Debt free without a consolidation loan

Having to deal with debts which you can't reasonably afford to pay back is overwhelming. Nothing can interfere with your plans quite like owing other people lots of money, money that you could put to use through investments, savings, paying for school, or even just being able to treat yourself and your loved ones. That's the problem with borrowing money whether it be student loans, personal loans, car loans, credit cards; once you start accruing interest its money that is now working for your creditors instead of you.

If you are reading this then you are probably one of the millions of people across the world who desperately want to become debt free. Unfortunately there is no quick fix - apart from winning the lottery, which is never a likely bet - but if you put your work hard and attack your debt like your life depended on it, in a realistic time frame you can be completely debt free - perhaps just a few years!

So how can this be accomplished?
There are many reasons you could be in debt but the most common problem is the fact that you probably spend more then you make. But even if this is the case do you know why this is happening? Where is your money going? Until you get that figured out you will continue to be financially lost.
To understand exactly where your money is going, follow the steps below:
1) Take a debt inventory. As difficult as that sounds it is something that will need to be done if you want to get a handle on your financial situation. Once you have faced the total figure, at least you know where you are! There are two ways to do this. Start by listing all your debts, one by one, including total outstanding amount, and if it's a loan then the monthly repayments and length of time left; if it's a credit card then the interest rate and minimum payments.  
2) Write our your total monthly income including salary after tax, government benefits and anything else you get on a monthly basis. A budget is the better way to go as it allows you to start taking back control of where your money is going and get some of those more unnecessary expenses under control.
3) List all your other monthly expenses such as rent, electricity, telephone bills, cell phone bills, groceries, transport costs (bus fare or fuel) and anything else you can think of.  It's worth adding a realistic sum allowance for clothes, toiletries, going out which you will actually stick to. If you make the figure too small, you'll blow your budget and be back to square one.
You can now work out what you have left every month to repay your debts by taking your monthly outgoings (calculated in point 3) from your monthly income (calculated in point 2). This is your budget, and if you make good in-roads in to that debt you'll be debt free in no time!

So take that first step to becoming debt free and make a budget. Just get out a pencil and paper and write down your income in one column and then write down all of your expenses in the next column. Add up the two columns and those two numbers will tell you how well you are doing financially. If the income is greater then the expenses then you're in a manageable situation. If the expenses are more than the income then you have found the primary reason for your financial problem. In this case you should find ways to either earn more (ask your employer for a pay rise; get a second job; rent out a room in your house), spend less, or seek help from a debt consolidation company.

So, you've written out your budget, and you have money left over to repay your debts. Look again at the list of outstanding debts you made in point 1. Work out which company is charging you the highest interest rates and pay that debt off first, while you continue to make your minimum payments to other creditors. It is also worth considering writing letters or calling your creditors to see if they will reduce your interest rates - they don't always say no! If you're feeling particularly confident that you can stick to your budget, and your credit rating isn't horrendous you may want to consider applying for another credit card to take advantage of their low interest introductory offer but BEWARE OF FALLING FURTHER INTO DEBT!

Here's the thing about making a budget. It isn't the greatest of fun and the results can be somewhat depressing but you can't bury your head in the sand forever - eventually you'll suffocate! Budgeting is quite a freeing experience because you can take all the information and make informed decisions about your future.

The next step to become debt free is to act on what you see in your budget. Your monetary problems are right there in front of you and it's time to start performing some financial surgery. Start cutting and eliminating bad spending habits to free up money that can be put to use reducing those debts.

You will have to make a conscious decision to live on less then you make and apply any savings to fixing you financial problems. And if you are serious about being debt free get rid of those credit cards. Don't just hide them in a drawer; you have to destroy the things in whatever manner works for you. Credit is not your friend when your debt is destroying your future.

The first steps to becoming debt free are simply taking back control of your money and telling what to do and where to go. Once you have done this by building a budget and seeing how lost control of your expenses you can start down the road to financial freedom.