Dear Readers: Somehow, I missed an entire week of posting. I’m sorry and I hope you haven’t all given up on me. It’s been a busy, busy, busy couple of weeks and posting has taken a hit. However, this week will be jam-packed with posts, I promise! I have a lt of ideas that have been brewing, so I hope you’ll stay tuned!

Getting out of debt can be a long, frustrating process. Knowing the first steps you should take if you’re serious about getting out of debt can make the difference between success and failure.

Step 1: Understand why you got into debt in the first place. In order to start digging yourself out of debt, you need to understand why you went into debt in the first place. You can then see the best way to remedy the situation? Was it excessive spending? Then you need to work on why you spend excessively. Maybe you overspend due to a lack of self control or as a way to boost your self-esteem. Working out those inner issues must be done before you seriously start tackling your debt so you don’t just end going back into debt shortly thereafter. Was your debt situation the result of a unexpected financial crisis, like losing your job or a large medical bill? In that case, you need to work on building up a stockpile of funds so it doesn’t happen again. Which is, in fact, the next step in debt reduction.

Step 2: Start an emergency fund. Before you start putting any of your money towards debt, start stockpiling savings instead. That way, you have something to fall back on if things go awry. You won’t have to go back into debt. Strive for $1,000 in your emergency fund at first.

Step 3: Set up a plan and get to work. There isn’t just one way to get out of debt. Start researching the different methods to find out which method works best for you and your family. Some families prefer a cash envelope system of budgeting. This just doesn’t work at all for others. See what works for you and what doesn’t. A great resource is the personal finance blogging community. There, you’ll find a wealth of information Once you’ve decided, get to work. There’s no point in wasting time, so get cracking.


Do you agree with these first steps? Do you think there are any other first steps you should tak to help you tackle debt reduction?

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8 Responses to First 3 steps you need to take to get out of debt

  1. I think it’s fine to start building your emergency fund first if you have low interest debt, but if you have anything high interest you need to pay that off before you do anything else.

    • Rebecca says:

      Yes, that’s probably true because you’re paying a lot of interest. But, I think it’s a good idea to start reducing your debt with a little nest egg in the bank so you don’t go straight back into debt the first time something unexpected comes up.

  2. Good tips. I would tend to agree with Sean that you should probably knock down high interest debt before trying to fund an E-Fund. One thing I would also add is having a goal in mind to give you something to strive for. Getting out from sa mountain of debt is motivation enough, but if you add a nice little goal to it then you can be even more motivated to get it knocked out.

  3. Yes, I think these are great tips! The most important thing is actually start paying off debt, and not spend too long strategizing about it!

    • Rebecca says:

      That’s true. I was hesitant about putting in the second step of acquiring information because you could spend so much time just gathering more and more info and never actually paying down your debt. But I do think it’s important to be well informed.

  4. Mike Arnesen says:

    Great post. That first step is the one that’s always eluded me. As to the brass tacks: does anyone know of a formula for determining which credit card to pay down first, and/or whether to pay ALL of a single one down before cutting into the next?

  5. Jon Haver says:

    Setting up a plan is in my opinion the most important step. I agree with you Rebecca when you said that there are multiple methods to get out of debt , you just need to know what method works best for you and your family. The results might be very different from a method to another..

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