by Allen Teal

Created on: December 24, 2008

Becoming debt-free seems like the impossible dream to many. No one can become debt-free without a plan. It just does not happen by accident. For most people, sinking into debt was a long process without much thought being given to stopping the slide until the mountain of debt loomed large.

Getting out of debt should not take as long as it did to get into debt in most cases. The real problem to confront is to decide how you are going to move that mountain. It will not erode away. If left unattended, debt will usually continue to grow. The type of debt that worries most people is unsecured debt. This normally indicates credit cards, payday loans, or other debt created without collateral to back it.

Mortgages and car loans are not nearly as troublesome because the interest rates are usually lower and often at least some equity exists between the value of the property and the amount of the loan. This type of debt only becomes a really big problem when a person either amasses too much unsecured debt or has a substantial income reduction. The one exception would be adjustable rate mortgages that can produce elevated interest and escalating payments.

The unfortunate thing about debt is that it almost always comes with interest. On credit cards, this interest can easily be above 15% and can rise to above 30% interest per year. At the higher level, you will be paying the entire amount of the debt every three or so years just in interest alone. Much of the principle will still be sitting there continuing to accrue interest for the lender and heartache for the borrower.

The first step to becoming debt-free is to make sure that you earn enough to make the payments and still be able to live. This may require finding new sources of income or taking on a second job for a while. The simple way to figure out if you earn enough is to write down everything that you pay out every month and compare it to your net pay. If your net pay loses the race, you need more income.

How you get this income is a matter of personal choice. You may need to start up some type of side business and try to get it to grow. For most people, the best way is to just go out and find another job. It may not be the highest paying job in the world, but even a minimum wage job that can give you 20 to 30 hours per week is enough to usually give you the earnings boost that you need. Working this many hours will not be fun. However, within 2 years if you are careful, your debt should be reduced enough to lower your

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