It all begins by making a commitment to get out of debt and possibly staying out of debt. Showing such an interest is a major step towards getting out of debt. Let this one step lead to another which will eventually lead you out of debt.

Next, you need to know who you owe money and the exact amount you owe them. List down the name of each creditor, total amount you owe them, and interest rate tied to each debt. This might force you to get your credit report from your bank if you have any credit card debts or loans you took with a bank. Such information is important since it will give you an approximation of how much you need to pay plus is an important factor in determining how you’ll clear each debt and after how long.

Third, you need to prioritize your creditors. Finance experts recommend that you should begin by paying off highest interest rate debts. Rank your debt in order, starting from the highest according to tied interest rate to that debt with the lowest interest rate.

You could also consider paying off your smallest debts first especially when you can settle such debts with a single payment. If your high interest debts have high balances, you could consider putting a hold on them first and focus on clearing your smaller debts first. Clearing smaller debts first could motivate you to keep on clearing each debt until you are through.

If you have creditor who is pilling pressure on you, it’s best to begin by clearing their debt, this will give you an easy time clearing the other debts. There’s nothing as bad as having someone nagging you, demanding for their money.

The fourth step entails determining how much you can pay each month. This is where your budget comes in handy. List down your total monthly expenses; these include utility bills, food, transport, rent or mortgage plus entertainment cost. Identify areas where you can cut down on cost so that you only spend on those important expenses, maximizing on the amount you have after settling all your other financial commitments.

Subtract the expenses from your disposable income to figure out how much you can spend on your debts.

After you know how much you’ll spend each month in settling your debts, you’ll easily tell how long it will take to clear each debt. If there are debts you can clear with a single payment, begin with them. If optimizing your payments is most important, then starting with high-interest debt is most ideal.

Remember, choose a system that will keep you motivated throughout your debt repayment period.

Lastly, implement your plan to the end and avoid getting into more debts along the way.