Tuesday, March 16, 2010

Living A Debt Free Life

Posted by pucca at 6:09 PM

Here are some helpful yet simple tips that can help anyone who is in debt to get out of it.

* Spend less than you earn.Use cash for better budgeting, and stop using debit cards and credit cards.
* Create a plan to get out of debt for better results than just sending money to your accounts randomly.
* Know exactly how much you owe, keep track of it in a spreadsheet or notebook and update it each time you make a payment.
* Establish an emergency fund as soon as possible to avoid relying on debt when an unexpected expense occurs.
* Shred your credit cards but keep accounts open (closing accounts lowers your credit score).
* Consider a non-profit debt counseling service to help you develop a plan for getting out of debt faster.
* Contact creditors to request lower interest rates or easier repayment plans.
* Get a free copy of your credit report to see if there are any errors that need to be corrected.
* Don't go into more debt trying to pay off your debts! You can't send so much to your debt repayments that you can't keep up with your living expenses.
* Look for ways to reduce expenses – the more you reduce, the more money you can pay toward debt and the faster you can become debt free. You don't have to live like a monk, but there are many living expenses and unnecessary expenses you can reduce or eliminate (even if only temporarily) to get out of debt faster.
* Learn how to entertain yourself for free.
* Plan for upcoming expenses and non-monthly expenses so you don't have to scramble to get the money all at once (car insurance premiums, property or school taxes, car maintenance, etc).
* Create and stick to a budget.
* Consider the debt snowball. Once you start rolling, it keeps on rolling unless you put it into a stop.
* Consider the highest-interest-first method of paying off debt.
* Consider the debt avalanche. Once your buried in debt, it's hard to get out of it.
* Avoid relationship problems by keeping open communication regarding finances.
* If you fall off the debt repayment wagon, get back on. It takes discipline and hard work to get out of debt.
* Learn how to reward yourself for sticking to the budget, or paying off debt, without spending a lot of money for the reward.
* You didn't get into debt overnight, understand it will take longer than a day to get out of debt, too. You have to break the cycle of debt.
* Stop borrowing or applying for credit. If you can't save for the purchase or the expense, then you can't afford to buy it.
* Don't forget the importance in saving for the future (retirement, college, etc) while repaying your debts.
* Increase your income with a part time job, a home business, programming, design, or with freelance writing jobs.

The bottomline is live frugally, live within your means . Life and succes in not about how much money your bank account has. It is not about how many cars you have, how many shoes are stuck inside your closet. It is about how you have lived your life. You're rich but you're not happy. You're rich but you're sick. You're rich but you're alone. I would rather live a happy simple life. But money is always welcome.

 

 

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