, terminate savings).
c) Follow a Repayment Strategy. A budget overhaul should enable you to 'find' more money to put towards routine debt repayment; but if you have two or more creditors (e.g. cards), how do you go about making repayments? You should be following a strategy such as the Avalanche or Snowball Debt Solution
These are repayment techniques to get out of debt effectively, in a way that works for you.
4. Continuing Education:
Get out of debt and thereafter stay out of debt. Addressing Cause, is effectively about learning good budgeting. Controlling finances through sound personal or family budgeting is essential, and an ongoing task. Develop spending discipline over what and when you buy things so as not to go 'over budget'. The more you read and become interested in the topic of personal finance the better placed you will be to avoid debt problems for good. Subscribe to a get out of debt blog online or visit your local library.
Get Out Of Debt Now
Find free resources and understand the options for consolidation here. Each person's debt situation is different; the type and amount owed together with the wider picture of financial circumstance all govern what the best cause of action is. Get me out of debt? Regardless of circumstance, personally examining, overhauling and controlling your budget is essential. Get me out of debt; but how much? Some people with multiple card debts have lost track of how much they actually owe in total and hence the scale of the problem. Often people have no concept of how much money they spend and budgeting amounts to a feeling about whether they can afford something. This all spells disaster. Learning and practicing basic household budgeting is essential for anyone serious about ending debt and staying out of it. Thus to successfully get out of debt fundamentally involves self-education, to understand and prevent cause. This site offers get out of debt tips for ending debt on your own but the principal focus is to provide advice on and explain debt consolidation in detail. Consolidation is a way of addressing the effects or burden of debt that can form part of successful strategy alongside personal efforts to address cause. To see if consolidation is right for you, follow our articles on each of the core approaches.