by Raven Lebeau

Created on: April 27, 2009   Last Updated: October 31, 2009

Being debt free is something most people dream about but few ever achieve. That's because while getting into debt is a downhill slide, getting out is an uphill battle that requires careful financial management. The good news is that getting out of debt is not an "all or nothing" proposition. Every step you take to reduce your debt is a step in the right direction and will help your overall financial wellbeing. Below are some ideas for helping you relieve your debt burden and ideally become debt free.

1. Assess the situation.

List all debts you owe along with the balance and the interest rate on each one. Common sources of debt are credit cards, mortgages, home equity loans, personal loans, and auto loans. When you have all of your debts laid out in front of you, you can can begin working on strategies for reducing them.

Also make a list of all of your assets, such as equity in your home, valuable possessions you could sell, bank accounts, and investments. You may need to liquidate some of your assets or use them as collateral to refinance some of your loans.

2. Set priorities.

In general, it's best to pay off debts in order of interest rates. If you have high interest debt such as a credit card balance or high interest auto loan, you will want to handle that first.

3. Negotiate with creditors.

Sometimes you can pay off your credit card balance at a discount if you are willing to pay all of it at once. This process is called debt settlement, and more and more creditors are using it as a tool to recover loaned money from high risk debtors. You may not be able to reach a favorable debt settlement, but it never hurts to ask.

Refinancing is another tool in the debt management toolbox. If you can refinance your mortgage, you may be able to consolidate your other debt into the mortgage, lowering your interest rates and your overall monthly bills. Remember that debt consolidation is not a "quick fix"! The debt is still there, but the interest rate is more manageable.

4. Analyze your income and budget.

In order to be debt free, you will have to find ways to pay off the balance of your debt. To pay off a large debt in a reasonable amount of time, you will need to make more than the minimum payment. For most of us, this means finding creative ways to stretch our income and/or lower our expenses. If you are able to take on a second job, that can help, but only if you make sure that your new paycheck actually goes toward paying off the debt.

If increasing your income is

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