Tip #2

**Get Out of Debt.**

It's time to stop borrowing, pay off debt and regain control of where your money goes. Without car, student loan, credit card and installment loan payments that likely total $800-$2,000 per month, it would be easy to save for purchases and a secure retirement.

Start now. It won't happen overnight, but you can be debt-free and financially secure - regardless of your current income and debt levels.

If you have adequate equity in your home, you may want to consider refinancing your mortgage and using the equity to eliminate the other debt. The interest rate is likely much lower, and mortgage interest is tax deductible. If this is not a viable option for you, the following debt elimination strategy is effective. First, save $500-1,000 in an emergency fund so you have a small safety-net during the debt-elimination process. Second, tackle debt using the "snowball" approach, as follows:

List all debts in ascending order, from smallest balance to largest. (You may also order them by highest to lowest interest rate, if you prefer.)

Commit to pay the minimum payment due on every debt.

Determine how much extra can be applied towards the smallest debt. (The more you can commit, the faster you will be out of debt.)

Pay the minimum payment on the smallest debt, plus the extra amount, until it is paid off.

Once a smallest debt is paid in full, add the amount you were paying on the first debt to the minimum of the second smallest debt, plus any extra you can afford.

Repeat until all debts are paid in full.

By the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow.