Getting Out of Debt: 10 Smart Keys

By the time Nancy was 33, she and her husband were over $164,000 in debt. They had nine credit cards, two car payments, and a mortgage. Does this sound familiar? Do you find yourself up to your eyeballs or even over your head in debt, wondering how you got there and how you are going to get out of debt?

Nancy isn't real, but these numbers are based on household averages. Today, an average household has nine credit cards and four installment loans, including a mortgage. With personal bankruptcies doubling over the last ten years and 43% of American families spending more than they earn each year, debt has become one of life's most stressful experiences.

If you find yourself in this situation, here are 10 smart keys to getting out of debt.

1. Figure out how much money you really need each month to live.

If your debt is growing, that means you are spending more than you are making. It doesn't take a rocket scientist to see where that will lead. It's just not something you normally think about.

So the first step is to figure out what you really need to spend just to pay your monthly expenses. Don't forget to factor in entertainment, eating out, clothes, and other things beyond just your monthly bills. Be realistic. Unless you are still in college, you are probably not going to be able to live on peanut butter and jelly sandwiches for the next four years, and neither will your family.

2. Figure out the balance, minimum payment, and interest on each debt you have.

Make a list of every debt you have. Write down how much you owe, what the minimum payment is each month, and how much interest you pay. If any of the debts have clauses that will cause the interest to skyrocket if you are late on payments, be sure to note that as well. People are often shocked when a credit card's interest suddenly jumps up by 10% or more because they missed a payment! It pays (literally) to read the fine print.

3. Figure out whether you are in the red or in the black, and by how much.

Mike Adams

Credit: Mike Adams

Copyright: Mike Adams