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how to get out of debt 3

Updated on May 16, 2009

Getting out of debt by reducing your spending

That is everybody's least favorite part of the getting out of debt business: Reducing the money you spent. Having to spend less has such a negative touch of not being able to afford everything what you want, poverty and -yikes- self restriction. But over-spending was, most likely, one of the main contributing factors of ending up in personal debt in the first place. Actually the same is valid  regarding the debt of whole countries. So, logically, reducing your spending is also the way out of debts. Again, to follow this hub it would be helpful if you would read Getting out of debt lists first. You will need to have these list done that shows where your money goes to.

Look at the items on the list that are the mere essentials, does your current income cover them? Can you realistically increase your income so that they are covered? If not, you are in serious trouble and need professional help. If you can't earn enough money to pay for a roof over the head and food to eat for you and your family, you should seek help – quick! Depending on the country/ state you are living in, there are places, often run by non-profit organizations and churches, that can help and advise you. Again, don't fall for scams, don't pay them anything. Look for advice bureaus that are run by your town, local government, reputable non-profit organization or a church.

If your situation is not too bad, means you are still able to cover the bare minimum of food and housing, and ideally health insurance with your income, than you might be able to tow yourself out of the swamp of personal and family debt.
Look at the items you have marked as essential, but where the amount of money you have to pay back, the rates, are negotiable or at least could be negotiable. That refers, mostly, to mortgage, credit card bills, car payments and the like. Now you have to contact the bank, people, institutions you owe money to and ask for a reassessment of the situation. Yes, that is something nobody really likes to do, but if you want to avoid to fall deeper into debt it is absolutely necessary. Bear also in mind that the faster you pay things back, the lower the total is normally. You will have to find a balance between lower monthly payments and the total amount of money you have to pay. And also the time it will take to get out of debt completely. Check with your debtors the following possibilities: Can several debts be combined? For example if you run several credit card bills. Can the monthly payments be lowered? Be careful when switching debtors, banks and credit card companies make often very tempting offers, but you have to read the small print carefully if it is really an advantage for you, in your situation, when you switch. If you are not careful and really read, and understand, the small print, than you might end up paying more instead of paying less. Look at both, long and short term, changes.  And last, but not least, try to find out which credit/loan etc costs you the most in terms of interest and which should therefor be paid asap. Check if there is the possibility of making additional payments, so that you are faster out of debt by reducing them quicker with extra payments, if you have the possibility and the money to do so.

Regarding the non-essential items on your list: If it doesn't house you, feed you, improve your health or protect you, you don't need it. Yes, it is hard to live only with the bare minimum but the better you manage to do this, the faster you are out of debt and might even discover that all this things you thought are absolutely necessary to be happy, are, in reality not making you happier at all. So check to which non-essential things your money has gone in the past and avoid them in future. Make now a considerate effort to remove debt from your life and you will enjoy your life more with less. Getting out of debt, and staying out of it, is a long process that requires a plan and the self-discipline to stick to it.


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