Have you found that a good portion of your paycheck is going toward credit card bills and utilities? Maybe your money is going toward a car payment and cell phone bills? All of these are typical bills but the question is how is it that some individuals are able to maintain these payments and their credit without finding themselves in a lot of debt? Debt is not new to most people; here are a few tips on how to start clearing away your debt while also improving your credit.

Confront Your Debt

As obvious as this may sound, many people just tend to ignore their debt, and some even throw their bills away in hopes of their credit just fixing itself. Other people just feel completely overwhelmed and find it is easier to pretend the debt is not there at all. Assessing your debt situation may be the only way to tackle it head on. The best place to begin is to write everything down – put it all in black and white so you can visualize the money that goes out monthly. Along with writing all the bills down, also write down the dates they are due accompanied by the account numbers. It is not a bad idea to include in this list the various interest rates as well so you have all necessary information right in front of you.

Budget

Budget. This single word may make people cringe but in all actuality, a budget is a tool to help you manage your money and stay out of debt (or get out of debt if you are already there). With all of your financial debt information written down; now you can write down all of the income that comes into your household and subtract what needs to go out each month to make sure that everything is covered. Many may be surprised to see that they can easily cover the bills, but wonder why they are in debt. Along with going carefully through your newly created budget, you should be able to see the amount of money that can be saved monthly as well as how much you can add to pay off your debts soon instead of later. Try to determine if there are any additional bills that you really could live without thereby cutting your debt even more.

Discipline

Once you have started doing the legwork, it is important to maintain what you have begun. It takes time, patience and most of all, discipline. It may be difficult in the beginning to readjust all of your spending habits and begin paying all your debts down, but it does get easier with time. It is a much better feeling to know that you have a little money in savings just in case something happens than to find yourself in an emergency with no money set aside. In addition, the temptation of getting more credit cards will probably never cease but with discipline, you can turn the offer down and know that you will be better off financially.

Carry a Notebook

This may sound quite silly, but until you get comfortable with your new budget, carry a little note pad around with you. You can then write everything down that you are spending, when you are doing it and make necessary adjustments in your physical habits as well. It is hard to comprehend that your daily three-dollar coffee habit costs you close to one hundred dollars a month. That one hundred dollars would be better spent paying off some of your outstanding debt.

Call Your Service Providers

You may wonder how to deal with debt collectors, and the answer is to call them and speak with them! Setting up pre-payments or direct debits will generally reduce interest rates and may quite possibly remove the additional fees from your monthly bill. This in turn can lead to additional funds at the end of the month that can go into your newly established savings account or paying additional amounts on your other debts.

Debt Consolidation

Depending on the total amount of bills you have, a debt consolidation loan may be something to consider. It may make repaying your debt much easier because it will be one payment versus several. The best way to consolidate your debt is to shop around and do your research thoroughly. You may find that some lenders interest rates are much higher than others;but you also want to find a lender who will work with to make your repayment terms work for you.

Consistent practice of these tips can help set anyone on the road to financial freedom and a debt free lifestyle. The important thing to remember is to stick with it your debt repayment plan and you will be pleased with the ultimate reward.