Debt can be the cause of lots of anxiety and stress for individuals and families. If you are experiencing debt or realize that you have borrowed more against your home or credit cards than you would like, here are five tips on becoming debt free.
Step 1. Start with a Budget
The key to becoming debt free, believe it or not is to realize that you are in debt. In order to determine how deep in debt you are, you should first create a budget that compares the amount of expenses you have each month to the amount of revenue (income) you bring in. By quickly computing the difference between your total monthly expenses and your revenue, you can determine first off if you are in debt and secondly, how much debt your in. Understanding your debt can help you both in the short term and long term. The deeper in debt, the more belt tightening you will need to do and usually the longer it will take you to dig yourself out of the hole.
Step 2. Cut Down on Expenses
After completing a budget, if you realize you are in debt, one of the easiest ways to dig yourself out of it is by cutting back on expenses. We all have expenses whether it is rent, car loans, transportation costs, coffee and snacks, etc. For many people that are in debt several thousand dollars, you can start getting out of debt by simply cutting back on the things you buy. There are necessities such as rent that must get paid, but most people have plenty of discretionary spending that they can cut back easily. For instance, instead of going out to eat four times per week, you can go out only once, or instead of buying a large coffee from your favorite caf