Let's talk about getting out of debt from the bottom up; specifically unsecured debt (credit cards, personal loans, cash advances etc). You are in serious credit card debt like millions of Americans. What could possibly be worst? Well how about being in serious debt during tough economic times such as right now. For many Americans, credit card debt and bills keep getting larger and larger while salaries remain stagnate. The secret to financial freedom is quite simple. This principle has been around since biblical times and actually can be applied to virtually all aspects of your life. The principle is called “balance.” When it comes to finances it means spending less than you earn. I do not need to go into great depth about how we got here (when I say “we”, I mean you). The more important question is how we get out. Before I get into details about the idiot proof guide to becoming debt free, there is something I need you to promise. You must promise to STOP USING CREDIT CARDS. You will never become debt free if you continue using credit cards.

As I mentioned before, this guide focuses on the bottom up meaning it is geared for people in the worst situations. If we can help the least of us become debt free, there is great hope for the rest of us. When you are deep in debt and your finances have spiraled out of control, options to getting back on course often appear bleak. There are definitely options. Unfortunately, at this point, all options are hard and require sacrifice. The first option appears to be the easiest option, but in the end you really lose a lot more than you gain. I'm talking about bankruptcy. It's a bad word. The four letter word of finances. Although bankruptcy may seem like a quick fix, it essentially cripples your credit for the next 7 years making it difficult to do things like buy a house or even get a job. Bankruptcy should only be used as a last resort; however, I never recommend it as a viable option. Getting out of debt truly takes great discipline.

For people that are in serious debt, the best option for getting out of debt is enrolling in a debt consolidation or debt settlement program. What is the difference between the two? With a debt consolidation program, credit counselors negotiate a repayment plan with your creditors by consolidating many unsecured loans so that you only make monthly payment. Other areas of negotiation with a debt consolidation program may include lowering interest rates and waiving penalties incurred. You don't have to be in difficult financial situation to enroll in a debt consolidation program. The purpose of the program is to create a structure for getting out of debt within a defined time. The goal of a debt settlement program is to lower the actual repayment owed (ex. You owe $10,000, but you settle to pay back $5,000). This is more beneficial for people in the more severe category. What both programs provide is structure and a time frame for getting out of debt, but the success of both options is contingent on stopping use of credit cards.