Debt is a dangerous thing because it can sneak up on you before you even realize it’s gotten to where it has. What caused this debt trap? Some of it could be simply not keeping track of what you’ve spent your credit cards on. Another problem could be not forming a budget or soliciting advice on how to manage your personal finances. Ignoring your debt could lead to big problems trying to pay off your debt such as bankruptcy or foreclosure on your home. But what should you do to remedy your debt?


It’s About Behavioral Change

One of the top experts on personal finance coaching, Dave Ramsey discussed on his show that the real problems causing debt are your habits. Whether it’s through ignorance of how debt works, or just simply wanting something you can’t afford, more often than not you’re using debt to get things “you don’t need,” according to Ramsey. One of his best pieces of advice for changing this habit is that when you don’t have the money in savings, you should not even consider buying that thing you want.


It’s About Eliminating One Debt at A Time

When you face debt, one of the best ways to get started with eliminating it is to start with one debt account at a time. In other words, maybe you have debt on multiple credit cards, utility bills, or a house mortgage that you’re trying to catch up to. Instead of trying to pay them off all at once, you’re usually better off taking one on at a time. It’s a much better plan too than simply moving your debt around either through debt consolidation, or even worse, through debt settlement.

If you aren’t sure which account to pay off first, check out this article that discusses the Cash Flow Index.  It’s a great way to identify the most inefficient loans so you can pay those off first.


It’s About Starting With A Savings Plan

On Dave Ramsey’s blog, he mentions that one of the best ways to start with changing your lifestyle and eliminating debt is to build $1,000 in savings that you do not touch. Life is bound to throw a few unexpected events your way, and it’s far better to have a savings fund available than trying to meet your expenses through debt. According to Ronald Weiss, a mortgage default is one of the worst things a struggling family can do. But it also can help change your spending and lifestyle and have you living only with what you can afford. Once you pay off debt, you should increase this emergency fund to 3-6 months of household expenses, and start retirement savings.


Facing your debt problems can certainly be scary, but you aren’t alone and you can overcome it. You don’t have to go at it alone because there are others who have been where you’ve been, and some of them have started counseling and coaching services to help people like you get out of debt as well. But only you can make the decision to start the climb out of debt.