by Isabelle Esteves

Created on: December 08, 2008   Last Updated: December 26, 2011

As the economy continues its downward spiral, people are taking a hard look at the way they spend their money. They are also taking a hard look at their finances and deciding to get debt free. Consumers have multiple credit cards and have never learned to wait to pay cash for the things they want. This has led to an epidemic of debt. There needs to be a change of attitude before the process can begin.

Getting out of debt is not something you can do overnight. You didn't get into debt overnight. It is something that has to happen over time. It is a process that must be gone through. It can and probably will be a painful process. If you take the easy way out, claiming bankruptcy or taking out a second mortgage or a consolidation loan, you can indeed be debt free at least for a few moments. The problem with taking the easy way out is that you haven't learned anything and much like a diet where you don't change your eating habits, you will regain the weight, with debt you will find yourself back in debt again.

Where do you begin the slow process? The first thing you need to do is to write down everything you owe. Don't lie to yourself or your spouse, write down absolutely everything. Major credit cards, store credit cards, consumer loans, student loans, car payments and mortgage. Now write down the interest rate that you are paying on each of these items. Make two lists from that first list. In the first list place the items in order by the amount you own, the smallest amount being the top item on list A. On list B list the items by the interest rate, highest at the top. Now compare the two lists.

The top items on each list are the first two bills that you need to get rid of. The first one should be the smallest amount that you owe. Look at the total amount you owe and decided if you can pay it totally off this month. This may mean that you will be making minimum payments on your other cards. Now look at list B. No matter what the rate is, if this is a major credit card company you are going to give them a call and ask them if you can negotiate the rate. You can often get your rate lowered by two or more points just by asking.

If you have more than one major credit card,  call all of them and do the same thing. There is no guarantee that all of them will lower your rate but many of them will. As you pay off each credit card, cut it up but don't cancel it, canceling a credit card can impact your credit score in a negative way.

In the meantime, while you are

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