Getting out of debt is one of the most liberating things you will ever do for yourself.  Although it is difficult to do, it is not impossible, and well worth every effort it takes.

Track Your Expenses and Income for One Month

Over the next month, track every dollar you spend and determine all income.  Once you have a full month of expenditures and income, determine what expenses are necessary and what expenses are able to be eliminated.  Eliminate all unnecessary expenses.  Next, determine your income and necessary expenses.  If your necessary expenses are more than your income, you may need to consult a financial specialist to help uncover tools to help your situation.  If your income is more than your expenses, the extra income should be used to help get you out of debt.

Build a Reserve Account

One of the most versatile tools you can use to help stay out of debt is a reserve account.  Emergencies and unexpected expenses are a part of everyday life.  Since they are a part of everyday life, these expenses need to be planned for.  If you do not have a reserve account, then you will have to use credit or borrow money to take care of your emergency.  A good reserve account should be between three and six months of bill money, including gas and groceries and all necessary expenses.  Once you have a reserve account built up, then you can start using your extra income to pay down your credit cards and consumer loans.

Pay off your consumer loans and credit cards

So, you have eliminated unnecessary expenses, built up a reserve account, and now you need to use your extra income to pay off your debt.  The most effective way to do this is to pay off the loan or credit card with the highest annual interest rate.  Pay as much as you possibly can each month.  When this bill is paid off, then move on to the next highest interest rate.  Continue in this manner until all your consumer debt is paid off.  Once your consumer debt is paid off, then you can have peace.  You will be debt-free and glad to be.