Getting Out of Debt on Your Own

They say being in debt is part and parcel of living in this time driven by consumerism, but having unmanageable debts can give you sleepless nights. You can try getting out of debt on your own by putting in consistent efforts and some hard work. Everything in life is based on principles, follow these and you will always be in harmony with your surroundings. This is not philosophy, but is the truth of living life on life's terms. For example, what goes up has to come down according to the principle of gravity, and in the same way if you spend more than you earn or can earn you are going to end up in debt. Proper understanding of the principles of finance will help you get out of debt faster than any debt management service.

You don't need a degree in accounting or finance to figure out a way to paying off your debt. All you will need is a pen, paper, and calculator. Understanding your income and expense figures and then sorting them to make a list of essential expenses and avenues to increase your income should be your starting point.

Debt Accounts
Make a comprehensive list of all your debts, this is important because if you don't know how much you owe right down to the last cent, it is going to be difficult to get out of debt on your own. All debts will most likely have an interest rate assigned to them. Sort your debt list by arranging the debt with the highest interest rate on top going all the way down to the debt with the lowest interest rate or no interest. This will help you prioritize your debt repayments. One of the tips is to pay off your high interest rate debts first.

Expense Accounts
One of the most important things that people ignore is writing down their daily expenditures and then complain that they do not have enough at the end of the day. If you want to know how to get out of debt on your own, you will have to maintain a diary with your daily expenses. At the end of the month small avoidable expenses will add up to substantial numbers. For example, if you eat out 3 - 4 times in a month and probably treat a friend to a dinner, you will realize that at the end of the month this will add up to a significant amount. Writing a daily expenses inventory will give you a clear picture about where you can cut down on your spending. This saved income will go towards your debt repayment.

Income Accounts
One of the reasons that you are reeling under debt is that you don't earn enough to fulfill your needs and wants. Try to come up with ways to increase your income, get a second job, try multi-level marketing schemes like Amway, anything legal under the sun that will increase your income. Nowadays you can even earn extra by working from home by doing online assignments. You can also cut down on your unessential spending to support your existing income. Make lifestyle changes, for example if you go to the bar every weekend stop it altogether or drastically cut down on the number of visits. This is one of the ways to get out of debt quickly.

Assets and Liabilities
Making a comprehensive assets and liabilities list will help. A lot of people think that their car is their asset, well in terms of accounts a car is a liability. The reason is simple the car doesn't make you money it takes money out of your pocket in the form of repair costs, insurance premiums, gas money, etc. Your asset for example can be your second home which you can give on rent to add to your income. Anything that makes you money in the short-term or whose value will increase over the long run is your asset. Getting out of debt is easy, once you have a list ready do everything in your power to get rid of the liabilities and build your assets.

Dialog with Creditors
Instead of contacting consumer credit counseling services, contact your creditors and initiate a dialog regarding your debt situation. Tell them you have an honest desire to settle your debt and would like a cut in the interest rate or need them to wave off the late payment fees and penalties. If you are thinking of settling debt on your own, you can also negotiate a debt consolidation plan with your creditors. All you will need are some basic communication skills and persistence.

If you are still unsure about how to settle debt on your own, understand this if you are already in debt do not borrow more. Getting out of debt on your own will be lot easier if cut your credit cards in pieces, just keep one with the lowest interest rate for your basic needs. Maintaining a diary with reminders about the due dates of your individual payments will also help your cause of living debt free.