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Get Out Debt - Get Out, Debt! - Getting Out of Level 1 Debt, Getting Out of Level 2 Debt

A Quick and Easy Guide for Restoring Financial Peace of Mind

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Getting out of debt is a very worthy goal to have, one that will restore peace of mind like nothing else. It’s not easy, but nothing worth doing is. We have prepared a simple guide of pointers and tips for different levels of debt, which we have named levels 1, 2, and 3. Read more about the different levels to decide where you are, and consider the tips that you can apply to your own situation. But please note that we are not offering this as legal financial advice – that is reserved for your personal financial counselor or lawyer who knows the details of your specific situation and the laws of your state.

Getting Out of Level 1 Debt

What we term “Level 1 Debt” is simply having debt of any kind. Your job situation hasn’t changed, you have been making your loan payments without a problem, but you just want to step it up to get rid of your persistent credit card, auto loan, or other debt once and for all. This is the best time to catch and eliminate debt, before it becomes a crushing burden.

To eliminate Level 1 Debt, you have to set a budget, first and foremost. Figure out exactly where your money goes every month by printing out financial statements from your bank, credit card companies, etc. Get as complete a picture as you can, so you can see where every penny went. Just looking at this information can give you all kinds of ideas as to where you need to cut back. Many times people are surprised at the places where so much of their money goes.

After you identify areas where you can cut back, set a firm budget that includes those limits. Factor in all necessary fixed expenses (rent/house payment, cell phone bill, etc.) as well as a reasonable budget for variable expenses like food and entertainment. It’s also good to establish a set percentage to funnel away into a savings account for emergencies or big purchases. Now do the math to figure out how much money you expect to have left over after paying for your budget – this is the extra amount that you can throw at your debt. Be merciless on your debt, paying as much extra as possible every month until it’s gone for good. If you have multiple debts, get out of the high-interest rate ones first. Before you know it, you’ll have mastered your debt and restored peace to your kingdom.

Getting Out of Level 2 Debt

Before doing steps for Level 2 Debt, try the instructions from Level 1 to see if you can solve your problem that way. Be ruthless with your budget to see if you could pay off your debt amounts while living the “bare bones” lifestyle for a while. Obviously you have to eat, and you shouldn’t sacrifice your health for the debt. But you can be ruthless when it comes to entertainment, clothing, or other expenses that aren’t absolutely necessary. If you just can’t devote any extra money to paying off your debt without taking food out of your mouth, then it’s time for more drastic action because you’re officially on Level 2.

You can lessen or eliminate auto loan expenses by selling off your expensive car in favor of something more affordable. If you have already paid down a good amount on the car, you can use the proceeds to fund your inexpensive car purchase and also to get rid of other debts or establish a savings nest egg. This alone can be enough to balance your expenses out again and boot you back up to Level 1. And if you have a boat, RV, or other big financed purchase just sitting around your property, then get rid of it! Eliminate everything that’s not necessary to feed, shelter, and clothe your family.

You should also look at extra income opportunities, whether they be from a second job, a big yard sale (or eBay fest), or a viable side-business. Doing this can help pad your income and take the edge off the debt until it is gone entirely, and you can rest easy again.

Getting Out of Level 3 Debt

The worst of them all is Level 3 Debt, which is where you feel completely incapable of paying off even the minimum monthly payments of your debts. Maybe your job situation has changed and you’re now making a lot less money than before. Maybe you just went crazy for a while and bit off a lot more financing than you could chew. Maybe you’re trapped in an ever-increasing home mortgage. Whatever the case, now you find yourself inundated with calls from collectors, your stuff either has been or will soon be repossessed, and you find yourself getting desperate. This is the level that demands the most drastic action.

It is not a good idea to jump right into bankruptcy, even though many people do. It’s a big decision that will affect you for years to come, so it’s important to do your homework before moving forward. Talk with bankruptcy lawyers, get familiar with your state’s laws and requirements, and know what ways such a decision will affect your future. You have other options available to you, too, including debt consolidation, debt settlements, etc. Companies like Consumer Debt Solutions have programs that can help you access these options. Just make sure you understand and accept all the plan’s details before signing on the dotted line. Getting out of debt still won’t be a cakewalk, but working with the right people on a solid plan can help a lot. A reputable consumer debt solution company may be able to help you negotiate better interest rates, lessen your unreasonable home payments, and generally support you in getting out of debt.

We sometimes forget that there’s no such thing as a “debt free loan”. All loans, by their very definition, have to be paid back someday. We keep going, thinking that day will never come, but it always does, and always too soon. After you have repaired your debt, stay away from it unless absolutely necessary in the future so you never end up in that stressful situation again.

We hope this guide has been helpful to you in your quest to eliminate debt from your life. Best of luck in all your endeavors!

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