Getting Out of Debt

MoneyWatch for February 2009
Share

Being debt free is a goal and dream for many people, but achievement of this goal is not an easy task.  “Getting out of debt,” says behavioral economist Meir Statman, “is the financial equivalent of trying to quit smoking” (CNNMoney).  Even though it can be difficult, debt reduction can be accomplished by following certain money management practices.

Here are some tips from Cleveland Saves:

* Use only 1-2 credit cards and put the others away.  Be sure to pick two that are accepted everywhere
* Write down what you spend every day. It will make you conscious of where your money is going.
* Develop a budget and stick to it. The only way to get out of debt is to reduce spending.
* Pay every bill on time. This includes Utility bills which often report to the credit bureaus. Nothing will improve your credit report faster.
* Pay the most you can on the bill with the highest interest rate, not the biggest balance. Pay the minimum on the others until the first one is paid off. Then move to the next highest one.

Click on these links for more resources and information on debt reduction.

Local and State
WECO Fund
Cleveland Saves: Reduce Your Debt and Create an Emergency Fund
Credit Consumer Counseling Service
Cleveland.com Plain Dealer: Whether You Hire a Pro or Go it Alone, Manage Your Debt

National
Federal Trade Commission (FTC): Knee Deep in Debt
US News and World Report: How to Get Out of Debt
CNN Money: Get Out of Debt
MSNBC: Want to Get Out of Debt? It Takes Discipline
Smart Money: Help! I’m Drowning in Debt

Support for MoneyWatch is made possible by Charter One Foundation.

Research assistance for MoneyWatch is from Cleveland State University Nance College of Business Administration. Information on the Nance MBD program is available here.