Crawling Out Of Debt

Getting out of debt the old fashioned way is not complicated; but it isn't fun and can take years. You must slash your spending and use every penny to get you to your goal as fast as possible. (The more you spend and the less you pay will mean more interest and longer time in debt.)

First, stop buying stuff! This is how you got into this mess in the first place. After you have learned financial discipline and paid off a chunk of your debt, you can start making small purchases again.

Second, make a budget. List only your required expenses. (If your required expenses are more than your income, you're screwed.) Then add on a small amount of extra monthly cash to spend on fun. You want your "fun budget" to be as small as possible to keep you happy every month. Just think of how happy you'll be when you're finally out of debt.

Third, look at increasing your income. Either go all out for a raise, get a better job, or find ways to make some extra cash on your time off. Every extra dollar you make can save you two because of interest.

Fourth, send every extra dollar to your creditors and don't quit! This is the hardest part. Those years of spending beyond your means now need to be balanced out with practical, hard work. If you make it through these tough months (or years) then you will have learned the discipline to keep you debt free forever. If you give up, even for a day, you could sink back into the pit of debt and never get out.

For more pointers on getting out of debt, check out this complete free seminar:
The Motley Fool How-To Guide: How To Get Out Of Debt

If you are overburdened by credit card debt, consider contacting a credt card counseling service. The down-side is you loose the use of your cards. The up-side is the service will negotiate you a reduced interest rate, lowering your interest rate - usually to zero. Choose a non-profit company with a national reputation. The FTC publishes an extensive guide:
FTC: Knee Deep In Debt