For many families, getting out of debt is like running in a maze — it's easy to get in but not to get out. According to David S. Broder's article in The Washington Post, nearly one in seven middle-income families have monthly debt payments amounting to more than 40 percent of their income. However a debt burden of this magnitude can be erased even with a limited income; it is possible to get out of the debt maze with hard work and a few tough choices.

First, get a new lifestyle. The best way out of debt is to spend less on your present lifestyle. Brainstorm ways to cut expenses. Can't think of anything? Keep track, in writing, of your spending for a week or two and you should see quite a few areas of which you can scale back or eliminate. Create a spending plan that has no more than 70 percent of your take-home income going to daily living expenses. Then make a pact with a close friend, relative or spouse to stop using your credit cards (emergencies are the only exception). Living on 70 percent of your income will force a major change in spending patterns and perhaps even lifestyle, but it's absolutely necessary.

Next, get creative but not too creative. Hold a garage sale. Add some part-time income, but remember that a penny earned gets taxed, while a penny saved earns interest!

Use extreme caution if considering any kind of debt consolidation loan, which often creates a false sense of accomplishment. A consolidation loan does not eliminate debt. It just makes debts easier to pay off — but only if the debtors have the discipline to stick to a reduced spending plan. If not, most people who consolidate loans eventually wind up deeper in debt.

Finally, get moving. Create a spending plan that allows you to make all of your minimum debt payments and leaves a surplus for additional debt reduction. Add the surplus to the minimum payment of your smallest loan balance. Start with what you have — even $25 a month will make a difference.

Paying off the lowest credit card balance first rather than the card with the highest interest rate or balance will build the confidence you need to stick with the plan. When the smallest balance is paid off, reward yourself to help keep motivated. Then, take the amount that you were using to eliminate the first debt (minimum payment + surplus) and add that to the minimum payment you were making on the next smallest balance. Repeat this process until your debts are cleared. Everybody I know who has used this method found that once they started, they couldn't stop!

It takes desire and discipline to navigate your way out of the debt maze. But the closer you get to the exit, the lighter the debt burden becomes.

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Article copyright © 2003, Ray Linder.
All rights reserved. International copyright secured.
Used by permission.

Ray Linder is the founder and CEO of Goodstewardship.com and an internationally recognized teacher of team success and personal development. He is author of three books, including What Should I Do With My Money? — How Your Personality Affects Your Financial Behavior. Ray is an associate of Otto Kroeger Associates, the world’s leading training firm for the Myers-Briggs Type Indicator. He has over 25 years of business experience including corporate finance, investment management, fundraising and development, consulting, sales, pastoral ministry, and small business management. Ray, his wife Christine and their two daughters live in Sterling, Virginia.