1) Know your credit report and evaluate your debt: The stepping stone to be debt free is to admit that you have debt, and are willing to be a free of it. Take a carefull look at your credit report and calculate the amount of debt you owe. The bill payment history in your report is a proof of how regular you had been during your past payments. Clear the accounts with the higher interest rates first. This will help you to save a lot of dollars. Without having a clear picture of your financial standing, it is very difficult to solve your problems. Ignore accounts with no activity that are over 24 months old.
2) Budget your expenses and avoid adding any new debt to your history: ItChange your spending habits. Keep a careful track on the amount you earn and your basic expenses. Try to reduce your expenses as much as possible. Change your lifestyle. Be a little more practical as to what your needs and wants are. For example, do you want that new fashion look or can you do without? Should you use a debit card for gas purchases instead of your credit card?. In this case you can only use the card if you have money in your account.

3) Squeeze out extra money and accelerate your repayment: Reduce your present cost of living and pay extra dollars to your creditors to reduce your debts faster. Work part time if you can. Take one account at a time.

4) Choose the right method to clear your debts: Select the right option to clear your debt. You must be aware that one wrong step can further ruin your credit. Your method of choice should ideally depend on the type and amount of debt you owe. Sums over $10, 000 typically require a cash out refinance of your home as they could take longer and accrue more interest by trying to get rid of them through traditional means.

5) Choose the right broker or lender: brokers and lenders are now growing like mushrooms all over America. It is thus very important for you to choose the right one to seek help from. Small firms typically have more experienced people who will give you the time and attention you deserve.

6) Reduce credit cards debt usage: Never close your credit card accounts simply reduce the balance to under 50% of the available credit. Closing accounts can severely damage your credit ratings. Leave the cards home. Keeping the card with you can further cause temptation to use it. Never roll balances from one card to another as this has got some disadvantages. With every new card you have, you generate an outstanding open credit line. This will also be reflected on your credit report. Keep in mind that introductory offers are quite tempting but may not be all that good after a certain period of time. With careless moves you could be stuck with high balances.


7) Leverage the equity in your home: The rates on mortgage loans are much lower when compared to the rates charged on outstanding credit card balances. Further the interest on mortgage loans may be deductible. All these factors added up have tempted the Americans to withdraw billions of dollars on equity in their homes. However, keep in mind that the money is used to repay debt. Once you cash out that equity, apply it to your debt, stick to the plan.

8) Take professional help: Overspending for some people is a psychological problem. It can be a habit or an addiction like alcohol, gambling or drugs. Social problems like divorce and loss of a job or unavoidable emergencies like physical ailment can also be a cause. Some people just have the Jones syndrome. In such cases a Psychoanalyst may be the solution.

Following the above suggestions with consistency will bear fruitful economic results in the long run. Look at your present situation as a life lesson, and you will be managing your debt in no time.

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