If everyone knew the answer to that, no one would be having financial problems. The problem is, some of us know what the answers are and dont follow them, but some of us just dont know. Were guilty of not planning and thinking we can do more than what we really can. The sad part is that most of us are just one paycheck away from bankruptcy if we were to be laid off, we would have no cushion to protect us. With todays economy and the uncertainty of jobs, everyone should have at least two months pay in a savings account.

The original question was how to get out of debt. The first thing to do is get rid of the credit cards at least until you pay them off. Develop a plan where you pay one off, and then add what you were paying on the other to the second, and so on until you have paid off every bill you have. During this period, you also want to avoid adding any new debt or increasing any other payments in any way, including moving to an expensive house or apartment, or even adding a cell phone if you dont already have one. Pay off all the old debt before you add anything new.

Once the debt is paid, you have to develop a plan to stay out of debt. If youre a person that likes to shop, then either stay away from the credit cards, or have their credit limits reduced so they become an emergency tool. Get into the habit of not charging anymore than you can pay off when the bill cycles unless its an emergency, and that doesnt mean a new pair of shoes or jeans. Were talking about a car that doesnt run, or a sick relative out of town, or maybe an out of town wedding that wasnt planned early enough for you to save money. You must also start saving money every payday so that if something does come up, like the out of town wedding, you have the money in the savings account to cover it without using any credit cards.

Keep your spending to a minimum. You dont have to go out to dinner three or four times a week, and even if you find yourself running late and dont feel like cooking, at least go to the supermarket and buy something to put in the microwave. Its cheaper than stopping at McDonalds and better for you as well. Take your lunch instead of eating out to save money. Certainly, you can go out to lunch or dinner occasionally, but limit it to once a week for each. If you tend to be a stop on the way to work for breakfast person, break that habit, too, and start buying things at the grocery store that you can take to work and eat.

It sounds like a lot to give up, but if you want to stay out of debt, you have to make some sacrifices. You have come this far, and you dont want to get back to where you were. Follow the plan, and you will find you have more money for the things that you need.