In Debt No More

Debt is a major problem for most people in the United States today. It is the main cause for most financial problems to include this recent credit crisis within the housing market. It can be overwhelming but you can get out of it; you just have to take the problem and break it down into something manageable. Being the engineer that I am, this is what I do for a living so maybe I can be of some assistance. Here are three basic steps to get you on your way.

Step 1

When you find yourself in a hole, stop digging. This is pretty simple. If there are things that you want to buy, but to get them you have to put them on a credit card, then resist the urge as this just adds to your problems. You will never get out of debt if you do not change the habits that got you in this position in the first place.

Step 2

On a sheet of paper or on a spreadsheet, list out all of your debts. Beside each of these debts write down the interest rate you are paying on the balance. This can be a painful part of the process because nobody likes to sit down and actually look at the seemingly insurmountable challenge ahead of them, but it is a very important step. Once you have everything written out, you can develop a plan of attack.

Step 3

If at all possible, try to transfer all your credit balances to the account with the lowest interest rate. One bill is much easier to manage than several bills. Another possibility is to get a home equity loan and transfer all your debt to this loan. Often these loans will be at a much lower interest rate than your credit cards. If this is not possible, then you should attack the debt with the highest interest rate first. One technique I would suggest is to pay the minimum payment on all your debts except the one with the highest interest rate. Pay as much money as you can on this debt. Once it is paid off, then you can move on to your next highest interest rate until all your debts are paid off.

I am sure I have oversimplified your personal situation, but if you use this basic template and apply it, then I am confident you can solve your specific debt problems.