Why is it that everyone who has debt problems wants to get out from under the burden of excessive debt, but most people labor unsuccessfully to get out of debt their entire lives? The lending industry has an interest in keeping people in debt, because they need a ready supply of people living beyond their means, and willing to go into debt to maintain a certain lifestyle. Of course, their lending or credit card services are presented as the best way to have it all now.



Since the lending industry has a plan to entice you to go into debt, you need to protect yourself from the temptation to buy things that you cannot afford. Practical budgeting can protect you from getting into trouble with excessive debt, and help decrease your total debt burden. Here are some steps you can take to avoid debt problems:

1. Have a budget. It does not have to be complicated; in fact, the simpler you can keep it, the more likely you will be to stick to it. Make an itemized list of all of your monthly expenses like gas, insurance, mortgage or rent payments, utilities, food, etc... When you have a complete list of your necessary expenses, subtract them from your total monthly income. Now you have an idea of how much you have left for spending money and savings. Seeing your budget on paper will allow you to identify unnecessary spending, and see exactly where your money is going.

2. If you have high interest debts, you should attempt to transfer the balances to a lower interest credit card or line of credit. Doing so will give you extra money to spend or use to reduce your debt. Be careful not to run up even more debt with your new card or line of credit. Increasing your debt load runs counter to your efforts to get out of debt.

3. Check your credit at least once a year. You are entitled to one free credit report each year, so take advantage of it and make sure that all items on the report are accurate and reflect your true credit history.

4. Contact your creditors, whether or not your account is up to date. Better interest rates may be available, and the lender may be willing to restructure your loan to lower your monthly payments.

5. Be careful with store credit cards. They may offer a discount for opening a new credit account, but if you maintain a balance, you could be surprised at just how high the regular interest rate is.

6. If you don't already have some money set aside for emergencies, now is the time to begin saving. Having something set aside can help you pay your bills on time when you are short on cash, and can prevent slow payments which would adversely affect your credit score. Even a small contribution to your savings account each month can create a financial safety net over time. You will be surprised how quickly your savings can accumulate by contributing only $20 per month.

7. When constructing your budget, calculate how much money you will have available every month for paying off debt. Rank your debts in order of interest rates, from highest to lowest. Make the minimum monthly payment toward all of the accounts except for the one with the highest interest rate. On the highest interest rate debt you will pay the remaining amount that you have set aside for making debt payments. When you have completely paid off the most expensive debt, continue in the same manner with the other debts on the list until your debt has been eliminated.

If you follow these simple steps, you will quickly be able to reduce your debt, and by sticking to your budget you can begin to improve your financial situation.