Make a List of Your Debts
In order to become debt free, you must first face that you are in debt. You need to make a list of all of your debts such as credit cards, car loans, and personal loans. By doing this, you will see exactly who and what you owe. You should also list your debts in order from lowest to highest.
Create a Budget
Once you have a list of all of your debts, it is time to create your budget. In your budget, you first need to list your total income from all sources and then list all of your monthly expenses along with your irregular expenses. If you prefer not to use pen and paper, several online financial software programs and apps allow you to enter your figures and create a printable budget. Your budget will show you where you money is going and whether you are overspending each month.
Cut Any Unnecessary Spending
If you are overspending or only have a little money left over each month, it is time to cut any unnecessary spending from your lifestyle. If you are eating out often, you may want to cut it back to once-a-week. If you enjoy shopping, you may want to shop at discount stores for only what you need. Other areas you can look at to cut cost are entertainment and cell phone plans.
Develop a Debt Reduction Plan
In order to get out of debt, you have to create a debt reduction plan that works for you. Many financial debt experts recommend starting out paying off your smallest debt first. You should apply any extra money you receive or save from cutting cost to that debt. Once the first debt is paid in full, you should transfer the same amount money you were paying on the first debt to the second debt to create a larger debt payment.
Automate Your Debt Reduction Payments
To prevent yourself from spending any money reserved for your debt free plan, try automating your payments. Most companies allow you to set up an online payment schedule to draft your payment from your checking or saving account. You can set up recurring payments on a weekly, bi-weekly, or monthly basis.
Create a Support System
In order to keep motivation, you need to create a support system. If you have family members or friends in debt, you should work together with them to stay on task. You should read financial books and online blogs for tips on becoming debt-free. If you find yourself short of money due to an unexpected expense, consider an online cash advance from CashNetUSA.
By using these six steps, you will be on your way to achieve a debt-free lifestyle.
source: everythingfinanceblog.com
