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The effect of excessive debt can introduce a major element of stress into your life. Even a substantial increase in your income seems to have no effect. Every month is a battle just to maintain the ever increasing debt repayments. If the cycle continues, you are at risk of acquiring a poor credit rating and being blacklisted by the credit bureaus. But there are effective ways to get out of debt. Eliminating debt from your life can have the same effect as doubling your income! Being out of debt debt is guaranteed to turn your life around and reduce the level of stress that you and your family have to face.

Credit is both useful and dangerous. Freely available credit allows us to buy today what we can't afford today. Easy access to credit often leads to excessive debt. You discover that you are in serious trouble. Your income no longer covers the expenses and there seems to be no end in sight.

A debt consolidation loan may provide some short term relief, but it will not get you out of debt! Debt consolidation allows you to combine all your debts into a single loan. It transforms your short term debt into a single long term debt. It may ease the budget, but the benefits are purely temporary.

If you are in real trouble where your liabilities exceed your assets, then sequestration or bankruptcy may be the only answer. You will be starting again with severe restrictions on your financial independence. Once rehabilitated, you will own nothing but be debt free! Do this if you have to, but only when you have tried everything else.

For most people, the solution lies in setting up a debt elimination plan. The plan is simple to follow but requires some difficult short-term lifestyle sacrifices. However, the debt elimination plan will ensure that you will be debt free relatively soon!

STEP 1: LIST YOUR DEBTS

Identify how much you owe and what you spend each month to repay debt.

Make a list of every debt repayment that you have. Include the mortgage, car finance, personal loans, credit cards, store cards, companies and people that you owe. Include payments that are in arrears. If the rent is in arrears, then it too becomes a debt. For each debt, List the current repayment, the rate of interest charged, the outstanding term, payments that are in arrears.

Get the total monthly repayments and the total amount owing.

Knowledge is power! Knowing the extent of the problem is the first step towards fixing it.

STEP 2: REVIEW YOUR BUDGET

Now review the total household budget.

If you don't know

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