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Many of us deal with debt on a daily basis when we really shouldn't have to. By choosing to eliminate your debt, you can develop a sound financial picture that will serve you for years to come. There are many ways to get rid of debt, and most of them just need a good plan, research, and determination. Developing A Solid Foundation The first step in eliminating debt is to draw up a budget that cuts your expenses as much as possible and ensures that you are not spending more than you make. This is the first step because it is impossible to cut your debt if you're still going into debt at the end of each month. A credit counselor can help you go over your monthly budget and look at areas that you can cut down on. Be creative and frugal, such as using coupons for necessities, buying in bulk, and cutting out luxuries. Taking Charge of Your Debt After you've gotten your budget set, you should take stock of all the existing debt that you have. Your debt should be categorized into good debt and bad debt. Good debt is items such as mortgages, student loans, and automobile loans. Bad debt is items such as unsecured loans and credit card debt. The bad debt needs to be tackled first. In order to cut your bad debt, there are debt management programs run by non-profit organizations. These organizations will set you up with a comprehensive debt help program that will begin by consolidating your bad debt into one lower monthly payment. This will close those accounts, but you won't need them if you already have a reliable monthly budget. A debt help program will usually be able to eliminate your debt within a few years. Start Saving Your Extra Money After your bad debt payments have been factored into your budget, you should put everything extra in your budget aside for an emergency savings account. An emergency savings account should contain 3-6 months of living expenses. Having this account means that if something comes up you won't have to go into debt again. Once an emergency savings account has been saved, you should portion your remaining income into your retirement savings and your good debt such as your mortgage. You should always have money in both your emergency account and your retirement savings, so if your budget still isn't allowing for this even after you've eliminated your bad debt you may need to either make cut backs or consult a retirement planner. Staying Debt Free After Debt Once you have officially become debt free, the difficulty is in staying that way. Avoid the temptation to open new credit accounts, and if you do have to open one, make sure you pay off the balance in full every month. Keep track of your budget even when you're doing well, and you should be fine. Getting out of debt is a difficult and lengthy process, but it is possible with hard work and determination. There are many programs out today that will help you with the process and give you reliable advice. Being debt-free is as much about changing your lifestyle and attitude as it is about changing your budget. The author has an immense knowledge on debt help program. Know more about eliminate your debt related info in his website.
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