Like many things in life that you want to be successful in, you need to make a plan on getting out of debt. There is no one way to do it but I have comprised a step by step guide to give you an idea of how I went about it. It was 100% effective for me but your results may vary. Keep in mind that you need discipline to execute these steps and methods. The problem with that is probably what you lacked to get in debt to begin with. You do not need to worry though as we can start today disciplining ourselves to a debt free or a more debt free life.
My philosophies on what I consider bad debt is debt that is non-productive or that makes no sense paying off. Paying off your house makes no sense unless you want to. At today’s interest rates and with the tax advantages having the debt of your home is OK. Debt that you have used for business purpose is OK for the short haul. Do not have guilt over this debt. Car payments under 8-10% are not bad either. Everything else should probably go. I call this bad debt and we want to eliminate it so we can use our money more effectively. The following is my step by step guide to getting out of debt:
1. Cut up your retail credit cards. They have too high of an interest rate and they are designed to keep you coming back for more. Buy from those stores with cash. Do not get sucked in by getting 10% off today if you open a card because they will get it right back in interest rates.
2. Take one bill at a time and pay more on it. Pay the minimum on the rest. Pay those bills of one at a time until they are all gone. Do not look at the other bills while you are doing this or it may discourage you. Focus only on the one you want to pay off. Send in the minimums on the rest.
3. If you have a medical bill you are paying off you can negotiate a cheaper rate with the hospital. A lot of times they will reduce the debt to a reasonable amount for you. You may also qualify for state help if you are really poor. Check with the hospital billing office for details.
4. If you are behind with your utilities call them up and get put on a payment plan. If you stick to it they will work with you. You can also do this to help you pay off high interest credit cards faster. I like to call it the float. I float bills all the time when I want to pay off something else faster.
5. Go to the grocery store and take a list and a budget. Groceries can blow a budget out of the water quicker than anything. Do not go over your limit.
6. You can pay your credit cards, house payment and car payments twice a month to your creditors. You still pay the same price but it stops the interest once the first payment is received. For instance if you pay $1,000.00 a month on your house, send in $500.00 on the first and $500.00 on the fifteenth. This will reduce your debt quicker. Do not take no for an answer as the credit companies do not want you doing this.
7. Do not pay late fees. get your payments in on time. Do not give away money to needless things.
8. Work off a budget and stick to it. If you over spend one month then you will need to make up for it in the months to come so you can balance out at the end of the year.
9. Lower the interest rate on any debt you can. Use lower credit cards to wipe out debt from higher cards, etc. The higher the rate the more you will pay.
10. Take out spending money ahead of time at the beginning of the week and stick to it. also brown bag it as much as possible. Bringing lunch is way cheaper than buying it.
Control your spending and pay off your debt quickly. Get great satisfaction in every debt you wipe away
Visit my website at : www.thecaneicorporation.com for more information on business and improving yourself. You can also view my meetup.com group at: http://self-improvement.meetup.com/219/
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Regards
Shelly.
Posted by: shelly | August 26, 2008 at 09:32 PM