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Throw off the burden of debt. Commit to a step by step plan, stick with it, and you will succeed. But before you plan the how, you must have a clear and accurate picture of your financial situation - how much money you have and where that money is going each month. The best way, in fact the only way, you'll accomplish this is with a budget. Then you'll know how much money you can channel into debt reduction.

MAP OUT YOUR PLAN WITH A BUDGET

Your income is the easy part, you know how much you have coming in, so write your total monthly income on one side of a sheet of paper. Take all of your bills and list them on the other side. Remember to include the monthly average for any bills you pay annually, semi-annually or quarterly. List all of your weekly and daily expenses. Again, use a monthly average. Once you have all your monthly expenses listed, and I mean all of them including the little out of pocket expenses, add them up and deduct them from your monthly income.

DISCOVER THE MONEY YOU NEED TO GET OUT OF DEBT

If your expenses exceed your income, you've got some work to do on your budget and even if you've come up with a positive number, keep digging for all the savings you can. You might be surprised where some of your money ends up each month. Eliminate or reduce every expense you can until you've exhausted the possibilities. You may need to make a few sacrifices, but keep in mind the sacrifice will be temporary until you can fix the real problem of your mounting debt.

PAY OFF THE HIGHEST INTEREST RATE FIRST

Now that you have some money to work with (no matter how small the amount), find the credit card or consumer loan with the highest interest rate. From now, on until the loan is paid, put every dime of the money your budget found into that one loan. Once the worst one is gone, use the same strategy on the next loan or credit card until they are all an unpleasant memory.

RESIST THE TEMPTATION TO USE YOUR CREDIT CARDS

The process may be painful at times, but getting out of debt will pay huge benefits. Resist the temptation to use your credit cards. Lock them in a drawer somewhere. You won't get out of debt if you add to your balances. Once you're out of debt, the money you've been using to pay off your debts and the discipline you practiced can be put to much better use.

BUILD A NEW FUTURE

Why not reward yourself and your family with a night out on the town as a celebration. You deserve it, but pay with cash. Then take all that money that's been going down the drain in high interest payments and put it to work for yourself and your family, building future wealth step by step.

======= Source: Ford, Justin. Seeds of Wealth. Baltimore, MD.: Agora Financial, 2005

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