Most Americans have never learned the bare-bones basics of personal finance. They regard having an available balance on their credit card as the same thing as having an actual savings account. It isn’t entirely their fault; the entire consumer lending industry, because they benefit from this ignorance, takes great pains to showcase the ease of getting into debt, but don’t talk about how to get out of debt. We’ll cover six techniques to get your financial house in order.

Make A Budget

If you can’t measure it, you can’t manage it. Take your last three months of receipts and figure out how much you’ve spent on housing, transportation, medical insurance, food, utilities and luxuries. Then look at your income. If your income is less than your expenses, start working through the rest of these steps.

Look For Patterns

If your expenses are only higher than your expenses some of the time, look at the types of expenses that put you over the top. They tend to be things like car repairs, emergency medical bills, and home repairs. Rather than throw the next one on your debt cycle, look for any tangible assets you can sell or liquidate. This can be old watches, unused electronics, even old clothing you can sell to the vintage store. A lot of people’s road to fiscal sanity starts from liquidating things they’re not using.

Trim Back Extra Expenses

This is surprisingly easy. The number one eater of American income is, well, eating – or rather, eating poorly. If you buy a lunch every day that costs six bucks, that’s $30 a week, or about $125 a month. Buy groceries in bulk, prepare in bulk and freeze; you can make frozen lunches to take to work for a fraction of what fast food costs, and if your idea of cooking is “throw it in the microwave” invest in a slow cooker and a cookbook.

Generate Extra Income

If, after cutting out extraneous expenses, or if you’re looking to buy something big in the future, start looking at ways to generate extra income. While you won’t be able to support yourself on sites like Fiverr.com without a lot of work, it’s not too hard to turn 2-3 hours a week into an extra $30 to $40 per month. You can also try to get extra hours at work, or take up a part time sales position and even selling unwanted or unused items. You can sell handbags, clothing, electronics and so much more at a local yard sale or on sites such as Craigslist to earn extra income.

Consider Debt Consolidation Loans

If you’re falling well short of your expenses, you should talk to a consumer credit counselor about getting a consolidation loan. Consolidation loans have the consolidation company buying up the old debt and combining it into one payment that can be made each month. That payment is usually at a longer, fixed term, and it’ll be a lower monthly amount – be aware that the penalties for being late on a consolidation loan, both in fees and damage to your credit rating are more severe than with credit cards.

Use The Snowball Method

Getting out of debt without a consolidation loan can be done so by utilizing the snowball method. This method is a combination of generating extra income (either through one-time sales of unused valuables, or generating extra money from more work,) combined with aggressively paying down the highest interest rate debt you’ve got, and making the minimum payments on the other. When that debt is paid off, shift the payment strategy to pay down the second highest interest rate debt you’ve got, and continue shifting the combined payments until all of them are paid off.

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