by Jimmy Flatbush

Created on: November 16, 2010

The current economic downturn owes most of its malaise to the America’s debt spending addiction. Banks create money out of thin air by issuing debt on credit cards and mortgage loans. Americans then voraciously spend the magic money on needless items ranging from extravagant electronic devices to the purchase of a third family car. Eventually, the debt addiction catches up to us and we seek recourse through debt counseling and the judicial system. The American dream has morphed into the American addiction.

America’s debt addiction has created a cottage industry centered around advising people on how to get out of debt. Watch any cable financial news network or morning ‘news” show for information on how to climb out of debt. You do not have to follow the advice of these financial wizards in order for you to get out of debt. Just follow the time-tested sage advice disseminated by your grandparents.

You get out of debt by implementing a number of sequenced tactics. First, create a monthly budget that itemizes each debt source. You then prioritize each debt in the order of elimination. Focus on debt that incurs high interest payments. Second, contact each creditor with your proposed debt reduction plan. Most creditors will work with you in restructuring your debt payments. Third, adhere to your monthly budget and discipline yourself to avoid impulse debt purchases. Finally, celebrate the elimination of each creditor as a small victory towards your ultimate goal of living debt free.

If your debt situation is dire, you may have to enlist the services of a bankruptcy attorney. Most personal bankruptcy cases end with the debtor being absolved of all debt and thus receiving a fresh start. However, the bankruptcy process requires that you provide meticulously prepared financial documents and that you clearly demonstrate the inability to pay off your debts. Bankruptcy stays on your credit report for a minimum of seven years. After going through this emotionally draining process, taking on more credit should be the last thing on your mind.

Getting out of debt takes an abundance of hard work. Remaining debt free demands that you develop a game plan.

Cash Purchases

One of the best ways to ensure you remain debt free is to purchase items with cash on hand. Studies prove that people who use credit cards for purchases spend more per shopping visit than someone who pays with cash. Moreover, cash purchases expunge the costly credit card interest expense.

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