The quicker you resolve your debt, the faster you can start living again

We live in a society where it’s considered “normal” to be in debt, but how did past generations avoid debt? They spent only what they had on hand, and they acquired that cash-in-hand by saving what they earned.

In this day of instant gratification, it IS “normal” to carry personal loan and credit card debt but if it’s starting to be a burden or you just want to get out of it, you have to go back to the tried and true principles of saving and spending within your means. That is also the best way to deal with current debt in order to get out of it more quickly—save for it and spend on the debt, not on new purchases.

Saving money, even when you’re trying to pay off your debts, will allow you to dip into savings when emergencies arise (such as car repairs or replacing an appliance that has given up the ghost), rather than borrowing the money needed to handle those emergencies.

In most cases, the secret to getting out of debt is to change habits—spending habits. The more radically and quickly you change those habits, the more quickly you get out of debt.

One of the first steps is to take stock of your spending and alter your behaviour. One strategy is to not give up completely on your spending (going cold-turkey, in essence) but to alter it. For example, say you spend $100 a month going out for dinners with friends. Instead of cutting those friends out of your life completely, you might want to cut that spending down to $50 per month or only go with them half the time or have dinner at home and join them after the meal in order to avoid costly menu items.

Having an idea of how much you spend will give you an idea of how much you can divert toward paying off your debts, since dealing with your accrued debt is often a matter of tackling what seems impossible but really isn’t.

Many financial experts recommend you tackle your most expensive debt first — try to pay off the high-interest items as quickly as you can before moving on to the others, using the cost of borrowing as your priority. Those same experts will tell you to pay more than the minimum on credit cards … except when it comes to paying off your debt quickly. One of the better strategies to getting out of debt is to pay the minimum on most of your credit cards and divert everything else you have to paying off the one with the highest interest. Once that’s taken care of, divert the “extra” toward the second-highest (continuing to pay off the minimums on the others), and so on down the list.

Consolidation loans or mortgage refinancing may give you the money to quickly eliminate your debts, but the key to maintaining that level of indebtedness is still to change spending into saving—don’t buy your desire item on credit right now because you figure you can afford to pay for it later, but rather save for it to buy it later when you can afford to pay cash.

One of the best tool that can help on your road to becoming debt-free is a repayment calculator. There are several available free on the internet, which means you don’t have to enter any personal information, and they will show you how much money you’re saving and how quickly you can realistically get rid of that debt based on what you can afford.

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