With the federal and several state governments headed to bankruptcy we wanted to share tips for you to get rid of your debt. Imagine what that would look like for you and your family. Could you afford to go on vacation? Could you afford college tuition for your children or better yet could they be taught to save and pay their own way? For many families being debt free means being able to afford the essentials like food and clothing. As you dream of a debt-free future, consider these 10 tips to get rid of debt.

1. Stop Spending and take an honest look at household expenses like cable, magazine subscriptions, groceries, car payments and cell phone plans. Write down all monthly expenses and figure out where you can afford to cut back.  You may be spending too much money:

• If you’re reading this while making illegal use of your neighbor’s unsecured wireless network because you cannot afford your own.
• If you’re eating Ramen noodles while watching 800 channels on super extended cable with DVR. It is time to scale down.
• If you bought a $30,000 car on a $30,000 salary. It’s time to get rid of car payments you cannot afford, sell the car and buy a clunker with cash. Use remaining cash to pay down debt.

2. Stop borrowing, shred credit cards and use cash only. If you can’t afford it then you shouldn’t be buying it. When the real estate market was growing homeowners took home equity loans out on their property. Now that markets have crashed and may not recover to previous levels, many people owe significantly more on their home than it is worth. Take note and learn from their experience.

3.  Know your statistics: Do you know how many credit cards you have? Do you know balances and credit limits of your cards? Do you know the interest rates for all cards and loans? Understanding and writing down your true credit situation is crucial to getting rid of the debt.

4.  Reality Check: Figure out personal debt ratio doesn’t mean hiring a numbers guru. There are many websites that offer instruction and tools to figure this out. Basically a personal debt ratio is the ratio of income to debt. This will further paint your financial picture.

5.  Snowball vs. high interest strategies: Now that you have all of your debt and related details written or in a spreadsheet, you can weigh various strategies for getting out of debt. Two of the most popular are snowball and high interest strategies. The snowball strategy involves paying off the debt from smallest to largest.  High interest strategy means paying the highest interest rates first. The idea being to save money on interest. Whichever strategy you select, be diligent with payments and sticking to the plan.

6.  Start saving: Regardless of your debt status or strategy, it is important to start saving for retirement as soon as you begin your professional career. There is a very real possibility for many of us that we will not have Social Security and medical benefits from the federal government in our retirement years.  Take advantage of benefits offered by the government and your company as related to retirement savings and other tax deferred vehicles.

7. Track spending so you know where your money is going. If you spend $5 every weekday for coffee and there are approximately 20 workdays in every month, you are spending $100 per month or $1200 per year on coffee.  If you spend $10 every weekday on lunch that’s $200 per month or $2400 per year. Think about what you could do with that money.

8.  Debt consolidation: There are companies that will negotiate your debt on your behalf and create a pay down plan. This will eliminate multiple payments, consolidating them into one. Investigate the options completely before signing on the dotted line. You don’t want your good intention to be wasted on a scam.

9.  Make your plan public will create accountability. You don’t need to shout it from the rooftop but tell someone you trust like your closest friend. Ask them to help you stay focused on the task and understand if you can’t do all of the things you once did. Maybe it’s a movie night at home rather than a night on the town. A true friend will understand.

10. Correlation between debt & exercise has been proven true in studies proving once again exercise is good for your body…and your wallet!

We hope we have provided tips you can apply in your life to help you get rid of debt once and for all!