Getting Out of Debt: One Simple First Step

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I have previously mentioned that debt is something many of us find ourselves ‘in’.  We often never really intended to get here, but lo and behold, so many are bogged down in differing depths of debt.  If you are currently under a heavy burden of debt I encourage you to continue reading.

How do you start getting out of debt?

The first exercise doesn’t really involve doing anything (initially), but changing everything.  Identify why couldn’t make your payments.  Larry Burkett always used to say, “debt is not the problem, it is the symptom”.  In other words, the loans are a byproduct of something else.  I have previously asked, Why Do People Go Into Debt? As a result, I would first identify the reasons you are not making your payments.  You cannot reverse the process unless you reverse whatever was causing the problem.

The first step or action to help you get out of debt

For one month keep every receipt and write down every single financial interaction. If you are married both partners should be recording every item that they purchase for a month.  Go to the dollar store and buy a little writing pad and every time you give money to anyone for anything write it down, or keep the receipt.  Yes, this includes buying a newspaper for $1 and donating $2 to the boy scouts.  Write everything down.

At the end of the month on a spreadsheet or piece of paper, write down all your expenses in categories. Use general categories like dining out, food, entertainment …  After you finish this process find a good place to talk with your spouse (if you are married).  Go for a walk.  Sit on the porch.  Cuddle on the couch.  Then reflect on the paper – do you give it a thumbs up or a thumbs down?  Do you want your spending to continue indefinitely as it is? If you decide it’s time for a change you just made one of the biggest decisions you need to make about getting out of debt.  Before you can tell your money where to go you need to know where it went.  You must learn how to make a budget.

How will this help you prepare for getting out of debt?

It reverses a trend.  If you got into financial problems by ignoring your finances then the best way to get out is by starting to pay attention.  If you couldn’t make payments because of a search for significance that will reveal itself in the budget by how the money is spent.

Here’s another tip: read 55 reasons to get out of debt any time you need some extra motivation.


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