If you are drowning in debt and would like to get back to your life and become free again, here’s a method you can use to get yourself out of debt. It’s not a quick solution, but when used effectively, it can get your debt repaid without borrowing additional money. It’s known as the “debt snowball” method popularized by Dave Ramsey.

Basically, what you do is align all your debts and pay back the smallest balance first. When you pay that one off you begin the next lowest balance. The method works because of psychology. Once you’ve payed off one debt, you’ll feel that you have accomplished something and it’ll have a snowball effect.Here are the steps:

1. List all of your debts with the smallest balance first.2. Still pay the minimum payment on the other debts.3. Now you find extra money by decreasing some place else and begin paying extra (above the minimum payment) toward the tiniest balance or lowest apr debt.4. Once you’ve cleared the 1st debt, you use the minimum payment from that debt towards the next lowest balance on your list.5. One by one, you use the minimum payments from the old debt toward the new debt and ultimately settle all your debt.

For this to work, you will need some discipline. It’s tempting to wish to spend the excess money on another thing instead of eliminating your debt. You have to tell yourself that you have gone without that extra cash before so you can do it again. Don’t try to put too much extra toward the first debt. You don’t want to strain your funds too much or else you may stop this course. Finding yourself in debt is stressful. Getting out of debt is tough. Mentally, you must focus and keep in mind what a beautiful stress-free feeling you’ll have when you’re finally debt free. Try and set an ambition, like a vacation you have always wanted to take. This can keep you motivated and focused through the entire program so you don’t quit. What you really should do is begin to use the income that used to go towards debt and initiate investing it wisely. Going back to your old habits is only going to bring you back to the same situation.

Due to the recession in economy many people are facing huge debts and are unable to pay them off due to reduced salaries or unemployment. In usual circumstances the only option for these debtors would be to file for bankruptcy. But nowadays relief is available in the form of debt settlements. Most common consumers do not have any formal financial training. Hence it is better to obtain professional guidance and advice. There are many debt settlement companies offering their financial expertise in the market

If a debtor cannot afford to pay the fees charged by settlement companies, they can seek free counseling from non profit debt relief networks. The information about debt settlement companies and debt relief networks is easily available on the internet. The creditors have also abandoned aggressive collection tactics and are trying their best to help the debtors to become debt free. They are pro-actively offering debt settlement options after assessing a debtor’s actual paying capacity. In this way they are able to recover at least part of their money and at the same time the debtor is saved from bankruptcy.

The creditors usually agree to offer letters of full and final settlement for an amount much lesser than the original payable amount. They re-age the accounts to save them from delinquency. The creditors also waive off the interest on the negotiated amount payable. The debtors have the option to pay this amount as a lump sum or in installments. The debtors also have the choice of consolidating several high interest loans with a single low interest one. The rate of interest on the unsecured loans can be further reduced by converting them into secured loans. Hence due to debt settlement programs, it has becom possible for debtors to get out of debt even in a bad economy.

It would be wise to not go directly to a debt settlement company but rather first visit a debt relief network. The top debt relief networks only allow debt settlement companies into their accredited organizations that prove a track record of successfully negotiating debts and have also been certified. They are free to use and offer helpful debt relief advice.

Free Debt Advice

Retirement planning expert Russell Jalbert lists ways people might use to reduce their indebtedness or get out of debt altogether.

Experts say that if more than 15% of your after tax income, not including your mortgage, goes toward debt reduction, you are overspending. Using your savings, you should allocate a set amount each month for debt repayment. You should avoid using your credit cards and quit spending period until the debt goes away.

Here are some additional ideas for reducing expenses:

* Analyze all spending. Use checks so that money spent can be recorded. Be sure to record any bills paid via the Internet in your check register. Save all your receipts and confirmation numbers.

* Analyze all energy costs. Most utility companies will do an energy audit for about $20. Internet web sites for most utility companies will offer an option to view and print usage and charges for recent months, and some up to the past 12 months, at no cost. Read the consumer information that is usually included with the monthly statement for more energy savings/cost-cutting ideas.

* Shop for prices on your home and auto insurance. Ask the agent for ways to reduce costs, such as raising the deductible amounts, installing deadbolts, etc.

* Destroy or put away all credit cards.

* Avoid impulse buying.

* Clip coupons for items you normally use.

* Grocery shop at warehouse stores and shop less often.

* Compare prices from sales flyers. Most stores will honor the lower advertised price for the same item from a different store if you bring in the flyer. If you can find and show a lower advertised price from another store, some stores offer cash back.

* Shop for clearance or after season sales items.

* Fill your gasoline tank mid-week.

* Read and mail in rebate offers.

* Save stamps by paying your bills online. There’s usually no charge to pay online, but remember to record confirmation numbers, amount, and date paid or scheduled to be paid.

* Compare banks for checking/savings account requirements and fees.

* Compare Internet server companies. Some servers are no charge. If you have a dial-up connection, make sure they offer local area dial-up numbers.

* Have a yard sale or donate items to charity. Itemize and save receipts for a great tax benefit. Sometimes in preparing these items for sale, one can actually see an aftereffect of overspending (too much stuff) that might help deter further overspending.