Reader Russell Heimlich forwarded an excellent MSN Money piece on Escaping from Debt Hell.

It’s hard to escape the news that Americans are drowning in personal debt, but you hear less about the many people who…have been able to dig out of debt.

Ordinary people use a variety of methods to shake off their past credit mistakes. Some use credit counselors. Some take second jobs. Most live frugal lives until they’re back on their feet (and longer!). The article includes real-life anecdotes of people who have defeated debt, including the story of one woman who owed $30,000.

Maffei heard about Joanne Nagel, a consultant whose system requires an all-cash existence. It was a harsh system — exactly what Maffei wanted. She abstained from credit cards, even from ATM machines. She learned to keep records, budget each week in advance, pay herself in cash and suck it up if she ran out of money midway through.


In January 2000, after two and a half years, the whole debt was paid. Today, she still lives almost entirely on cash, planning every category each week on a spreadsheet. Faced with big purchases, she compares the cost with her budget for that category, asking herself, “that’s a week’s worth, or two weeks’ worth — is it worth it?”

The article includes several suggestions for tackling debt:

  • Immediately stop accumulating new debt. The first step is to stop acquiring more debt. (I advocate destroying your credit cards.) Total your current debt; fix this amount in your head. This is how much you need to pay off.
  • Get educated. Make smart financial choices based on sound advice. Don’t do something just because you see your friends do it or you see it done on TV. Read personal finance books. Talk to an accountant or financial planner or credit counselor. Get expert advice.
  • Find a system that works for you and focus on it intently. There are many approaches to debt reduction. Do what works for you. If you need a credit counselor to help guide you, find one. If you have the time and ability to work extra jobs, do it.
  • Abstain from credit cards and debit cards. Live an all-cash existence. This is a radical step, but radical debt requires radical measures. Learn to live without plastic.
  • Prepare a weekly budget. When you’re deep in debt, you need to plan where your money is going. Use a budget to direct your spending to the places that need it most. Prioritize debt reduction.
  • Track every penny you spend. This is excellent advice for everyone, not just those trying to recover from heavy debt loads. It’s not as difficult as it might seem. (And for me, it’s become a habit. I love to track my money.)
  • Don’t quit. Paying off debt can be a long slog. I know. I’m still working on my last bill, and it’ll be a couple of years before I’m done with it. Don’t let the long trek put you off.

If you’re in debt hell and want to escape, go to the library and borrow The Total Money Makeover by Dave Ramsey. It’s an inspirational read filled with sound advice on how to get out of debt as quickly as you are willing to make it happen.

People can, and do, get out of debt. It happens all the time. But the best time to start is now.

[MSN Money — Escape from Debt Hell]

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