How to Get Out of Debt and Stay Out!

Credit card bills getting out of control? Wondering if you're ever going to be debt free? Tired of all the scams and costly "plans" out there for getting out of debt fast? Don't pay someone to tell you what you can already figure out for yourself! Use these quick tips to set yourself on the road to a debt free life.

First, you need to take an honest look at your financial picture. Use your most recent paystub(s) to calculate your yearly after tax income. (Multiply your total after tax pay by the number of pay periods each year (52 for weekly, 26 for bi-weekly, and 12 for monthly). Write that number in large print at the top of a piece of paper, and then divide that by 12 (to figure out your monthly income) and put that next to it. (For example, you might make $35,984 after taxes, which is $2988/month.)

Next, gather all your "necessary" bills - rent or mortgage, electricity, gas or oil, water/sewer, telephone, cable, insurance, daycare, gas for your car, retirement plan, etc. Make a list of all the bills, figure out what you pay for each on average every month and write the amounts down on an expense list, and then set that expense list aside.

Now figure out about how much you spend on groceries each month and add that to your expenses list.

Now comes the tough stuff - the honesty. Gather up all your credit card bills. Every last one of them. On a new sheet of paper, list every credit card, the balance on the card (even if it's zero), and the interest rate. Total it all up, and take a deep breath. That's how much you need to pay off. But how?

The answer is actually much easier than you think. First, total all your monthly expenses (excluding credit card payments). Compare that amount to your monthly income. If the numbers are very close to one another (say within $400), you are going to have to take a good long look at your expenses. What on that list can you reasonably cut? And, I'm not talking about forever here - just cut back for a year or so. Can you live with a less expensive cable package? Fewer cell phone minutes? Can you set the thermostat a few degrees cooler in the winter? Can you leave the AC off more in the summer?