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How to Get Out
of Debt by B. Dear This article is not really for those of you who are good with money. The folks out there who are financially smart probably already have their act together in this area and therefore, don't need any advice from me. These people probably already have their retirement planned out along with a healthy savings account. This article is meant for the rest of us out there who are "spenders", living month-to-month, and need to make a change. Now with that said, I will explain how I managed to do it and I assure you, with a little discipline and patience, you can too. Now here is the bad news. You will have to make some changes in your spending habits. For some of you, this may be painful. First, you will need to build yourself a bit of extra money at the end of each month. You will have to either increase your income, or decrease your monthly expenses. This may involve asking for a raise, finding a better job, or reassessing some expenses to determine which spending is absolutely necessary. The more extra money you can scrape together each month, the faster you will be able to get out of debt. Add up all of your monthly expenses and subtract the amount from your monthy income. the difference will be the amount of money you will use to pay down your credit cards. Next, cut up all of your credit cards, except for one that will be kept for emergencies. This will prevent future temptation. This card should be one that has a low Annual Percentage Rate (APR), and that you feel has provided a decent level of customer service. The card will only be used to rent hotel rooms, make car repairs, or pay other unexpected emergency expenses. As a general rule of thumb, never put anything on this card that you can't pay off in a month or two. Next set up a schedule for paying off your debt. When doing this, track which cards are costing you the most in finance charges and pay those off first. In some cases, the decision to pay one card off before another will depend on a tradeoff between how much you owe and how much the card is costing you in finance charges. You will want to apply the excess money I discussed earlier to the first card in the list, and month after month, work our way through the cards applying the same amount each month. Soon, you will have paid off one card and will be working on the next. Apply the extra money plus the amount you paid to the first card to the next and repeat as necessary. Continue to do this until everything is paid off. As you pay these credit cardsand loans off, one by one, you will feel more and more financially free. Be careful not to change the plan and fall back into old habits. The key to achieving financial freedom is to stick with the schedule. If you have any additional information to add to this list, I'd love to hear about it. Please send any comments, questions or other remarks to contact@pro-think.com. |
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