Debt Elimination - Good Medicine, No Aftertaste
Debt is a burden, we all know that. Too much causes worries and that can lead to any number of bad things. In the worst scenario worries over debt can make you ill, perhaps very ill. If you're faced with this problem the best time to start doing something about it is right now.
Reducing debt starts with a pioneer attitude. You only have $5 left at the end of the month is what your bank tells you. Humbug! You have more than that, you just have to be creative. Start with the little stuff. Eat out one less time per month - saves another $5. Only shop at places along your commute to work - saves gas money. Get creative!
Starting out with the right attitude isn't going to make your debt go away right away. First things first and that is to start spending smartly and spending less. Your first goal should be to avoid going any deeper into debt. Once things are starting to level out you can focus on reducing the debt you have.
To actually keep expenses down and start reducing your debt you want to start living on a budget. Budget is a dreaded word for most of us. We equate it with a Spartan existence, bland diet, no more toys and the like. Your budget however represents your plan of action. Laying out your budget is not the easiest thing to do, be prepared to struggle at first and it may take a month or two before you actually find a plan that works, a budget that fits. Make a list of what you're paying out for bills, food, clothing and entertainment. Then start prioritizing and assigning dollars to each category.
Next are your loans. Make a list of all the loans you have, the outstanding balance, how many payments you have left, and the interest rate. Look at the two with the smallest balance. Which one has the higher interest rate? Throw all of your extra funds at that one first, that way you pay it off even faster.
Either approach will eventually lead to a snowball effect. The more loans you pay off the more you have available to pay off the remaining loans. Don't start trying to save until you're well on your way. Keep your first priority getting out of debt. You'll also learn a good life's lesson. Living without debt is very satisfying indeed. And living within your means isn't nearly as bad as you were afraid it was going to be.
Instead of extravagant spending, start investing. Take your extra funds, and snowball yourself a savings fund. You can do this with anything you wish - a savings account, stocks, bonds, anything. The important thing is that you are saving money, that way you never have to make the kind of decisions you did before when you were forced into reducing debt.
The savings you "pay" yourself will be useful in the future when you are ready to make large purchases. Instead of financing a new car at 8%, you can stay out of debt and maybe get a discount by paying cash, or you could make a large down payment on a home or send a child to college. The sky is the limit!
Reducing debt starts with a pioneer attitude. You only have $5 left at the end of the month is what your bank tells you. Humbug! You have more than that, you just have to be creative. Start with the little stuff. Eat out one less time per month - saves another $5. Only shop at places along your commute to work - saves gas money. Get creative!
Starting out with the right attitude isn't going to make your debt go away right away. First things first and that is to start spending smartly and spending less. Your first goal should be to avoid going any deeper into debt. Once things are starting to level out you can focus on reducing the debt you have.
To actually keep expenses down and start reducing your debt you want to start living on a budget. Budget is a dreaded word for most of us. We equate it with a Spartan existence, bland diet, no more toys and the like. Your budget however represents your plan of action. Laying out your budget is not the easiest thing to do, be prepared to struggle at first and it may take a month or two before you actually find a plan that works, a budget that fits. Make a list of what you're paying out for bills, food, clothing and entertainment. Then start prioritizing and assigning dollars to each category.
Next are your loans. Make a list of all the loans you have, the outstanding balance, how many payments you have left, and the interest rate. Look at the two with the smallest balance. Which one has the higher interest rate? Throw all of your extra funds at that one first, that way you pay it off even faster.
Either approach will eventually lead to a snowball effect. The more loans you pay off the more you have available to pay off the remaining loans. Don't start trying to save until you're well on your way. Keep your first priority getting out of debt. You'll also learn a good life's lesson. Living without debt is very satisfying indeed. And living within your means isn't nearly as bad as you were afraid it was going to be.
Instead of extravagant spending, start investing. Take your extra funds, and snowball yourself a savings fund. You can do this with anything you wish - a savings account, stocks, bonds, anything. The important thing is that you are saving money, that way you never have to make the kind of decisions you did before when you were forced into reducing debt.
The savings you "pay" yourself will be useful in the future when you are ready to make large purchases. Instead of financing a new car at 8%, you can stay out of debt and maybe get a discount by paying cash, or you could make a large down payment on a home or send a child to college. The sky is the limit!
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posted by Credit Counseling at
3:43 AM
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