The best way to become debt free is to sit down and write out a budget. There are several sites (including this one) that have loads of free info on how to create one and many offer free template downloads.
But the basics are this-in one column write down all the bills you must pay each month (rent or mortgage, utilities, personal loan and credit card repayments, insurance, cable and internet, mobile phone, etc).
In the next column list what you spend on groceries, petrol, clothing.
In yet another column list what you spend on 'misc' items like books and magazines, theatre tickets and/or movie and video games, meals out, cigarettes, beer or other alcohol, and similar expenditures.
Be honest-if you splash out on a latte every day, write it down! If you spend a lot on groceries, make sure you write that down. Always round up to the nearest dollar to give yourself a bit of a cushion for price rises.
Total each column and then add the totals together to arrive at one sum to represent your total monthly outgo.
Now list your total monthly net (after taxes) income.
Compare the two totals.
Oh dear! You're spending far more per month than you are taking in!!
So go back to the outgo columns, figure out what you can eliminate and then do so. Stick to it.
It will take a while to pay down whatever debt you have, so stick to it. Double up on payments like mortgage and credit card or other personal debt-make sure to note on the doubled payments that the extra is to apply against the principal or the sorry creditors will apply it against interest only, and you'll still have that big principal to pay down. They love to do that because the higher the amount of the principal, the more interest they can charge you-it's a vicious and never ending cycle, and that's how they make their money, from interest!
It won't be easy but being debt free is the absolute best feeling ever.
There are several ways to become debt-free. One is to file for bankruptcy. You will not lose your house or your car, and once you begin to file for bankruptcy, you will be protected so that your creditors can no longer hound you. It cost around $2500.00 to file which may sound like a lot, but since you're are no longer making payments on your bills, you will have the extra money every month to make payments to your lawyer. Most lawyers are willing to make some kind of payment arrangements. You will also have to take some kind of classes, but these can be done online. Some debts, such as student loans, can not be discharged through bankruptcy.
The other method is to pay down your debt. Start with your bill that has the highest interest, and take as much extra money as you can afford every month and add it to the payment of that bill - while still continuing to make payments on your other bills. When the first bill is paid off, take all the money you were paying on that bill and add it to the payment on your next bill, Repeat this procedure until all of your bills are paid off.
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