I ran across a little plan to get out of debt that really works if you just stick to it. Here it is:
As with anything, this takes time, and as a result, takes patience.
I would also add that you must begin to live more frugally, learn to tell a want from a need, and enjoy the contentment that can come from being in control of your finances instead of them controlling you.
This is not something that is easily or quickly done. The first thing you need to do is get rid of any credit cards. Make as much as you can for payments on any loans or credit card bills you currently have. Before you ever borrow money for something make sure that it really needs to happen.
I am 31 years old and own my home (owe nothing), I drive an older car that I saved money for and paid cash. I only have to pay monthly living expense bills. Due to this when I lost my job the beginning of this year we were able to survive on my husbands income.
Our rule of thumb is if we can't pay for it now we don't have to have it. If we really want it then we save for it. My husband just built a garage this summer that we paid for with money that he has saved for the past 5 years. It would have been nice to have the garage 5 years ago but we survived with out it.
Make a distinction between "wants" and "needs."
Sit down and really look at your bills. Is there anything you can cut? For example: Keep the basic phone service but get rid of call forwarding, call screening, and anything else you are paying extra for. Keep the basic cable but get rid of the "premium" channels. Do you subscribe to lots of magazines? I was shocked and appalled to realize how much money I spent on subscriptions. $10 here and $10 there adds up and I hardly had time to read them anyway! I contacted all my magazines and asked them to stop service immediately due to "financial difficulties" and refund the unused portion of what I had pre-paid. I wound up getting about $30 back!
The secret is, whatever money you get back, you add to any other "found money" (like the amount you have saved by reducing other services) and you apply this money to your debt. Another huge difference for me was sending an additional payment as soon as I received "found money" instead of waiting to send it when the bill was due. Your credit card company or other people you owe money to will be happy to accept a payment at mid-billing-cycle, call and get instructions, and be sure to put your account number on the check. That way, you won't be tempted to spend the money on anything less important than getting out of debt. YOU CAN DO IT!!!!
By Becki in Indiana
First, spend 2 weeks-a month writing down every penny spent. Even the quarters you drop in the charity bin. You'll be surprised how much the little things add up.
Then use your red pen to mark the unnecessary expenditures. Entertainment and convenience foods are big ones. These expenditures can be cut, and the money used towards paying off debt.
Figure out what you owe, and how much "extra" in fees you are paying everyone. Pay off the highest interest/lowest bills first. Hospital and college loans usually can wait the longest, don't put those on credit if you can make a deal. Pay minimum payments on all but one bill and put *everything you can* into that one bill. Once its paid off, do the same with the next card. If you have Discover or another card with good rewards, use it for groceries, pay it off completely each month, and use the rewards to pay extra bills or to buy essentials.
The important thing is to cut your spending so you can pay off bills ASAP.
All great ideas but don't do the highest interest first, do the smallest amount owed. This way you don't get frustrated so early in the game. Example; 1 card has 25% interest but the amount owed is 10,000 dollars, a second card has 19% interest but amount owed is 1,000 dollars. Knock out the smaller card ($1000) first. Trust me I have been doing this for about 3 years, the first 2 was dedicated to the highest interest card and 2 years into it I got frustrated and nearly gave up, so I moved it to the smallest card and 6 months later it was paid off.
One small victory and I felt great, then I took the money for that card plus what extra I was paying and moved to the next smallest debt(card). it will be paid off in the next 2 months. Keep moving from there. The small victories only help reinforce the positive reaction that started you on this venture and can tell you interest really doesn't matter as long as you are consistent in paying extra on one card or debt and be content with the minimums on everything else.
Oh by the way, some credit card companies may lower your credit line, please don't let this get you down either. The goal is to eliminate them anyway so let them. When it is all said and done, they will be begging you to use there card.
Unfortunately, in this day and age we need a credit card. We need it to travel, to reserve rooms and buy things on line. Many card companies will cancel your card without telling you if you don't use the card. So the best thing to do is at least once a month use the card to buy a week's groceries then pay it off when you get home. That way you keep your card active and will have it when you need it. A good rule also is to never use your bank c ard unless you are swiping it yourself. Use the credit card if you go out to eat and the server takes your card away when you pay the bill from the table. This is because they can copy your card number and use it to make charges. You can get a refund for this kind of fraud but instead of making a charge on your credit card they have taken your money from the bank and it takes a few weeks to get it back. With a credit card you aren't out any money and they will cancel the charge. So don't let your bank card out of your hands.
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