Checklist of the Best Ways to be Free of Debt

  1. Use your assets.
    If you have assets with significant equity (such as your home), you may be able to use these to get control of all your debts.

  2. Find extra work.
    Look at getting a second job, to help pay off your debts faster. Once the debts are gone you can go back to a normal life with one job.

  3. Set up a repayment plan.
    It is no use looking at being out of debt unless you put together a plan and stick to it. Your plan should show how you could cut back on your expenses, including paying off the debts with the highest rates first.

  4. Cut up your credit cards.
    Get rid of all your credit cards except for one. Cut them up. Use the existing credit card for emergencies and conveniences. You will find that one of the best steps to get out of debt is immediately stop using credit cards.

  5. Consolidate.
    A consolidation loan can make a lot of sense. This is where you get one loan (perhaps secured on your home) to clean up the four or five other bills. Not only will the interest rate be lower, but also it will enable you to focus on one debt, which can be cleared that as soon as possible. If you are going to go for a consolidation loan then make sure you don’t add on any other debts.

  6. Seek counselling.
    Don’t try to handle becoming debt free on your own if you feel you need some help. It is nothing to be ashamed of. It is far better to own up and seek the services of a counsellor or a financial adviser who will put together a plan for debt reduction and encourage you to be financially free.

  7. Make an arrangement to pay.
    If you have a number of debts it may be a good time for you to get in touch with all your creditors and come to an arrangement whereby you can pay them off over a period. Some of them may even accept 50 cents in the dollar just to clear the matter. If you can put a payment plan to your creditors allowing you to pay them in an orderly fashion over a period, this will not only preserve your credit rating, but it will also give you peace of mind. The important thing with a proposal to creditors is that once it is in place you must stick to it. Do not renege or even miss one payment.

  8. Look at bankruptcy.
    As a last resort, bankruptcy is an option. This should only be considered if all other alternatives do not work out. Unfortunately for some people, bankruptcy is the only way to start afresh. More and more people are becoming bankrupt because it offers a quicker solution for getting out of debt and getting back on track. Do not file for bankruptcy unless you have received proper advice.

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