Digging Your Way Out of Debt

As many Americans are finding out right now, when the economy takes a downturn, life can become much smaller. Vacations get canceled. Purchases get postponed. In this era of unbelievably high gas prices, making a simple trip to the mall requires some forethought. But hard times can be even tougher if you are in debt.

Food and gas prices continue to rise, but those credit card payments still have to be made. So what steps can you take to begin the climb out of your bottomless debt pit? Tracey McBride, author of Frugal Luxuries: Simple Pleasures to Enhance Your Life and Comfort Your Soul recommends you start by taking these steps (and I warn you, they are painful):

1. Phone a creditor. Find out what you can do to get started knocking down your debt. Work out a payment arrangement. Some creditors are even willing to take a smaller lump sum just to get the debt settled. Keeping the lines of communication open is crucial, especially when you are going through difficult financial times.

2. Cut up any unnecessary credit cards you own. Some people feel the necessity to have one emergency card. But get rid of all the rest.

3. Write out a simple Money Map of your earnings and expenses. This will force you to think about where your money is going and see places where you might easily cut back.

4. "List all the areas in your life in which you are overspending. Ask yourself how you might realistically reduce your spending."

Taking the first steps towards getting back on financial track can be hard. But the rewards, especially with regard to peace of mind, are great.

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