Getting out of debt requires a little bit of effort. You need to first of all have a complete understanding of what your debt is. Contact the three credit bureaus and get their reports on your credit. Or use a third-party that offers free credit reports. Having a complete and full credit history is the first big step in getting out of debt; you need to understand the scope and details of the problem before you can fix it. Many times, you’ll find inaccuracies and incorrect information in your credit report. Address these immediately; it’s like getting free money.

The next thing you need to do for getting out of debt is to halt all purchasing on credit. Some people say that you should cut up your credit cards, others don’t. I think you should. Don’t even give yourself that option. Getting out of debt doesn’t mean adding on to it. You shouldn’t cancel your credit accounts however. You might be better off calling them up and renegotiating. Some credit card companies will do it; some won’t. But you’re getting out of debt – every little bit will help and it only costs a phone call to find out.

Next, build a small emergency fund. Ideally, this would be about two months worth of expenses. Don’t use a credit card for emergencies, use the emergency fund. This is not a fund for purchasing, in fact, don’t tie it to your debit card or checking account if possible. Make it its own stand alone savings account.

Then, you need to attack your debts. Make sure you pay the minimum amounts on all your debts, but in terms of getting out of debt, the best strategy might be to take the smallest balance and pay it off in full as quickly as possible.

If you’re serious about getting out of debt, you should probably consider either cutting your spending or finding additional income, perhaps a second job. Additional income goes straight to your debt collectors though! If you follow these tips, and above all – stop using CREDIT! – you should be getting out of debt in no time. Without a bailout!

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