Many of has have debts to pay for, and all of us of wants to get out of our debts, and here I provide you with my personal guide on how to get your self out of debt.

Basically there are three main steps on eradicating your debts, and I will explain briefly on each steps

Step 1: Stop getting your self new debts

The main reason why getting out of debt is so hard for many people is because many of them keep adding new debts. And many of these new debts are “hidden”. Some examples are the using of credit card, financing a car etc. My first suggestion is to cut up your credit card and don’t make excuses. This applies to those creditcards for a safety net, convenience or cash-back bonuses. If you want to get out of your debt, cut them up. In fact, credit card is actually a trap if you are on a debt. It is save to have a credit card when you are not on a debt (with wise usage, of course). But if you are, it is strongly recommended not to use them or even having one at all. One more thing, those automated charges to your credit card, you should stop them. Either it is a gym membership or World of Warcraft or other recurring payments.

Step 2: Emergency Fund

The reason why we should save first BEFORE paying debts is to prepare for unexpected expenses such as for an accident or broken car. Now that you are not using a credit card, you should save some emergency cash. The amount is vary, depending on your need. But I think $1000 will be adequate for most people. Remember, DON’T use them unless it is an emergency.

Another suggestion is to save it on another bank account so that the emergency fund is ’save’ from debit card. This means that it is still liquid but not entirely easy to access it. One solution is to open an online saving account.

Step 3: Implement a debt snowball

The last step is paying your debt. Pay them hard. Pay them whenever you can, with whatever you can. A debt snowball might be your debt-free solution. Short version of it is this:

1. Order your debts from lowest balance to highest balance.
2. Designate a certain amount of money to pay toward debts each month.
3. Pay the minimum payment on all debts except for the one with the lowest balance.
4. Throw every other penny at the debt with the lowest balance.
5. When that debt is gone, do not alter the monthly amount used to pay debts, but throw all you can at the debt with the next-lowest balance.

Just remember the golden rule of paying debts: Start now. Don’t start tomorrow. Don’t delay.

So sometimes when we have difficult time in our financial condition, our parents, brothers/sisters or some closest friends may have lend us some amount of money, with no interest, of course. According to the common ‘theory’ in paying debts, the personal debts that comes with no interest should come last. However, some of us might feel guilty knowing that we pay other debts first rather than paying the personal debts to our closest persons. So there’s two sides of the story

Now what is exactly things to consider about personal debts?

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