How to get out of debt

WHAT you need to know before you can get out of debt:

• Assess your financial situation;
• Understand the basics of how credit works;
• Get help when you need it;
• Budget and cut costs;
• Avoid credit and debt mistakes.

ASSESS YOUR SITUATION

Calculate key ratios that indicate your financial health .

One of the most basic is your debt-to-income ratio.

Calculate it very carefully in order to find out if you have too much debt.

Another key indicator is the net worth statement, a snapshot of your current financial situation.

It will provide important clues about where you should concentrate your efforts.

Include a worksheet and instructions on how to calculate your net worth.

UNDERSTAND HOW CREDIT WORKS

It's important to know what's on your credit report, how to fix errors and how to improve your credit history.

Don't let yourself be lulled into a false sense of security that you don't have a debt problem just because you pay your bills on time and can manage your monthly minimum credit card payments.

GET HELP TO GET OUT OF DEBT

Use the services of debt councillors provided by the National Credit Regulator.

You can easily save thousands of rands a year with very little effort by following cost-cutting measures.

To get out from under the burden of debt, face the uncomfortable truth: it may take you 30 years to pay off that credit card balance, but there IS a way out.

BUDGETING GUIDE

You need to have a successful budget , including how to get and also to stay motivated.

So start budgeting immediately and make sure that you stick to it.

COMMON CREDIT AND DEBT MISTAKES

Don't fall for credit card offers that are "too good to pass up". Find out what the credit card companies don't want you to know.

Payday loans may seem like an easy solution to a temporary cash shortage, but they can be the beginning of a vicious cycle that is difficult if not impossible to escape.

Find out why so many young people are unable to qualify for a home loan because of their car payments and how you can avoid having to choose between new wheels or accommodation you can call your own.

Buying more car than you can afford can lead you into debt as you turn to credit to make ends meet.

Rapidly rising home prices have pushed home ownership out of reach for most people, so lenders have created a whole new generation of mortgage loans, from the risky to the downright scary.

Are you an impulse spender? If there are psychological factors in your spending, following a debt reduction plan is like wearing perfume to cover body odour. It treats only the symptoms, not the underlying cause.

Impulse spending can put a strain on both your finances and your relationships, so discover the real culprit behind your urge to splurge. - about.com