There are a lot of reasons that people end up in debt. Unfortunately, for most, the reason seems to be overspending and a disorganized or absent system to manage money. Usually its a little bit of both.
There are legitimate reasons for being in debt. Job loss, and other factors. Whatever the reason, it is important to eliminate the debt, and not incur any more!
Here is the top ten list for eliminating your debt. Its not always easy to follow. But it is vital that you use this list as a guide. These ten rules will get you out of debt, and keep you out of debt in the future.
1. Make a realistic budget. Get all your bills written down. You have to see it in front of you for it to work. Make sure that the total of all your bills and expenses are within the amount of money that you earn. If your total bills and expenses are more than 90% of your income, you will need to make some changes.
2. Use the payment snowball to get your credit cards and consumer debt paid off. If you have a little cash and can afford to make a lump sum payment on your cards, pay them to below 50 percent of the card limit. This will increase your credit score. If you cant, then just begin to use the payment snowball system to pay off your cards beginning with the highest interest rate card. After its paid, cut it up and close the account.
3. Use cash! Keep only one credit card, in a drawer in your house. Don't carry it with you. It isn't real money. If you need a new refrigerator or an emergency car repair use it. But never allow the limit to exceed what you can easily pay off in 3 months. If you can afford the refrigerator with in cash, use cash.
4. Use direct deposit for you paychecks, and have a limit on what you can withdraw for personal use each week.
5. Make a commitment to reduce optional spending. Subscriptions, dining out, anywhere you can cut your expenses improves your situation.
6. Your home and housing expense should total less than 33 percent of your total household income. Talk to your insurance agent and see if you can reduce your mortgage insurance. Try to get a lower interest rate on your mortgage - make sure you understand your mortgage. NO, you cant get a million dollar loan for 1500 a month no matter what the predator on the other side of the table tells you. Go online and use a mortgage calculator to determine what your real, actual, fixed monthly payment is at the interest rate you want. If that amount is more than you can easily afford, then you may need to get an extra job. Also, some utility companies offer more economical utility plans. Check with your local utility provider.
7. Debt consolidation loans are a trap. If that sounds like a blanket statement, it is. If you have convinced yourself that this is the only way out, be careful. MAKE SURE that the total loan payment is actually less than you are paying on all your debts separately. If you can save money, and if you close ALL the paid off accounts immediately, then it can work. But remember, you have mortgaged your house to pay off a credit card. If you can't pay the card, you can always file bankruptcy. if you can't pay your mortgage, they will take your house. Be cautious!
8. Contact your creditors, and stay in contact with them. See if you can get a reduced interest rate. Some creditors will even eliminate the interest rate. Some are willing to work out optional repayment plans so they don't have to resort to using debt collectors.
9. Become a great shopper. Become a coupon clipper. When your making a larger purchase, be sure and shop around. Negotiate. If you find a better deal somewhere else, let the salesman know. See if they can beat the price.
10. If you have the option, work some overtime now and then. Use the extra money to eliminate the debt. If your job doesn't offer any opportunities for overtime, think about a small home business, or finding a part time job. Keep your eyes open and opportunities will turn up.
If you don't think you can do this on your own, bankruptcy is probably still not the solution. It will leave you in financial ruin for at least 10 years. There are other options. Debt reduction specialists can be a huge help. Again, be careful. Some of them charge as much as 20% of the total debt as a fee. If you owe 20 thousand in credit card debt, thats $4,000.00 dollars. That 4 grand would have eliminated a lot of the debt. So, again, shop around even for help eliminating the debt.

Real Estate buyers are usually highly focused on the purchase price of a property. This is a legitimate concern. The purchase price is one of the most important considerations in a real estate transaction. But at the same time home buyers too frequently treat interest rates as a secondary concern. Many buyers will stress over $300 or $400 in negotiations over purchase price. But when told that interest rates dropped half a point, home buyers will often respond with a shrug.
This is frequently because it is easy to understand the difference between paying 200k and 195k for a house. But it's harder to appreciate the difference between an interest rate of 6.5% and 6.0% for a house. But interest rates can have a large influence on mortgage payments. Using a mortgage calculator first let's look at the difference between the mortgage on a 200k and the mortgage on a 195k house assuming a 6.5 percent interest rate.
200k (6.5%) Mortgage $1264.13 per month 195k (6.5%) Mortgage $1232.53 per month
The difference ends up being $31.60 a month.
Now let's look at the difference between an interest rate of 6.5% and 6.0% on a 200k house.
200k (6.5%) Mortgage 1264.13 per month 200k (6.0%) Mortgage 1199.10 per month
The difference ends up being $65.03 a month or $780.36 a year. A simple half point drop lowered the mortgage payment by 5.4 percent.
Interest rate changes are not that uncommon. We wrote a tool that graphs Mortgage rates over time based on the interest rates provided by Freddie Mac. In the middle of 2007 we saw interest rates of 6.7%. At the beginning of 2008, interest rates were down to 5.75%. What is a little more interesting is when we switch the toggle on our tool to showing the mortgage on a 200k house based on the interest rate for that date instead of the actual interest rates. From the middle of 2007 to the beginning of 2008, we saw a drop in the monthly mortgage on a 200k house drop from $1270 a month to $1170, a difference of 9.3 percent. This is why when buyers say they are waiting for prices to drop 5%, it might be a good idea to tell them that the actual mortgage they would get on a house has already dropped by more than 5 percent.
In light of all the mortgage issues over the last few years, it highlights why home buyers should shop around for interest rates. All too frequently home buyers will go with the first mortgage person they meet under the assumption that everyone has roughly the same rates and that a half point isn't really that big of a difference. As we have seen above, a half point can make a non trivial difference in mortgage someone pays.
To make matters worse for those buyers that don't shop around, some mortgage brokers over the last few years charged industry rates that were out of whack with what was standard at the time. If potential buyers had simply made a few calls they would have discovered the problem. But riding under the assumption that it wasn't worth their time to call around and that interest rates where just one of those mundane details they didn't really need to be concerned about, they ended up with interest rates substantially higher than what they should have been. If buyers had a better understanding of interest rates, it could have significantly cut down on mortgage fraud over the last few years.
In summary, home buyers should still focus on price because it will always be an important part of the real estate transaction. But if home buyers start to look at interest rates more closely, they will end up with more success in their real estate purchases and lower mortgage payments.