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How to Get Out of Debt Fast

Debt sneaks up on you. When it does, you want to get out of debt as quickly as possible. So I've put together a how to guide for how to get out of debt fast. No one plans to go in debt. The main symptom of debt is despair: a feeling that you can never get on top again. Don't let student loans, credit card debt or medical bills ruin the rest of your life.

Remember, this is a temporary state and, while you're going to have to go without certain luxuries for a little while, you can start getting out of debt right now. You have the power. In just one year, you'll start to see an improvement in your credit score.

Spend Less Then You Make

I'm just like everyone else. I respond to rewards. I knew that if I started to save some money and pay down debt, I'd be in a much better position to put money down on a new car within a year - even if it isn't the Ferrari I've always wanted.

Debt relief isn't hard. It can be as simple as spending within your means. You have to learn to spend less than you make, then take that excess cash and buy down your debt. If you don't get to work eliminating your debts, you'll be in the same situation (or worse) in a year.

Spending less than you make should become a habit, like putting on the brakes for a red light. Remember, if you can't afford that flat screen TV right now, you certainly won't be able to afford it at the end of the month when the bill comes.

Good Debt vs Bad Debt

While there may not be such a thing as "good debt", there are debts that are okay.

What I call "good debt" is debt with a low interest rate, as far under 10% as you can go. that debt should come with some kind of tax incentive.

This means using borrowed money on something that will appreciate in value. That's right, I'm talking about an investment. A mortgage for your home and even educational loans or home improvement loans are examples of good debt, because you're investing in valuable property or you're investing in yourself.

To put it simply, "bad debt" is all other debt: high interest rate, low return debts like a car loan or a credit card. When trying to eliminate debt, find the worst debt you have and pay your it on it first. Then move on to the next problem, so you eliminate debts one at a time.

Have One Emergency Credit Card

I had two credit cards before. I paid one off and left it open for emergencies. The other card was paid off and is now only "open" to maintain my credit score. I never use it, and in fact I don't have a copy of the card on me.

That's a little credit trick for you there: pay down a credit card, get the balance to 0, and leave it open without ever touching it. Closing a credit card will lower your credit score and diminish your efforts of getting out of debt. For your emergency card, pick the one with the lowest annual interest rate.

Pay High Interest Debt First

This means I found the highest interest rate debt and paid it off as quick as possible. While it would have been easier to pay off the low interest rate credit card with a lower balance, I knew that would make a tiny dent (if any dent at all) in my credit problem.

After the big boy was paid off, I paid the other debts in order of annual interest rate. I did this over and over until every one of my bad debt accounts were paid off.

This tactic is good for a number of reasons. Paying off the big problems on your credit score first mean those big bumps in your credit score come sooner, sometimes during your payments to the lower interest debts. Those rates can be begged down quite a bit while your score improves.

Being in debt can feel like financial prison. The good news is that it doesn't take years and years to improve your credit score and shore up your financial situation. Start resolving your debt today using the simple guidelines above.

Everything is in your control. Just get a plan and stick to it and you'll eventually find your way out of debt hell.