The First Step to Getting Out of Debt

Have you been thinking about getting out of debt? I mean, you have entertained the idea before and paid a little bit toward your credit card once in a while, but you didn’t really take a dive at your debt seriously. If you were truly serious about getting out of debt, you would have changed your lifestyle and would be much richer today.

I strongly encourage you to take the first step in getting out of debt. I took this step over 4 years ago and have been debt free (outside of my mortgage) since February, 2011. Having money at the end of the month and being able to pay the bills without worry has been amazing. Can you imagine an ever-increasing bank account hardly trying? One morning you’ll wake up and just happen to notice that you have over $2,000 in your checking account. A few months later this amount will have accidentally grown to $5,000, and then $10,000. You then start to wonder what you should even do with it! Let me tell you though, these are great problems to have.

Take the First Step: Sell Your Possessions 

At the point when you really become serious about getting out of debt, you want to see your debt total go down, and fast. Typically, this can’t be done with your normal income because you have stretched yourself too thin (in terms of cash flow) as it is, so in order to get your debt payments rolling you’ll need to sell some stuff – obviously, the more the better.

So what kind of stuff should you get rid of? Truthfully, I would just start out selling anything that has a real value and that others would want. If you have outdoor toys like quads, dirt bikes, or wave runners that you hardly use anymore, start with those. They are in the price category that people can easily afford without getting help from the bank. At the same time though, I would put the big stuff on the market. If you have an extra car or a boat that you can really do without (you have to be honest with yourself here), then put them on the market too.

Listing your items through Craigslist is typically the best way to get rid of them. Your customers are local and can quickly come with cash to make the purchase. Within one day of listing your item you could have cash in your hand and make that big deposit into the bank.

From this point you must move on to step two (yes, I’m going to give away step 2, so listen closely). While it will be very tempting to use that money you just received to buy something else, please DO NOT! This money is first for a small emergency fund of $1,000, and then the rest of it is for putting toward your smallest debts (likely a store credit card or a gas card). Then, once you get a small debt taken care of, you can use that money you had been paying each month to that small debt and put it toward the next largest debt. Then, once that larger debt is paid for, you can take that payment and put it toward the next largest debt. This is called the debt snowball. Once it gets rolling, you can really start to pay off your debts in a hurry!

source: lifeandmyfinances.com

8 Easy Steps We Used to Pay Down $60,000 in Debt - Fast

There are plenty of ways to wind up with debt. You can acquire it as the price of a good education. You can pile it on when bad stuff happens to your house. Or you can simply spend too much money at the mall. With almost $60,000 in consumer debt, I was guilty of all of these -- and more.

Worse than just having debt, I was in debt denial. I happily made my credit card and auto loan payments every month without thinking twice about them. In my mind, I was doing the right thing. I had no idea what kind of impact my debt was having over my financial life.

Then, in the fall of 2011 my wife and I found out that we were expecting, and realized immediately that our spending habits needed to change. We didn't want our children to be burdened by our financial mistakes. Together, we made a plan we hoped would eliminate our debt before the birth of our new baby.

We didn't quite make that deadline, but 12 months later, we were completely debt free. Here's the basis behind our strategy:

Step 1: List All Your Debts, Their Balances and Interest Rates

Go to the website of every financial institution to which you owe money. Copy down all the balances and their respective interest rates, exactly as they appear. It's also important to know what your minimum payments are for every account.

Step 2: Set Periodic Goals
Short-term goals allow us to break really hard things into manageable chunks that we can feel good about after we complete them.

When you set a goal to pay off your all debt, you first need to assess how much money you can contribute to debt repayment every month. Divide your total debt by your planned monthly repayment amount. This will give you roughly the number of months it will take to become debt free. This isn't accounting for interest, of course, so understand it'll likely take you longer than that to repay your debt, but it's a fair gauge of how much longer you have to bear this burden.

Step 3: Start Paying Off Your Balances from Highest APR to Lowest

Each month, make the minimum payment on every account, then dedicate all the rest of your debt repayment budget to the one that you're trying to eliminate first -- the one with the highest APR. Over time, this allows you to waste as little as possible on interest.

When you pay off one debt, that frees up money that you can now use to tackle the next debt down the list. This concept is known as " the snowball plan."

Step 4: Trade In Big Ticket Items

Do you still owe big money on your vehicle? You can significantly reduce your total debt by trading in your car for something cheaper. If you can get $18,000 for a trade-in, and find a $10,000 car on the lot, you just came into $8,000 to help you pay off debt.

You can apply the same idea to boats, yachts, jet-skis, snowmobiles, among other items. Now isn't the time to have pricey toys. You can have toys when you're debt-free.

Step 5: Sell Almost Everything

Now that all of your big ticket items have been either sold or traded in for less expensive versions, you can start becoming a professional Craigslister.

Carry around a notebook and write down every item that you use over the course of a given week. You'd be surprised with how little of your stuff you actually use. Why not try to turn some of your less-used items into cash?

Step 6: Work, Work, Work

This one is going to blow your mind: To pay off debt faster, you can work more. Overtime, second jobs, babysitting, etc. More money, more debt repayment.


Step 7: Reward Yourself for the Small Wins

Achieving a goal, no matter how small, should be celebrated. Naturally, this doesn't mean that you should go out and spend hundreds of a dollars at the mall for paying off $100 of your debt. Instead, splurge small -- perhaps on one of those fancy coffee drinks you've (wisely) been denying yourself.

Or, as a free alternative, you can guilt people into congratulating you by posting your achievements on Facebook.

Step 8: Use Windfall Money Wisely

My definition of windfall money is "any money that you receive that didn't directly come from your employment." Tax refunds, bonuses, inheritances, birthday money, wedding gifts, whatever. If you are in debt, windfall money isn't fair game for fun. You should apply it directly to your debt. You couldn't ask for a better gift than being closer to debt free, so don't blow it.

Congratulations, You're Debt Free

Now that you've made it, teach your friends and family how they can accomplish the same thing. You'll be living proof that it's actually possible.

source: dailyfinance.com

6 Steps to Get Debt Free

Having debt has become a normal way of life for many people. However, you do not have to stay in debt as long as you have the discipline, patience, and drive to set yourself free. Here are six steps to start you on the right path to becoming debt free.

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