How to Get Out of Debt - Emergency Debt Elimination
The steps that a person will need to take in order to alleviate themselves of the debt they have accrued will differ from one person to the next. No two individuals are the same and no two financial situations are the same. This being said, a person looking to eliminate the amount of debt they have as quickly and efficiently as possible can do so by following a few simple steps. The reason that an individual may want to take more drastic measures to eliminate their debt rather than taking a slow and steady approach are varied, but the steps are basically the same.
The first step to immediate debt elimination involves acquiring no new debt. Although this step may seem obvious, many individuals either ignore it altogether or failed understand how important it really is. A person looking to pay off all of their debt as quickly as possible should immediately quit using credit or financing to make purchases. This means getting rid of credit cards. Getting rid of credit cards, however, does not necessarily mean closing the account, it just means getting rid of the physical card so that it can no longer be used.
The second step is to establish an emergency savings. It may seem counterintuitive for an individual to start saving money before they even begin paying off their debt, but it is one of the surest ways to prevent unexpected expenses from derailing the entire process area having some money set aside to cover unexpected expenses will keep a person from having to reach for a credit card in order to cover costs like vehicle repairs, home repairs or even medical expenses. Generally, this money should be kept so that it can be accessed quickly in the event of an emergency but not necessarily kept on hand.
The next and final step to emergency debt elimination is to determine which debts to begin paying off first and to attack them with as much money as possible. Most individuals recommend paying off the highest interest debt first and this definitely makes sense since high interest means more debt. Other individuals recommend what is known as a debt snowball starting with the lowest balance and working up to the highest. This method allows a person to build up some momentum and they are often spurred to keep going after they see their smaller debts disappearing.