Start the New Year Off By Eliminating Debt

The New Year is a time for reflection as well as a time for turning the page and new beginnings. Many people take the opportunity to make New Year's resolutions. Perhaps your resolution has to do with better managing your finances, and eliminating some or all of your credit card debt in 2012.

Getting rid of debt and taking charge of your financial life may seem challenging, but it is also very possible. Below are some suggestions for getting your finances back on track:

1) Make a list of all your debts: Although it may be hard to face the total amount you owe, it is necessary to allow you to plan appropriately.

2) Don't be too hard on yourself: Once you realize how much debt you are carrying resist the temptation to beat up on yourself about how you got there. You want to learn from your mistakes, but focus on moving forward.

3) Develop a repayment plan: Although many argue that you should work to pay off the debt with the highest interest rate first, financial expert Michelle Singletary advocates aggressively attacking the debt with the smallest balance first. Her "debt dash" method aims to give you a sense of accomplishment and motivates you to continue.

4) Consider your options: Think about ways you can earn or save extra money by taking on a second job or reducing some of your monthly expenses. These funds should then be allocated towards your debt repayment plan.

Sometimes you may feel so buried in debt that you are unable to develop a workable repayment plan. In cases such as this you may want to consider personal bankruptcy. Chapter 7 bankruptcy gives individuals a fresh start allowing them to eliminate unsecured debts. A Chapter 13 bankruptcy allows individuals with a steady income the opportunity to discharge certain debts and restructure others into a workable repayment plan.

Source: Washington Post, In 2012, finally pay off credit cards with the 'Debt Dash' method, Michelle Singletary, 3 January 2012