"Debt" is one of the worst of all the four-letter words in the English language. It can ruin futures and destroy families. Getting out of debt, however, is something that can be done if you have a plan of action and you stick to it every month. Follow these steps, and you can reduce your debt and get back on track financially.

Eliminate Late Payments

The first step to rebuilding bad credit is to pay bills on time. Late bill payments are a sign to creditors that a person is financially unstable. All payments should be made on time, whether they are credit cards or bills such as utilities, phone and cable.

Reduce Your Debt

Paying off high-interest loans is a must to improve your credit rating. Credit cards, auto loans and any other arrangements where a person has borrowed money must be paid off as quickly as possible. With credit cards, the interest is so high that the debt will take much longer to pay back if only minimum payments are made each month.

Know Where Your Money Is Going

The old adage "If you fail to plan, you are planning to fail" comes into play with repairing credit. A monthly budget must be designed so a person knows exactly where income is spent. A person rarely goes into debt by spending wisely. A budget helps reduce unnecessary spending and helps you identify areas where you can cut back to guarantee that you will make more money than you spend.

American Express - Leave Home Without It

Credit cards almost always play a role in a person getting into debt. They also play a role in getting out of debt. Leave credit cards for emergencies only, or cut them up altogether. Pay for items by check or cash to ensure that you will not increase your debt.

Repairing Credit Is Not a Quick Fix

No one goes into debt overnight, and they don't get out of debt that way, either. Repairing credit takes months and even years of making on-time payments, reducing unnecessary spending and developing successful spending plans. Anyone looking to get out of debt quickly will be quickly disappointed.

Source:

Financially Tough

360 Degrees of Financial Literacy