Being in debt is scary process, and while most debt can be avoided, it tends to snowball very fast.  This is why you will always want to create a prevention plan before you get to where you are today.  For example, if you have medical debt, there are many deductible health insurance plans that you can afford, etc.

Now, being in debt will take some time to get out of, depending on how much you owe.  Regardless, you’re going to find that one thing is going to get rid of it, and that’s money.  There is no magical formula, nor is there a magical tree in your backyard that will help you get out of debt.

I wanted to give you a very simple, step by step guide that you can follow, when you want to get out of debt clean and easy.

#1 Don’t freak out - If you’re losing your home, or you’re losing your car, let them take it.  You couldn’t afford it anyways.  I know it sounds harsh, but this is reality.  If you can, crash with some friends, or find something that is within your means.  If you can barely afford anything, you may want to apply for federal assistance.

#2 Start your budget / game plan - Get a piece of paper, and write down each and every debt that you want to pay off.  I would include everything but your mortgage.  If you want, you can include that, but I don’t think its necessary.  You will want to list the balance, the interest rate, as well as the company name.

#3 List your debt in order - There are a few ways that you can list your debt, and this is a personal choice.  You can either use the debt ladder strategy, or you can list your lowest balance first, and organize it all the way down to the highest balance.

#4 Start attacking your debt – No matter how you organize your debt, you will want to pay off all the minimums on all your cards, but your #1.  With your #1 debt, try to throw as much money as you can toward it.  By doing so, you will find that the balances will start to go down rather quickly.  Remember that money is the only way to get it down.

#5 Pay in full if you can - If you can pay in full, don’t pay just yet!  What you will find is that you can call up many credit companies and settle for a smaller amount.  If you’re going to do this, make sure that you get this in writing.  I wrote a detailed guide on how to negotiate your debt back in the day.

#6 Keep making money – If you have a full time job, you may want to consider getting a part time job doing retail, becoming a waitress or whatever else it may be, you will want to work as much as you can, so that you can make more money.

This guide may seem straight forward, but it is really the way to go.  What you’re going to find out is that it’s going to take some time to get rid of it.  If you think you have to declare bankruptcy, you may want to consult with an attorney before doing so.  While you’re going to need help because of debt, following these steps should get you on the right path.

If you’re looking to fight your way out of debt, you’re going to find that the best way to do so is by reading magazines, as well as publications / blogs online such as this one!  While there are only so many options online that you can read for free online, you’re going to find that you may want to turn to signing up for a magazine subscription.  If this is the route that you want to take, I wanted to recommend five magazines that you may enjoy, if you want to read more into debt, as well as how to manage your finances.

• Smart Money – Smart Money is a highly rated magazine that talks about your retirement, your personal finances as of today, as well as many other related articles such as lifestyle, technology and more.  You can pick up a subscription for around $10 a year through Amazon.
• Forbes - Forbes is a fantastic magazine for those that not only want to get out of debt, but learn more about the stock market, success stories, as well as other related material in regards to topics such as taxes, computers and more.  A basic subscription will run you around $30 a year.
• Money – Money is an excellent publication that gives it to you straight forward.  Some readers find that some magazines are just too sophisticated.  If you want something that dabbles with a little bit of everything finance, this is the one to consider.  An annual subscription runs around $15 a year.
• INC. - While this magazine is geared more towards business owners, it’s a great pick up if you have your own business, you’re thinking about opening one up, or you’re just interested in the sector all together.  A subscription here will cost you around $10 a year.

There are a fair amount of finance magazines out there, but what you will find out is that there are a lot of them that don’t really focus on the debt aspect of things.  While the top 4 above can get your the right track, there are many publications online that you can look into as well that won’t cost you a dime.

Learning about debt fighting tactics will take you some time, but if you stick with it, become motivated, as well as earn money to pay off your bills, you will find that you will become debt free in no time!

Similar to Dave Ramsey’s snowball effect, a debt ladder is the same concept, and whether you’ve heard about it, or you want to create one, but you don’t know how, let’s take a look at how it is done.  By following the steps below, you will find that it is quite easy to create a debt ladder that will help you get out of debt in an organized fashion.

Step 1: You will first want to gather up all your statements that have your details on it such as what you owe, what your minimum payments are, as well as your interest rate.  This first step is going to allow you to gather up your debts to become organized.

Step 2: With the next step, you’re going to want to take your debts, and order them by the lowest debt at the top, and continue to write your debts from lowest to higher.  This is going to become your debt ladder.

For example, it may look something such as this:

• Debt 1:  $349
• Debt 2:  $844
• Debt 3:  $2,392
• Debt 4: $4,599

Step 3: You’re going to want to prepare to pay the minimum on every account, no questions asked.  This is going to keep your accounts in good standing, as well as keep your credit score higher.  If you miss one payment, you will find that not only will your score drop significantly, it will result in many numerous calls if you miss many payments.

Step 4: With our example above, you will want to pay the minimum on 2, 3 and 4.  With #1, you will want to pay as much as you can toward that debt.  So if you had $1,000 to pay off bills, you would put the minimum of whatever toward 2, 3 and 4, while applying the additional to the #1.  Once #1 is paid off, #2 will then become #1 and so forth.

Free up money, and continue the process.   While Dave Ramsey recommends that you pay off the highest interest rate first, this is more of a psychological effect, as it will feel as if you have less bills.   Many people prefer this route as they find that it does help them with attacking debt.  Have you used a debt ladder before?

Debt is a crazy thing, and while laws vary state to state, there was a question that I was reading about the other day, and I thought I would set aside a few hours to explain the following:

Can you go to jail for not paying debt?

With a short answer, I’m going to say, “no”, but let’s take a look at why people think this.  You’re going to find that if you’re in debt, you’re going to hear everything from debt collectors.  You will hear everything from, “I’m a police officer getting ready to arrest you”, all the way to “You’re going to go to jail if you do this.”  These are just scare tactics, and while it is illegal, you will need to know what you can do about it.  This is why I wrote up an article on debt harassment and your rights.

Failing to make your payments isn’t considered a crime in the United States.  Hence, you will not go to jail, if you didn’t commit a crime.  The last time a debt prison was in tact was back in the early 1800s.  While it is crazy to think that people could go to jail, do you think it would actually set people to pay their bills on time?

How to pay your bills and avoid defaulting:

If you don’t want to go to court, or have your wages garnished, you’re going to want to either settle your debt in full with the collection agency (many will negotiate on a lower term), you will want to file bankruptcy, of if you wish, you can start paying it back in increments, which many will oblige to.

Are there any chances that you can go to jail?

There is only one way that you can go to jail for not paying your bills, and that is if you don’t show up in court.  While this is very rare, it can happen.  You will want to make sure that you always show up for your court cases, as you will find that you could go to jail for “contempt of a court order.”

Overall, you will find that you’re not going to go to jail.  While it will be best to pay off your debts to avoid any court dates, etc, be rest assured that 99% of the time, jail time won’t be served.

Credit: Flickr.com

Getting out of debt is a challenge, but just like losing weight, there is no magic formula, nor bill that is going to help you.  What you’re going to realize is that as long as you have money, and you apply it toward your bills while not packing up more debt, you’re not going to have a hard time getting rid of it.

If you want some ideas when you want to get out of debt, I wanted to give you 8 tips that work for many people out there.  Hopefully by following them, you will find that you can save a lot of money.

1. Stop using your credit cards: The first thing that you will want to do is stop using your credit cards.  This is the only way that you’re going to rack up your debt.  Cut them up, and try to stick to your cash.
2. Create a plan and attack it: Write down all of your debts, and be sure to list your minimum payment, the interest rates and more.  You will want to make sure that you attack the highest interest rates first, while paying off the minimums on your other cards.
3. Get a side job: If you’re working a full time job, you can always consider getting a side job.  What you’re going to find out is that you can dump it once your bills are paid off.   Deliver pizzas, or wait tables.  Even working 20 hours a week can save you a ton of money!
4. Dump the bills: Get rid of your cable TV, Internet, Netflix and more.  Granted, you can get them all back in the future.  You’re going to have to make sacrifices today, in order to save as much as possible.
5. Sell things: Look through your house, and start selling items on eBay, garage sales and more.  You will be amazed what you can get for your items.  By selling items in your home, you can easily rack up a few bucks.
6. Inform yourself: There are a lot of debt books out there that can help you.  What you will want to do is check out these books, and read them.  Read them until your brain hurts.  You will find that the more you know, the more it will help you.
7. Speak with a counseling service: Whether you go with a church, or a debt collection company, you will find that there are many services out there that you can take advantage of.  Find one that can help you today.
8. Eat at home: This goes along with the bills, but make your food at home.  You will also want to make sure you watch your grocery bills, use coupons and more.

These are some great ways to get you on the path to financial freedom.   If you want to read another great article on getting out of debt, ZenHabits has another great read.