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There is no one in this world that is immune from the debt trap. The hardest part of getting out of debt is not the fact that you want to; the fact is that you just do not know how to begin the process.

Twelve steps to get out of debt program

There are many options available to those who are looking to be debt free. It is not a generic process but should be as individual as the person using it. This guide will help you start to see how you can move toward your financial goals and give you what you need to take that first baby step to financial freedom but still allow you to customize it for you particular situation.

This is directed towards those who have more going on than just a few bills that need to be paid completely. It is designed for those who have little or no income left over after the monthly bills are paid if they are able to get that far each month. These individuals are finding themselves sinking farther and farther into debt and are not able to climb back out. Emergency action is called for and FAST!

Word of Caution: Financial advisors may be just the thing that is needed for your particular situation. The writer of this article is only knowledgeable about what has worked in the past for them and them alone. This includes things like taking control of the finances, providing a proper emergency fund, making sure the bills go out when due, staying out of more debt, and getting rid of some of the existing debt owed. The knowledge comes from reading materials, self experience, and information on the internet.

The Twelve Steps to the Get out of Debt Program

1. Be honest with yourself about your faults in it - You need to realize that you are the problem and things need to change. Admit you have a problem with the money you are spending. Then acknowledge there is a need for the right type of budget plan, control with one's self over the way money is spent, and it will take a slow process but it will happen if it is followed. There is also a need to spend about a half hour to an hour each week on the financial budget. This needs to be around the same time each week on the same day and there is absolutely NO EXCUSES why this can be missed.



2. Stop Spending NOW! - The second phase of this process contains an awareness of one's spending habits. For one month, try to refrain from spending money on anything that is not a necessity. Take those credit cards and rip them to shreds. If the cards are not the problem, put them where you will not be using them. Leave them at home when you go out. Necessity items include your mortgage or rent payment, your current bills, gasoline, food, etc. Things you do not need include movies, music, a magazine, electronics, etc. You get the general idea, Right? After your thirty day abstinence, you can then begin to choose how much you can actually spend each month safely on these items.



3. Start cutting out the little things - By week three of the process, you will need to be looking into the items you buy on a regular basis and be able to tell which are important and which "do without" items are. Say for instance, you like high priced food products, instead, why not try a generic brand that is much cheaper and still tastes the same in most cases. Stop spending money on eating lunch at a restaurant every day and "brown bag it" for awhile. You might be surprised at the money you save!



4. Begin your Emergency Fund - The next week's process includes opening up a savings account to use as an emergency fund. This starts with the cutbacks you have made the week before and the money you have saved. Now that you know the amount of this new way of life, make it a regular deposit each week into your emergency fund and make it direct deposit. You want to shoot for a total of $1000 in the beginning. It is best if you allow it to grow larger if you can. You really need at least three months if not six months in it as a safety net if something happens.



5. Take stock in what you owe - This is definitely the hardest part of the process. It will help in this next week of the process if you take the time to sit and create a spreadsheet containing all the debts on one side and the amounts on the other. Your mortgage is omitted from this list but all other debts are to be included. In a third column, list the payment due each month and the fourth column needs to be the interest rate you are paying for it. Add columns two and three up separately and this will give you the amount of debt you have and how much you need each month to pay for your bills.



6. A solid schedule for spending your money - Week six brings the most hurtful step in the process. This is the time when you need to do a spreadsheet with the essentials like your mortgage or rent payments in the first column and other things like apparel expense for the month, money for eating out, cable, electric, etc. In the next column, put down an amount for these items that is as close to the amount as possible. For clothes and the like, try to give yourself a decent amount each month without going too high or too low. This is also the time to add in the money going to the emergency fund. This is what is called a temporary plan for spending. As you start paying each month, you will be able to see where adjustments need to be made each month afterwards. If you find the amount you need to spend is greater than what you have to spend, you will need to adjust some items to make it come out for the better.



7. Stop spending on things not necessary - Week seven brings the knowledge that you need to pay first for the emergency fund and then pay for the debt you have. After that, comes the monthly bills you have. Take one envelope each month and fill it with the total needed to take care of everything you have listed. Once the money is gone from the envelope, you cannot spend any more for the remainder of the month. Make sure you are cutting back as you can on the items that are not necessary to you so you can have more money left over for the bills.



8. Be punctual with bill payment - Most individuals find this step hard. It is so essential to being debt free. When you send in your payments on time, you will start to see those debts begin to get smaller and it will also save you money in late fees and interest in the long run. For those that need a reminder, try paying them immediately by using the internet, make out a check for the amount and mail it on the next day, or have an electronic calendar to alert you of the bill being due.



9. The domino effect - Now that things are moving along at a steady pace, you can begin to add more to pay off your debt faster. Here's how to do it. As your weeks progress, begin to see how much from your spending you can save. When your emergency fund reaches the $1000 limit, that monthly money can be used. The idea is to come up with $100 extra. This amount is used to begin to pay off the smaller debt and move on to the larger debt. This $100 is used to help accelerate the debt reduction process as it is added to the monthly payment. You continue to pay off the debt until the account is paid in full. Take that payment plus the hundred dollars and apply it to the next bill on the list. Does this until you have no more debt to pay off? You will shortly be able to pay off your debt bad begin to use some of this money for your emergency fund and investments in your future.



10. Take larger amounts if possible - When you have begun the domino effect of paying your debt, you can take a look at the larger bills and see if there is a way to actually reduce them. Is it possible to get a lower priced vehicle or downsize your rent payments? Maybe you can sell your current house and buy a cheaper one. This money you find goes directly to the domino effect on the bills.



11. Try to make more money - If you can come up with extra money to add to your income such as a raise, or by a second job, the extra would help greatly. Sit for about an hour and try to think of ways to do this. You might find you have some items to sell on auction that will bring you extra money. This money needs to go directly to the domino effect of paying your debt.



12. Watch how you are progressing - The spreadsheet should be showing you how well this plan is working for you. Make sure the changes in the debt are made each payday. The spreadsheet will give you an idea of how long you might be doing this and that you are closer now than you were before.

Enjoy Your Freedom! - When you come to a milestone in your plan, you need to reward yourself. This means that when a debt is completely paid off, do something nice for yourself but not too extravagant. When you are completely out of debt, throw yourself a party. You deserve it.

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