Creating a Get Out of Debt Plan
Sometimes feeling like you are drowning in debt will make you feel like you are at the bottom of the totem pole in society. Sure, no one else may know about your issues, but it certainly wreaks havoc with your personal self-esteem or even the relationship with your spouse. No matter how far into debt you are, there is a way to find the light at the end of the tunnel. You can find a way through the hardships and come out ahead with a solid debt management plan. If you need assistance enacting a strategy for reducing your financial liability, there are many debt services and management resources at your disposal.
“Welcome me to Earth without debt, please”. Look at these eyes how funny by Nina Matthews Photography, on Flickr. This work is licensed under a Creative Commons Attribution 3.0 Unported License.
Goals
Set yourself some goals, not time constraints, but things you want to accomplish in your venture. Maybe you want to increase your credit score enough to buy a home. Maybe you need to establish some credit or positive credit so you just have some to speak of. Whatever your personal goals are, write them down and post them where you can see them each day to keep you motivated.
Cut Backs
If you are having a hard time making your bills, or paying them off, then you must be pretty much living paycheck to paycheck, right? You really should evaluate the areas that you could cut back and save some money. Live frugally for the first 30 days and then when you start getting the feel for things, add a few luxuries back in here and there. You may find that living with a little less than before is not as hard as you think it will be. Sit down and think about how much you are saving by doing this and apply this money to your savings account.
No Savings Account?
Having no savings account, or not using the one you might have, is not good. A savings account will allow you to set money aside and have it be “out of sight, out of mind”. If it is not accessible, you are less likely to spend it. Do an automatic transfer out of each paycheck to get the ball rolling. You may need this for an emergency one day, and the better you get at being able to sock it away, the better off you will be, the more ahead it will put you. It will aid you in paying off your debts. So get one, if you don’t already have one. Use it if you do.
Making Lists
Make a list of all of your debts owed, the company, the balance, and the payment. Then, in a ledger, list them from the smallest balance to the largest balance. Say you have a collection for $125. You will take that bill and pay it off, paying the minimums on everything else. Now that bill is done. Don’t go out thinking you have that $125 to play with now. Take that money and apply it plus your minimum payment to the next bill on your list. Pay that until it is paid off and then apply the $125 plus the last bill’s minimum and put it toward the next debt owed. Is this making sense? Essentially, you are paying off your bills but you are not freeing up your cash yet. Live just the way you have been until you are debt free. Then have fun.
Credit Cards
Credit cards are pretty important to build your credit. But if you are not the type who can’t charge what you can pay off in a month, cut it up, pay off the bill, but do not close your account. Even if you are not using it, it will still help your credit. But while you are trimming back your spending, don’t continue to use your card to spend with instead of your cash. It is still another piece of debt that has to be paid. They say that charging 1/3 of the limit and paying it off will boost your credit score. Maxing it out will hinder you. Do not fall into the credit card trap.
There is little else that feels better than watching your debt melt away. Find some discipline and get down to it. Soon that house will be yours, the car you have had your eye on will sit in your driveway, or maybe welcoming that new baby is your dream. Whatever it is, go get it.
