How to Get Out of Debt, and Start Becoming Financially Free.

By: Michael Press

Going into debt has become an American fact of life. We go into debt to buy our cars and our homes, as well as our education. On top of that debt, many of us also have a number of credit cards. The average American household has more than $9000.00 in credit card debt, and that average continues to rise. And the only way we know how to payoff that debt, is with our paychecks. Most American's make a decent living salary, but always think they're broke because most of that salary goes towards student loans, mortgages, credit card payments, and car payments.

The rich, who are financially free, have little if any personal debt. That's because they know the difference between good debt and bad debt. They also HATE paying interest and fees, so they pay their debts off as quickly as possible. To get on the path to financial freedom, you have to get your debt under control and pay it off as quickly as possible. Here's how to get started:

Think of yourself as a business - Pretend that you are a business and your goal is to reduce expenses while maximizing profits. In reality, a business would increase income while reducing expenses. But more than likely, the majority of your income is from your employer. And you can't really increase that income unless you get a raise, or get a new job where you earn more money. So you have no choice but to reduce expenses.

Start thinking of expenses in terms of yearly cost- For example, if you spend $3.00 a day on a cup of coffee in the morning, that adds up to $1095.00 a year! In another example, if you eat fast food 4 times per week, at an average of $7.50 per meal, that adds up to $1560.00 per year! The rich realize that small purchases add up, big time. So instead of buying coffee each day, make it yourself. Pack your lunch instead of buying it. There are infinite "little" things you can do that add up big savings.

Put the money you saved into a high-interest savings account - If you don't already have a high-interest online savings account, I really recommend opening one. Right now they are paying 5% interest or more on balances. They are a great place to store your cash until you can use that money to make better investments. Put as much as you can into your savings account. Whether it's a 10 cents, $1.00, or $1,000.00, it all adds up!

Transfer credit card balances to 0% APR cards - Make sure to carefully read the fine print of the credit cards you apply for. You want to look for credit cards that have a 0% APR for at least 6 months, and make sure the card doesn't charge a balance transfer fee. Divide your debt by the number of months that you have a 0% APR, and that would be the credit card payment you should make every month. For example, if you have $3000.00 in credit card debt and transfer it to a card that has 0% APR for 12 months, you should pay $250.00 a month on that debt. The number you calculate personally may seem like a lot, but that is money that YOU owe no matter what, so the sooner you pay it off, the better.

Start Paying 10% more per month car, mortgage, and student loans - Doing so will pay them off sooner, while saving you a lot of money in interest charges.

Open a low-commission brokerage account. There are a number of stock brokerages that offer low-commission brokerage accounts. Use the money that you saved in your savings account to start investing in dividend re-investment plans, or REIT stocks. The low commissions will help increase your profits.

Start Investing - Learn everything you can about investing, and then get to it. Start buying income stocks. Start investing in real estate. Start a business. There is an infinite number of ways you can invest your money.

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