Get out of Debt Before the Economy Gets You

Our government has proven itself incapable of effective debt management. Over the years, it has steadily borrowed more money to pay for our public programs. Unfortunately, this is money it simply doesn't have.

Regardless of your political stance, using the same approach with your personal finances would never work. If you're currently in debt, you already know the adverse effects of borrowing more money than you make. It may be time to apply debt elimination tactics to your own situation.

Look at spending habits

Beginning a personal debt management program should start with getting a grip on your finances. If you spend carelessly, and don't keep close tabs on your bills, it's time for a spending freeze. Put a moratorium on all expenditures besides the basics, such as groceries, fuel, utilities, etc. Next, track your spending for the last six months to a year. You'll probably discover that you're spending far more than you make.

Putting it on the plastic

If you've been spending with reckless abandon, chances are that you're putting most of the expenditures on your credit card. Have you taken a close look at your plastic, and the interest rate that each of them charges? Most people who have poor debt management are too busy spending to carefully consider how high the interest rate is on their balance, and how much money they'll need to spend just to break even. If you're carrying credit cards with high interest rates, you may want to consider paying off one or all of them. Any card that charges more than 10 percent spells trouble for you in the long run.

Debt consolidation is the ticket

Finding the discipline to pay off those high-interest credit cards may be difficult. If you have some extremely high balances, it may also take too much time, and cost too much money, to make serious inroads on your balance. A faster, more effective way to pursue debt elimination is to seek out a debt consolidation mortgage. Assuming that you have good credit, the interest rates on most mortgages are in the single digit range. The interest is also tax deductible, effectively lowering the overall net rate.

While the big shots in Washington figure out how to cope with our sputtering economy, take smart steps to cope with your own sputtering economy. Budget wisely, eliminate credit cards with double-digit interest rates, and pursue a debt consolidation loan. These steps can help you eliminate overspending. We can only hope that our elected leaders can figure out how to do the same for our country.