The New Year is full of hope and excitement. Many are looking forward to a bright year ahead. This includes goals like having a new car, promotion at work, increase income, better relationships, better house, and probably more travels. The list goes on.
For me, I have decided that I will look for ways to increase my earning capacity for two reasons: to speed up the process of paying my debts and to celebrate my birthday in May, my first since I can remember! I want to save towards that meaningful event of my life when I turn 60. What A blessing!
I am posting this article by MMarquit entitled "Get Out Of Debt: 6 Steps You Need To Take" (Coupon Shoebox). The thing that really cool about this article is it's simple and easy to do. My wife and I start our year by revisiting our last year's budget and making changes to arrive at our 2012 budget. Part of that process is listing all of our debts as suggested in item no. 3.
I know it will be of great help to you as you do what MMarquit says. Cheers and Happy New year!
One of the most important financial lessons that you can learn is that debt is prison. Indeed, when you are paying interest on your debt, that money is going straight into someone else’s bank account — and you receive nothing in return. Plus, paying that interest makes it harder to pay down the principal and to reduce your debt. Even though it might be difficult to get out of debt, it is doable. Here are the steps you can take to get out of debt.
1. Really Decide That You’re Getting Out Of Debt
The first thing you have to do is decide that you are really committed to getting out of debt. You need to truly want to change the way you do things, and get serious about paying down your debt and getting on the path to financial freedom. Without the commitment to get out of debt, you are likely to give up.
2. Stop Adding To Your Debt
Take a look at your budget, and figure out how you can better live within your means. Before you can effective tackle your debt problems, you need to stop making purchases with debt. Look at your spending, and cut back on the unnecessary items so that you are living within your means.
3. List All Of Your Debt
Next, list all of your debts. List the balances, minimum payments and interest rates. Decide on an order to pay them off. Many people like the “debt snowball” method. You take that lowest balance debt, and concentrate on that first. This method is psychologically rewarding, since you see success faster, and are encouraged to keep going. Others, though, prefer to start with the debt with the highest interest rate, since it will save more money in the long run, since you will get rid of the most expensive debt faster.
4. Decide How Much You Can Put Toward Debt Pay Down
Now that you have prioritized your debt list, it’s time to figure out how much money you can put toward your debt pay down. Honestly evaluate your spending, and look for places to cut back. You should be able to find waste in your spending, and, instead of spending it on frivolities, put it toward paying off your debt. Pay the current minimum on all of your debts, except the one at the top of your list. Put your debt pay down amount toward that debt. The more you can put toward it, the better.
5. Look For Ways To Earn More To Speed Up The Process
If you want to speed up your debt repayment process, you can look for ways to earn more money. Start a side hustle. Get a part-time job. It’s only for a little while. If you can put your debt repayment efforts into overdrive, you can be free that much sooner — and you will reap the benefits.
6. Acknowledge Your Successes
You can stay motivated when you acknowledge your successes and take time to reward yourself. Don’t go big though — you want to stay out of debt. But you can hold a little celebration, or you can retire each debt in a creative way. Buy a small treat, or cook your favorite dinner at home. Be sure to mark each milestone, and get excited about your next step toward success.
Looking forward to 2012, debt-free,
Jimmy
P.S. Last year, I decided to start blogging in my desire to create a new stream of income. However, as I learn how to blog, I found that beyond making money, I can express my passion and help others find answers to their problems and challenges. Today, I am grateful to my mentor, Jomar Hilario, for teaching me how to blog and hopefully to be like him someday. If you are interested in blogging, why don't you join me at Online Mentoring Club.
Photo Credit: http://www.gettyimages.com/detail/photo/files-with-labels-royalty-free-image/92347801
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