How to Get Out of Debt

Unless something catastrophic happened, you didn't get into debt overnight. This problem took years to materialize. Sometimes debt is a result of having large bills you can't pay--car repair bills, for instance. Sometimes, it's just a result of overspending over a longish period of time. The big problem is debt just sort of creeps up on you.

Although you really can't blame anyone except yourself, as Americans we're inundated with credit card offers and advertisements talking about how easy it is to just pull out the old plastic and pay for whatever we want.

But when reality hits, it's not so pleasant. Suddenly, you're not paying for that great vacation with your MasterCard, or buying that set of golf clubs you've been wanting so bad. Suddenly, you owe thousands of dollars and guess what? You can't make the minimum payments.

Not a good place to be...but then again, there are certainly worse things in life.

So, if you've gotten yourself into this situation, what's the first step?

As painful as it might seem, the first step is by far the hardest. You absolutely must get real with yourself and your finances. You absolutely got to quit digging the debt hole deeper and deeper.

Although our government doesn't seem to believe this, you can't get out of debt through more debt. You've got to stop borrowing money.

And here's the really difficult part about not borrowing money. You'll finally have to live your real standard of living, not the false one that you've debt financed over the past five or so years.

Reality Check!

So, first step, cut up your credit cards. And quit borrowing money. Even if it means you eat beans and rice for the next year or so.

Once you've stopped the blood loss, you can start to repair the damage. That's what we'll talk about next.

Okay, you've faced the monster, and it really is big, hairy, and ugly. If you have a sinking feeling in your stomach, and if you're wondering "Oh my God! What have I done?", then welcome to the club. Anyone who's ever woken up from the debt financed dream to realize that it was really a credit card nightmare all along, has had these same feelings. But if you've stopped borrowing money, you're actually 50% the way there.

Your financial life is kind of like one of those big container ships that ply the oceans. It literally takes miles and miles to turn them. The crew has to plan way in advance where they want to go. They can't just see an obstruction and turn the wheel. Well, you can, but the ship's not going to change course that fast.

If you've built up a lot of debt, you have a lot of "negative momentum" as far as money is concerned. Your financial ship is headed in the wrong direction, has been for some time.

It's not changing course overnight.

But rest assured, it will change course!

From this moment forward, however, you need to actually plan where your financial ship is headed. You do this through a thing called a budget.

It's not really that painful. Just sounds like it. But from this moment forward, you have to actually plan how you're going to spend your money each and every month. This is actually step number two in getting your financial house back in order.

There are a ton of resources on the Internet that will help you budget. Just Google the word "budget" and you'll find them.

Will the phone ever quit ringing? Will you ever be able to answer the phone and see if it's your Aunt Martha calling instead of the bill collector from the credit card company? What are your rights as a debtor, anyway? You do have some, don't you?

The Federal Trade Commission has some very good articles about your rights and how to get out of debt. Here are a few of the best ones:

http://www.ftc.gov/bcp/edu/pubs/consumer/telemarketing/tel16.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre41.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre12.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm