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The first step to becoming debt free is to make the decision to do so. This step is the hardest in the whole process because we all tend to be wishy-washy we start out strong, but quickly lose steam.

Start by making a complete list of your income and expenses. Do not include debt repayment here. Example Monthly income $4000 less electric, gas, phone, groceries, rent etc. Money left goes to the debt payments. Subtract the minimum debt payments allowed from the left over, then apply the total amount of what is left after that to the highest interest debt that is not tax deductible.

It is very important to only pay down on one debt at a time, because it is human nature to get bored and frustrated if we don't get immediate satisfaction. Keep a spreadsheet that you update every month to show you your progress and keep motivated.

Steps to help insure success!

1. Call Electric, Gas & Phone Company, If they allow a budget plan take it. This will stabilize your payments so that there are not surprises. Then have them set up to automatically draft your account. Wala - no late fees or forgotten bills.

2. Call all credit card companies. Ask for a lower interest rate. Even if they only save you 1%, consider that a plus. Then obtain online access of all accounts. Make the minimum payments automatic to your account. Wala - no late fees and good credit history.
*Set this up even for your highest rate debt, because your extra money (that you calculated above) is going to be paid on this card with every paycheck (example: If you have an extra $100 per month and get paid 2x's a month you will pay down $50 each paycheck) This will keep the balance moving and help to lower balance faster and yet you have a little control in the event of an emergency.

3. Make a financial commitment - short term - people give them up if they are too hard. An example would be for 1 month I am not going out to the movies or out to eat or out for any entertainment that costs money. If this leaves me with extra money in my account (which it should) at the end of the month I am going to celebrate by making an extra payment to my account. No matter if it is just $5.00. Then the next month do something else (If it is summer I am going to hang my clothes to dry and .....) or repeat.

4. Use coupons and discounts, if you are going to buy something anyway. Track these savings and at the end of the month apply them to your debt.

In a nutshell, control your debt, so it can't control you.

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