A person in debt very often feels helpless and is at a loss about how to go about reducing the debt. To add to this confusion, the person will receive plenty of contradictory advice that only end up paralyzing him as far as taking any concrete action is concerned. Here is a simple five-step process that will help you start reducing your debt.

1. Understand Where You Are - To begin with, you should have clear ideas of where you stand financially so that we can begin the process of planning for the future. Be honest with yourself about the income that you are bringing in and will continue to do, for a reasonable amount of time in the future. Though this may be emotionally difficult for you, it is the most important step in the process of debt elimination. Also, as you are trying to analyze your financial reality, you will also frankly face your spending habits and precisely point out the areas where you need to practice more financial discretion. This will help clearly understand how much money you will be able to put aside on a regular basis to start repaying the debt.

2. Understand Where You Want to Be - You should be clear about your financial goals. Like buying a car in two years, a house in five years and so on; however, unrealistic they may seem now. You should have enough faith in your abilities but should not set your goals too high as you may be setting yourself up for disappointment

3. The Realistic the Better - Do not expect your debt to be gone in just a few months when you have accumulated it over the years. By taking extreme measures like eating just once a day or cutting down on other essentials will not fill you with positive energy. On the other hand, aim to reduce your debt with the help of careful planning. This way, every achievement will fill you with a sense of achievement and renew your sense of purpose.

4. Get Help Where You Can - When you start the process of reducing your debt, to your pleasant surprise, you will find many friends and family members willing to help you along the way. However, you should be careful to accept only a limited amount of help so that it makes the process easier on you and at the same time, your friend does not feel taken advantage of.

5. Look for Solutions - Finally, keep looking for solutions that will help you either earn someextra income or save more money. You could try cutting down on some luxury items like canceling your cable subscription and magazine or newspaper subscription, packing lunch from home a few days a week, doing some freelance work or taking up a second job and so on. All these will let you put aside some more money every month, which you can use to get out of debt.

Follow these five steps and you will soon be on your way to financial freedom.