Hard to eliminate debt? Use these 4 steps

According to a survey done by creditcard.com more than 2 out of 3 U.S. adults (68 percent) don’t know when, or if, they will ever be debt-free.

It can take just a few months to create tens of thousands of dollars in debt, but sometimes decades to pay it off.

How can you get out of debt will depend on YOUR situation.

Until you fully commit to getting out and staying out of debt, you will never “get out of debt”

This is because, in my opinion, debt is a mindset.

Choosing to get gratification now, and then pay for it later is a frame of mind.

Spending on credit justifies this.

Go on vacation and work later to pay it off rather than delay gratification and choosing to work on yourself, your business or your goals is a broken( in my opinion) frame of mind and just a money problem.

Everyone who pays off their debt does it a different way and very often combine strategies to knock out bad debt.

It will work with ANY  types of debts which you have.

There are generally no rules in which you can choose.

Choose which one suits you best and more importantly which makes you feel better. 

Everyone who pays off their debt does it a different way and very often combine strategies to knock out bad debt.

I will encourage you to find one or more strategies which will work for you.

There is no one size fits all strategies out there.

Try all strategies till you find one that suits you.

Combine strategies if you have to.

In this guide you will learn about 4 steps that will help you get out of debt:

1.Managing your money

2.Saving for an emergency fund

3 Attacking your debts

4 Deal with your creditor

STEP 1

MONEY MANAGEMENT

If you don’t already have one, create a monthly budget to better manage your money.

It can possibly help you figure out how you cut out some expenses and use that money for your debt.

Look for ways to put more money towards your debt.

The more you put toward your debt, the faster you can pay your debt off for good.

You may also be able to come up with money for debt by selling things from your home or generating income from a hobby.

Use the budget template on the next page to help you start.

INCOME
HOUSING
Mortgage/Rent
Real estate taxes
Repairs/maintenance
Others
TOTAL
FOOD
Groceries
Restaurants
TOTAL
UTIITIES
Electricity
Gas
Water
Trash
Phone/Mobile
Internet/Cable
Total
TRANSPORTATION
Gas
Repairs/Maintenance
License and Taxes
Car replacement
Others
TOTAL

 

STEP 2

SAVE FOR AN EMERGENCY FUND

An emergency fund may sound counterintuitive if you’re trying to get out of debt since you could be using that money to pay off your debt instead of sticking it in a savings account.

But, an emergency fund can actually keep you from creating more debt by providing you with a safety net you can use instead of a credit card when an emergency comes up.

The ideal emergency fund is six to twelve months of living expenses, but focus on building up at least $1,000 in the short-term.

Use the chart on the next page to save $1000 next year.

There are 52 numbers on the board, one for each week of the year.

Pick one number each week which will be the amount you must save.

After each week is done, cross off the number you chose to keep track of your progress!

$1000 is not enough for you?

Add a 0 to the end of each number here and the total will become $10,000.SAVE $1000 in 52 weeks

$0 $4 $40 $12 $20 $24
$18 $33 $10 $19 $12 $5
$26 $2 $14 $16 $25 $28
$10 $54 $41 $8 $17 $4
$35 $31 $15 $9 $30 $11
$56 $5 $22 $30 $46 $19
$6 $28 $12 $23 $1 $20
$16 $24 $18 $7 $3 $13
$11 $38 $10 $19

 

STEP 3

ATTACKING YOUR DEBTS

Have a good understanding how much you have to pay off including all interests and other fees.

Once you understand it compare it to your income and plan it how much you can realistically pay off every months.

Some people increase all their minimum payments by just a little bit, but that way your payments only drop by a small amount each month.

You can make more noticeable progress by making a big payment to just one of your accounts each month until that debt is completely repaid.

In the meantime, make the minimum on all your other accounts.

Then do the same for another debt, and another until they’re all paid off.

Here is an example 

On the next page you will a blank copy

Debt Interest
Mortgage
Car Payment
Credit Card 
Student Loan
Other

 

Debt Interest

DEBT PAYMENT SCHEDULE

Name of debt:
Opening Balance 
DATE PAYMENTS INTEREST APPLIED BALANCE
TOTALS

 

 

STEP 4

Deal with your creditor

Ask your creditor for a lower interest rate

Higher interest rates keep you in debt longer because so much of your payment goes toward the monthly interest charge and not toward your actual balance.

Ask your credit card issuers to lower your interest rate.

Often, customers with good payment history can negotiate lower rates.

If you use a balance transfer to get a lower rate, try to pay off the balance before the promotional rate expires.

After that, your balance will be subject to the higher interest rate.

Settle with your creditors

Debt settlement may be the solution if your accounts are past due or you owe more money than you could repay over a few years.

When you settle your debts, you ask the creditor to accept a one-time, lump-sum payment to satisfy the debt.

Creditors who agree to a settlement offer also agree to cancel the rest of the debt, but they typically only accept these offers on accounts that are in default or at risk of defaulting.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s