Getting out of debt is one of the top New Years resolutions made every year. Unfortunately, like many New Years resolutions, most people generally forget about or give up on their resolution to get out of debt before the first month is even up. Here are some tips to help you keep your 'get out of debt' resolution this year:



1. Stop borrowing. The first thing you should do to get out of debt is to stop borrowing. You can't get out of debt if you're continuing to add to your burden each month. So cut up those credit cards, or freeze them, or put them in a safe place where you can't get to them easily, and start using cash for all of your purchases. This simple step will keep you from over spending and will make you stop and think "do I really need this?" before each purchase. You will be surprised at how powerful this one strategy is!

2. Take an inventory. This is a painful step, but you absolutely have to know where you stand before you can make a plan to get out of debt. Write down who you owe, how much you owe them, and the minimum monthly payment required to meet that obligation.

3. Track your spending. In order to pay off your debt you have to know were you are spending your money. You should keep track of your spending, either in a software program such as Quicken or MS Money, or using spreadsheets, or even pen & paper. Whatever method works best for you, it is very important that you know were you are spending your money so you know how much cash you have available to put towards your debts each month.

4. Set short term goals and milestones. Getting out of debt can be a monstrous task, especially if you're deep in debt. Many people give up simply because the goal itself seems so large that it's unachievable. To get around this, I encourage you to set smaller goals to help you achieve the greater goal. For example, if you have several credit cards, and the total debt is $5,000, instead of focusing on your goal to pay off the $5,000 total, focus on paying the smallest balance card off first, or focus on coming up with an extra $50 per month to put towards your debts. The point is to set goals that can be achieved in a short time period so that you see results right away and are encouraged to continue towards the larger goal.

5. Reward yourself periodically. Just as important as setting goals that you can achieve, you should reward yourself for goals and milestones reached. Another reason why people give up on their goals is because they feel like they have to give up too much to achieve that goal (i.e., skipping that latte, cutting back on spending, etc.). To keep you motivated, you should reward yourself every time you achieve a goal or you see that you are making progress toward reaching a goal. If you don't ever celebrate your successes, you may end up resenting your goals, and giving up on them.

Finally, the best way to make sure you keep your 'get out of debt' resolutions, is to know why you want to get out of debt. Is it to reduce stress? Is it to spend more time with your family? How will you feel when you are out of debt? Putting some feeling behind your goals and reminding yourself why you want to get out of debt will help you stay on track and achieve your goals.