Debt, what were the methods you use to get out of debt? How long did it take for you to get out of debt?

Answer 1

We ended up really far in debt and unable to pay and as strange as it may sound, that was really the start of us getting out of debt. My husband was out of work for a few years. Most of our bills got turned over to collections. My husband sold his truck so it wouldn't get repossessed. That took care of that debt. Another thing, when you get behind on your credit cards you can't use them anymore. Therefore, we weren't getting deeper in debt. Now that we are both working we keep paying on what we have. We managed to refinance our house and used some of the money to pay off most of the accounts that went to collections. We took settlement offers on most of them. It is a big relief to have those off our backs. We're still not out of debt but we are working on it. Had it not been for our bad fortune I don't think we would have paid off what we have. We always said we wanted to be out of debt but we still went out and bought new cars and used our credit cards. Now we don't do that.

Answer 2

First and for most you have to look at debt as the enemy. The only way that you get rid of an enemy is to attack, attack attack. The method that I used to get out of debt was a two pronged attack. The first step was to streamline. Closeout unnecessary accounts. (i.e. department store credit cards) After that cut down on conveniences and luxury items. Anything that you do not need to survive (i.e. dining out, cable and cell phone options, etc.) I consider a luxury item. The goal was to free up money to attack the debt. On the second prong there are two ways of doing this.

1. Organize all of your debts from the highest interest rate down to the lowest interest rate. Pay off the highest interest rate first and continue work on the next highest. Once the first debt is finished, add that payment to the payment of the next debt. Continue on until the last debt that you have is the lowest interest rate.

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2. Pay off the smallest debt amount (i.e. a small balance on a credit card) first. Then apply the payment that you used to pay on that payment on the next debt. What you are doing is freeing up more money to hit the next debt amount harder. By the time you come to you largest debt (i.e. car payment or mortgage) you will probably be able to pay over your minimum payment.

I was 23 years old and had $25,000 in credit card debt. I applied the above concept and paid it off in 2 years. Sometimes it felt overwhelming to have this debt, but I stuck to it. The debt did not happen over night so paying it off will not either. Be vigilant and good luck, you can do it.

Answer 3

We are still getting out of debt, as we started with $35K to Uncle Sam and $19K on a car. Thankfully we stopped using credit cards about 8 years ago. So far, we've paid off about $26K since last November. We think we'll be out completely by the end of 2007.

Every month we write a budget. We try to write it as thoroughly as we can. All of our income is written down and all expenses are deducted from that. I'm in sales, so we try to live on our salaries and use my commission checks to apply straight to debts.

Many financial advisors recommend something often referred to as the "debt snowball." We are using this to eliminate our debts.

The basic steps in the debt snowball method are as follows:
1. List all debts in ascending order from smallest balance to largest. This is the method's most distinctive feature, in that the order is determined by amount owed, not the rate of interest charged. However, if two debts are very close in amount owed, then the debt with the higher interest rate would be moved above in the list.
2. Commit to pay the minimum payment on every debt.
3. Determine how much extra can be applied towards the smallest debt.
4. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
5. Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt.
6. Repeat until all debts are paid in full.

This technique really works and is also motivating as you can see your debts reducing right before your eyes.

Work hard, spend less, and you'll be out of debt before you know it!!

Answer 4

We are using the Dave Ramsey method. (The Total Money Makeover). We are still working on getting out of debt but have paid off over $20k in a little over a year. We have to make sacrifices but we already feel more peace with our finances.

His baby steps are as follows but get his book (go to his website he is having a sale during the month of June) and it will give you all the details on how to do each step and what to watch out for.

1. $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3. Three to six months of expenses in savings
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
5. College funding for children
6. Pay off home early
7. Build wealth and give!

Answer 5

I stopped using credit cards, and only buy what I can afford. I try to pay something every single month against any back balances...even if it's only five dollars. This month, five dollars seems like a drop in the bucket against a large balance, but I know from experience that those dollars add up, and people I owe money to are usually forgiving, because they see a diligent effort, because I pay this month's bill plus a little extra each month.
If I have a windfall (like my tax return) I spread the money out, and give some to each creditor, and hold a little back to do something special with/for my family, because we get discouraged if we don't EVER get something extra.
It has taken me ten years to pay everyone off. I am not completely debt free yet...I still owe on my student loans from college, but I am current and paying as agreed, and I still owe Discover, but I am current and paying as agreed. I still have a significant back balance on my electric bill, but I also am current and paying them as agreed.

Answer 6

we made a budget that cut spending a minimum of 20% in everything except payments and rent. To do this, we took over doing many small tasks that we had previously sent out.

to reinforce the budget process, we kept track of every cent we spent [computer makes this easy] for over a year AND reviewed totals to our budget on the first weekend of the month.

beyond that, we reviewed all our financial dealings and changed at least half of them, eliminating all bank charges except interest, and got a different credit card that we paid off every month in FULL and used only for current expenses. We then added nothing to any card that had a balance owing until it was completely paid off for three months [and we ended up closing several card accounts that way.]

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One financial commentator I later met made it pretty simple -- pay 110% toward your debts, putting the extra toward the smallest one (only). Pay the same total amount every month until you are debt free [the number of debts will decline over time -- keep paying the same total amount].

After you've paid your 110% per month, spend the rest.

BUT, incur no more debt of any kind. Period.


GL

:-)