Even after creating a sound budget and cutting unnecessary expenses you may still find yourself with lingering debt to get rid of. Financial leverage, or using credit and taking on debt by itself are not necessarily a bad thing but there are two kinds of debt: good debt and bad debt.

When you borrow money to purchase a home you are taking on a lot of debt, but lower interest rates and the purchase of an asset that can increase in value is an acceptable form of debt. On the other hand when you go to the mall and have yourself a shopping spree using your credit card with a 24% annual interest rate without paying it off in full right away is bad debt.

Getting out of debt doesn’t have to be difficult but it is essential in reaching a state of financial independence. The first thing to do when you find yourself in debt is to pay more than the minimum monthly payment. If you only pay the minimum each month it will often take decades to repay the debt and cost a small fortune in interest. Once you are paying more than the minimum you should look to lower your interest rate. High interest rates will make getting out from under the debt even more difficult.