With credit cards, home loans, school and car loans, many people carry a lot of debt. Living a debt free lifestyle is a dream for many people. While it is difficult for most people to get out 
of debt; it is not impossible. Here are six tips on becoming debt free.
Figure out how much you owe
To start out, a debtor should know how much they owe. Now, this may seem like a painful step, but it is crucial for a debtor to know where they stand. When tallying up the debts, a debtor should note the payment amounts, interest rate and debt amount. Once a debtor knows exactly what they owe, they can start devising their plan.
Create a budget
To devise the perfect payoff plan, a debtor must know more than the debt amounts. A person in debt needs to write-up a budget so they can create a solid payoff plan. A debtor must list all of their monthly expenses such as rent and insurance while also listing for other expenditures such as food and gasoline. With a budget, a consumer will know how much they can denote to their debts.
Pay off high-interest debts first
A debtor should pay as much as possible on their highest APR debts while simultaneously making the minimum payments on their others debts. Then, as one pays off the higher APR debts, he or she can move on the second highest APR and so on.
Negotiate better deals with your creditor
While a solid payoff plan will get the process going, a consumer should do more to pay off their debts. Believe it or not, a consumer can call up their creditor and ask for a lower interest rate. This does not always work, but oftentimes a consumer will be successful, and the debtor will receive a lower interest rate on their debts for a fixed period. Since it only takes a few minutes to make the call, a debtor must take this step if they are serious about being debt free.
Take advantage of balance transfers
Most consumers are familiar with credit card balance transfers. If a debtor has a high interest rate card and the creditor will not budge on the interest rate, one should consider initiating a balance transfer. Oftentimes, one can transfer a 29 percent APR balance to a zero balance card. One must keep in mind; a balance transfer will usually cost the creditor a three percent fee. In the end though, a balance transfer can help a creditor pay off debts quickly.
Generate extra income
Finally, a consumer should seek out ways to earn money off pay off their balances faster. A debtor can easily earn some extra cash by working a second job or selling excess household goods. When increasing income or getting extra cash, a debtor will pay off debts faster.
Look into bankruptcy alternatives
If things become desperate, there are a number of alternatives to bankruptcy. If you simply can’t find enough cash to make the minimum payments on your debts, there are a number of options available to you. In the US, many people choose debt restructuring or a Chapter 13 Wage Earner plan. In the UK, options include Individual Voluntary Arrangements (IVAs) and Debt Management Plans (DMPs).
It’s never too late to wrestle back control of your finances, so stop burying your head in the sand and start taking your financial future seriously.
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Written by Jon the Saver
This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER
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