What are some strategies I can use to pay off debt quickly?

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Answered by: Steven, An Expert in the Managing Money Category
Unless you've been living cut off from the news and world events you know how critical the debt problem has become across the globe. Not only personal debt is skyrocketing, but so is government debt. It seems to be a never ending spiral once you're trapped in this whirlpool of debt and interest accumulation, however there are ways to overcome the problem and pay off debt so you can live a more stress free life. Here are three ways to overcome the your personal debt issues as quickly as possible.

Create and Follow a Budget

It seems simple right? While the idea of a budget is simple, the majority of people and households do not follow a budget let alone have one. In fact, according to MSN Money, fully 20% of Americans have no idea where their money goes on a monthly basis.

Creating a budget is simple although it does require a bit of discipline. Start by tracking ALL of your expenditures for a full month (2 or 3 month is even better). This will give you an idea of where your money is going each month. More importantly, it will let you know how much you have left at the end of the month to pay off debt or how much you need to cut from your spending to pay off your debt even faster.

Eliminate Luxuries and Non-Essentials

I know you've heard this before, but you do not need that daily latte from Starbucks. Nor do you need the expensive full data plan for your iPhone or Blackberry. You don't need to eat out for lunch or dinner (or breakfast) and you don't need a subscription to XBOX Live. All of these things may feel necessary right now, but they are definitely luxuries and if you're in debt they should be cut from your budget. Yes, you'll miss them initially, but after a month (or less) you'll learn to live just fine without them.

I'm willing to bet that most of you can find at least several hundred dollars of these non-essential luxury expenditures in your budget. That is all money that should be going to pay off debt. You can add them back in later if your budget allows for it, but until you're in the green they have to go. Cutting these may even free up some extra time that you could use to make more money, see below for more on that.

Create Additional Income

Personally I've worked 50-60 hours a week for most of my adult life. Sometimes it was less and sometimes more, depending on my circumstances. When I found myself $40k in debt I knew it was time to do whatever was necessary to fix the problem. That included the two steps above which cut my expenses, but it also included getting a second job as well as creating income from online sources. This increased my income giving me a double whammy approaching to knocking down my debt. Was it inconvenient? Sure it was. I missed parties and had to cut back on game playing and nights out, but in the end it was well worth it. I not only paid off that debt in 2 years, but I also found that I was able to create a portable income that now follows me wherever I go in the world (currently Thailand). That freedom is priceless.

I know when you're under a burden of debt it can feel overwhelming, but the truth is that for most of us it is pretty easy to fix if you're willing to have some discipline and undergo a bit of hardship. When you pay off that last credit card the sense of accomplishment will make any sacrifice you've made well worth it. You'll not only be debt free, but I'm pretty certain you'll also gain more knowledge about yourself and an increased sense on pride and self confidence knowing you were able to tackle this problem on your own.

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