How to Get Out of Debt in 36 Months

May 29, 2012

Getting out of debt, like getting into it, takes time. How you get out of debt is based on a few points: if you have a time constraint of 36 months or a goal date for when you want to be debt-free; your income and how much disposable income you have; and, of course, how much debt you have.

Your first steps to getting out of debt should be to create a budget and curb your spending. If you don’t do these two, you’ll only accumulate new debts while paying off old ones.

Make a list of all the money you owe and a list of your typical monthly expenses. If you’re having trouble making an accurate and complete list, save your receipts for a few weeks so you can document your spending.

Take note of how much money you use for frivolities like entertainment, clothing and dining out as opposed to necessities like medical costs and home repairs. Then make a budget, vowing to cut down on needless spending and instead put the cash toward paying down debts.

Don’t forget to leave room in your budget for rent or mortgage payments, food, transportation and minimum monthly debt payments. If you are able, always pay more than the minimum on your debts. This will save you time and money in interest.

If you’re like most Americans and have more debt than your income can handle, budgeting is rarely enough to get you out of debt, especially when you’re working with a time constraint. Consider strategies like debt consolidation and settlement to help you reduce your debt load.

Debt consolidation is one of the most popular tools for dealing with too much debt. It combines many small loans into one larger loan to simplify your finances and payments. Additionally, it can help you negotiate lower interest rates so you save money over the lifetime of the loan.

Another money-saving tool is debt settlement, also known as debt negotiation or debt resolution, which can help you become debt-free in as little as 24 months. Most people who choose to settle their debts seek the help of debt settlement firms, which will work on your behalf.

Counselors at the settlement firm of your choice will contact and negotiate with your creditors with the end goal of having your debts partially forgiven. If it is successful, you’ll be responsible for paying only a portion of your owed debt, while all the rest will be erased.

  • femmefrugality May 30, 2012 at 5:22 am

    My friend tried to do debt consolidation. Then her credit card company sued her. And the consolidation firm didn’t stand behind her. They said there was no law against what they were trying to help her do, but that they weren’t willing to go to bat against those huge companies. Not sure which side was selling her the worse product in her situation.

    • Marissa May 31, 2012 at 2:53 am

      Holy! I had never heard of that.