Figure out how much debt you really have
First, you need to do what you should do whenever you face any serious problem: determine the nature of the problem and how bad it really is. In other words, you need to take careful account of your debt situation. When in debt, especially if you have multiple sources of debt, it can be tempting to avoid facing the truth about how much you really owe altogether. So, sit down with a piece of paper or a computer spreadsheet and simply add up all of your debt. The number you come up with is what you will target to become “zero” in the very near future. Imagine the relief you will feel when that happens!
Put your debt into categories
As you add it up, put each type of debt into its own category. The reason for this is that different types of debt should be treated differently. Examples of relevant categories include credit card debt, department store card debt, mortgage, second mortgage, auto loans, and equity lines of credit. Also, if you have multiple credit cards, for example, be sure to list each one separately.
Arrange in order of which to pay off first, by interest rate
Now, next to each debt instrument you have, write down the amount you owe and the interest rate for each one. Most likely, your credit cards will carry the highest interest rates, for example. Now, re-copy your list in the order of highest to lowest interest rate.
Pay off one at a time
Put together a plan to pay off each of your cards, one at a time. Each month, start by making the minimum payment on each of your cards, except for the highest-interest card. For that one, pay it down as much as possible each month. As you successfully pay down each card, you will get a feeling of accomplishment that will encourage you to keep fighting your debt monster until it is completely dead. By paying off the highest interest cards first, you will be freeing up more money each month to pay down your remaining debt faster.
Work on your credit score
One of the smartest ways to get rid of debt that many people overlook is to take the steps necessary to improve your credit score. You could potentially save a lot of money per year in interest payments simply by improving your credit score. The reason is, a better score will mean you will be eligible for lower interest rates, and it is the high-interest rates associated with debt that keeps people in debt longer.