10 Steps to Get Out of Debt in 2011

Debt can destroy lives, families, marriages, relationships, business -- even countries. So this year my mission is to help one million people pay down a billion dollars in debt and start a new, debt-free life. Care to join me on this journey?

I've just written my twelfth book, Debt Free For Life; The Finish Rich Plan for Financial Freedom. What follows is a condensed version of what I believe are the 10 most important decisions you can make in 2011 to crush your debt and buy back your freedom.

Getting out of debt is much harder then getting in. You can help yourself by taking advantage of the free one-day download of Debt Free For Life on WalletPop, available for today only! The book is filled with powerful tips and techniques, and can be your guide to a debt-free life in 2011. Click here to download your copy.

I'll be your guide for a 10-week counseling session on WalletPop, starting today.

Ready? Let's get going!

10 Steps to Get Out of Debt in 2011

1. Decide You Want to Get Out of Debt. It sounds obvious, but the truth is that all progress begins with making a real decision. If you have more debt than you want, you need to decide that enough is enough, and that it's time to be debt-free once and for all. Are you ready to decide? Make a public pledge right now by registering at Debtfreechallenge.com and be entered to win $10,000, which would go a long way toward putting a dent in your debt this year.

2.DOLP Your Debt Away. DOLP stands for "done on last payment." Among other things, Debt Free For Life will teach you my DOLP method for getting rid of credit card debt. First you "stack your debt," then you "rack your debt," then you "hack your debt." That is, you see how much you owe and who you owe it to, then you figure out the order in which you should pay it off, and then you start making the minimum payment on every card except the one you've designated your number one priority debt. Once you've paid off that card, you focus on number two, and so on until every card is paid off. You can download my DOLP worksheet here.

3. Go Online and Go Automatic. In my opinion, one of the best online debt-reduction tools around today is Debt Wise, an offering of Equifax, the giant credit bureau. I love this tool so much, I'm endorsing it. What's great about Debt Wise is that it has taken my DOLP system and made it automatic. As a result, in literally seconds you can see how much debt you have, what order to pay it off in, and how long it will be until you are debt free. You can get a free trial of Debt Wise by clicking here. There are similar free tools available from other companies like Intuit's Mint site, which also has a lot to recommend it. But only Debt Wise automatically pulls your debt data from your credit file. With the others, you have to access all your various accounts manually.

4.Get a Better Rate. Some of you are paying as much as 29.99% in credit card interest -- even though you've never had a single late payment. Don't accept this. Go to websites like creditcards.com, lowcards.com, or bankrate.com to find out the rates your credit card company is offering new customers. Chances are you are paying up to 10% more than they are. Debt Free For Life contains a chapter about how you can use this information to renegotiate your card rates down or, failing that, get yourself a new card with a better rate.

5.Do the "Debt Math." If you make only minimum payments, it will take you more than 23 years to pay off a credit card balance of just $5,000. My suggestion is that you make at least DOUBLE the minimum payment on your number one priority debt. In this way, your debt could be all paid off within three to five years -- maybe sooner. Read your statements today -- the new Credit Card Act by law requires lenders to show the "debt math" of minimum payments.

6.Raise Your Credit Score. A low credit score will cause lenders to charge you a high interest rate, which makes getting out of debt even harder. For that reason, raising your credit score in 2011 is an important goal. Other than paying down debt, and paying your bills on time (every time), length of credit history, types of credit used and new credit -- the fastest way to raise your credit score is to make sure there aren't any mistakes on your credit record. By law, you are entitled to one free copy of your credit report every year from each of the "Big Three" credit bureaus (Equifax, Experian and TransUnion). Make sure to check your report for errors, and if you find any, go to the credit bureau's website and use their online tools to request a correction.

7.Accelerate Your Mortgage Payments. When I was a financial adviser, I noticed that all my clients who retired in their 50s had one thing in common: no mortgage. And they all did it the same way: They paid a little extra every month. If they couldn't afford the payments on a 15-year mortgage, they paid extra on their 30-year loan (either by adding 10% to their regular payment, making one extra payment a year, or switching to a "bi-weekly" payment plan). Make 2011 the year you adopt this extra-pay plan; it will get rid of your mortgage by as much as six years early, and save you thousands in interest.

8. Avoid debt consolidation loans or debt settlement offers. Every week I receive letters from people who paid $500 to $1,000 up front to "professional" debt counselors who promised to get rid of their debts. In most cases, they got little or nothing for their trouble. If you need help, stay away from the "for profit" debt-settlement agencies and instead look for "non-profit" credit counseling services. You can get referrals through the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Check out WalletPop's recent series on the many dangers of debt consolidation companies as well.

9.If You Don't Have the Cash, Don't Buy It. That's what my grandmother Rose used to say, and it's advice that still holds up. If you want to get out of debt, you have to change how you spend money and the best place to start is to not borrow money to buy stuff you don't absolutely have to have.

10. Make it a Family Affair. Go team! Make getting out of debt a family, friend or team project. One of the videos we'll be hosting in coming weeks here on WalletPop tells how a woman named Genevieve paid off more than $70,000 in debt by creating a support team to help her achieve her goal. Getting out of debt can be tough. Having friends and family cheer you on makes it easier and more fun. Go build a team for 2011 to get out of debt!
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