Steps to help you get out of debt

Getting out of debt takes hard work, patience and motivation. And one of the best tools to help you get out of debt is a budget.

[Visual of ledger reading “Detailed Budget” with sticky note next to it reading “Goal: Debt Free”]

Now, if you already have one, make sure to update it to include all your debts and current monthly payments. And if you've never used one, now would be the time to start.

Why create a budget? Well, a good budget will help you see where your spending goes every month. And that means everything from, mortgage or rent, to credit cards, auto loans, electric bills,

[Visual of “Coffee,” “Gifts,” and “Entertainment” being added as line items]

and even those little things that you buy on a daily basis.

It's going to require a little time and effort, but believe me, it'll be worthwhile in the long run. Once your budget is good to go, you'll have a better handle on what you have coming in, what's going out, and what you can actually afford every month.

[Visual of new ledger page reading “Make Plan” with bullets underneath reading “Examine your debt” “Tackle secured loans” “Tackles unsecured loans” “Make minimum payments” and “Pay extra if you can” / Sticky next to page reading “Secured /Fixed Payments” with car and home drawn underneath. Another sticky reads “Unsecured” with graduation cap and credit card drawn underneath]

From there, you can make a plan. Start by taking a look at the kind of debt you have, and focus on addressing your secured loans. They usually have fixed payment amounts and are for things like your car loan or mortgage. Because, if you miss payments on them, you can end up losing whatever is being secured. Then, tackle your unsecured debts, like, your credit cards and school loans. Start by listing them from highest interest rate to lowest, and then continue to pay at least the minimum monthly payment on everything, but, where you can, pay more than your minimum, starting with the loans with the highest interest rates first.

Now if you're having trouble even making the minimum monthly payments, you can always call your creditors and let them know that you're having trouble. This may seem intimidating, but there are people on the other end of the phone who can help you come up with a plan,

[Visual of woman on phone with caption bubble reading “I need some help” and “Let’s see what we can do”]

and, think about it, really, it’s in their best interest for you to pay your bills, right?

[Visual of man shoveling piles of debt into consolidation container]

Another option to consider is a debt-consolidation loan. This can help you by rolling all of your unsecured debt into one, but it's only beneficial if it saves you interest and helps you avoid adding more to your debt.

[Visual of man and woman in retail store electronics aisle. Sign reads “Gadget World” and they are holding a container reading “DEBT”]

So, this is the part where you get some tough love. Now is the time to stop adding to your debt. There's no magic bullet here. It's the best way to reduce what you owe, and if you want to do this right, you're going to have to make some concessions in your life, which may mean you need to stop spending on nonessentials.

[Visual of thought bubble with bus, coupons with scissors, and iPod]

[Visual of man and woman now in front of shoe store with. Woman with speech bubble reading “THINK OF OUR BUDGET”]

Just think about where you can trim the fat in your budget, and then make some changes in your life. For example, you could take public transportation to work, use coupons when you shop, or don't buy the latest and greatest device when what you have works just fine. Another way to stop adding to your debt is to use this rule of thumb: If you can't afford it, you can't have it. That will help you avoid buying things that you'll end up paying for down the road.

[Visual of man thinking. Thought bubbles read “Yard sales” “More hours” “Sell online” “Do without” “Part-time Jobs”]

[Visual of tax refund and vacation with man holding briefcase reading “$3,000]

Finally, be creative. Let's face it, some of us live a little larger than we need to, so figure out
what you can do without and get some cash for it. Whether you clean your closet and visit a consignment shop, hold a yard sale or sell something online, there are plenty of ways to make some extra cash. Or, if you have a little time on your hands, why not try to pick up some extra hours at work or get a part time job? And, with your tax refund—think hard before you blow it on a vacation or something you don't really need. What you could be doing with that money instead is using it to pay down your debt.

[Visual of man holding stuff while woman stands next to him arms crossed. A rope leads out of frame]

[Visual of rope leading out of a well tied securely to a tree. Next to tree reads “NATIONAL FOUNDATION FOR CREDIT COUNSELING”]

Being in debt can make you feel isolated, and probably pretty bummed out, but if there's one thing to remember, it's that you're not alone, and there are people you can turn to for help.
So, if you find yourself in a spot that you can't manage on your own, check with an accredited nonprofit consumer credit counseling agency, one that's a member of the National Foundation for Credit Counseling.

So, now that you've taken the first step toward getting out of debt, simply acknowledging that you need to take action can help you start down the right path. And if you follow these steps, you'll slowly but surely chisel away at what you owe.


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