Eliminate your Debt

Here are five steps to help you eliminate your debt and set yourself up to avoid problems in the future.
The world has advanced so much that nothing has become impossible. Technology has widened to a greater extent and simultaneously the way of living has also risen. But what in this high standard world is the amount of debt that has be created.
Getting out of this debt is obviously what one would desire but how? No one knows.
Here are five steps to help you eliminate your debt and set yourself up to avoid problems in the future.

1. Know what you owe: Figure out exactly whom you owe and for how much. Make a list of all your debts, minimum monthly payments, due dates, and interest rates. Rank your debts in order from those with the highest interest rates to those with the lowest. Determine which debt (if any) is worth keeping.
2. Set up a budget and pay up your debt:If you don't already have a budget, now is as good a time as any to start one. A budget will help you determine how much debt you can pay off, as well as where you can trim expenses to end up with more money to pay up debt.
3. Lower your borrowing costs: Review opportunities to transfer your loan to another provider who offers a more competitive rate. In the context of home loans, this is colloquially referred to as a 'balance transfer'. Based on the offers on hand, you should even consider negotiating with your current loan provider.
4. Set up an emergency fund: To keep yourself from falling back into a debt trap, you need to set yourself up for a secure financial future. An emergency fund is your financial cushion to help protect you from unexpected expenses (say, expenses on account of a medical contingency) or changes in income (such as losing a job). You should keep this fund in a safe and liquid avenue like a savings bank account.
5. Live within your means:This is a hard but necessary truth. Stick to cash whenever possible for future purchases. If you don't want to carry cash, use a debit card instead of a credit card. Even when you use a credit card, ensure that you pay it off every month and pay it off on time!

Source: http://www.rediff.com/getahead/slide-show/slide-show-1-money-five-steps-to-reduce-your-debt/20120718.htm