Step No. 1: Make a list of all your debt.
This first step may be the hardest part of dealing with your debt. Put all your bills in a pile. Then list your debts in order, starting with the largest balance first. Next to the amount, list the minimum monthly payment, and the interest rate you are paying on that card. Now you know where you stand. To be Debt Free, you must find out where all your money is going, and who you can afford to pay.

Step No. 2: Prioritise your repayments.
If you have one or two small balances, you might want to apply extra money to pay them off, while continuing to pay the minimum on the cards with larger balances. Or you might want to pay off the card with the highest interest rate first.

When you have paid off the smaller balances, attack the larger ones. Here is a trick that can save you years of interest charges. Simply double the minimum monthly payment, you will soon be on your way to being Debt Free.

Step No. 3: Eliminate credit cards and dont roll over balances.
When you pay off a card, notify the company that you want to close the account.
Don't roll balances from card to card. Every time you get a new card, you are generating an outstanding open credit line that will appear on your credit report.

Step No. 4: Get a copy of your credit report and credit score .
Your credit report is simply a compilation of your bill-paying history. Don't hide from the truth. There may be some errors on your credit report that you will want to correct by contacting merchants. And if you do make progress toward paying down your balances, you will want to make sure they are correctly reported.

Step No. 5: Make a spending plan.
To be finally Debt Free for ever, then now is the time to change your free-spending ways. To do that, track the money that is coming in and going out. Fortunately, there are easy ways to do that. One thing worth spending money on is personal finance software such as Microsoft Money and Quicken. Both programs let you track all your check writing by category and make monthly comparisons of your actual spending to the amount you have budgeted.

Step No. 6: Be careful about the equity in your home.
In the past few years, Americans have withdrawn billions of dollars worth of equity in their homes. The ads and commercials are tempting, because the rates on home equity loans are typically lower than the rates charged on outstanding credit card balances.

But there are dangers in home equity loans. Frequently, the money is used to pay down credit cards, which are then charged up again. The banking industry has a term for it: reloading.

Step No. 7: Get help.
Sometimes being debt free is a lot harder than you imagine, credit problems are easily attacked once you have faced up to them. But for some people, the problem of overspending is a psychological one. Spending can become a habit that is as difficult to kick as alcohol, drugs or gambling.

In those cases, its wise to seek help from professionals. The only problem is that there are so many advertisements for credit counselling that you cant be sure whether they are rip-offs. Id suggest you stick with one of the national, non-profit credit counselling services such as Consumer Credit Counselling Services.

Conclusion.
If you have taken these seven steps, you should be able to work your way out of debt and toward a brighter future. You will be on the way to finally being Debt Free.

It will take time and lots of self-discipline. Its worth the effort.

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