The key to paying down your debt or getting out of debt is simple: Earn more money than you spend, save some of your monthly income for a “rainy day”. Take some of your monthly savings it and put it towards your debts. Pay a little extra $5,$10….$100 won’t hurt as long as you can afford to. It’s smart to start with your highest interest loan and work down. By sticking to a plan to make extra payments toward your debts you will successfully get out of debt. Results will vary depending on the amount of debt you have. It’s not easy getting out of debt and then staying out of debt.
With the current slump in the US economy, more Americans are turning to their credit cards, payday loans, and/or signature loans to help pay for the rising cost of gas, food and other necessities.
How easy is it to get out of debt or pay down your debt to a manageable level? Don’t be tempted by the ads you see for debt consolidation or debt counseling. It is just another added expense you don’t need. You don’t want to pay someone to tell you what you already know. Do your own research!! It will save you money and teach you how to better manage your money and debt. Here are a few helpful tips on getting out of debt:
Grab Hold of Your DebtSurvey the big picture, where do you stand financially? How much do you owe? Have you been able to save anything? Now without depleting your savings, come up with a game plan to attack your debt with your current income and cash-flow. Establish a budget that you can safely live on. You don’t have to starve yourself to save money. Be smart with your purchases.
Rolling your debt over to a lower-rate loan, whether it’s a credit card, home equity loan or signature loan. There are ways you can save money by switching the types of loans you carry. Make sure that you use the extra savings to pay down your debt and not waste it on unnecessary purchases.
Avoid Temptation
To avoid temptation, you should carry only cash or debit cards in your wallet/purse. Hide your credit cards at home. Try only using them if an emergency arises. The debit card method is the best, because if you pay with cash, you are more tempted to spend the change on other unnecessary things.
Impulse Buying
If you are like most Americans, you like to spend more than you save. What did you do when you got your stimulus check? Did any of the money go to savings? The current state of the economy is starting to make people re-evaluate their spending and saving habits. The news of layoffs seems to be a weekly if not daily occurrence. In the stock market, investments are falling and a recession is pretty much upon us.
Saving…Plan Now or Wish Later
Market research has shown that Americans' saving rate is dangerously low. The rate is figured on a percentage of disposable income. The savings rate for Americans dropped 7.8% in the early 1990s to a pathetic 1.0% during the first part of 2000. That is a scary trend to be part of.
When you start to look at tightening the reins on your spending and finances, most people know what to do. If you are able to figure out simple mathematic equations, then you can see where the changes need to be made. Pay off unsecured debt first!!! At the same time make small contributons to an “emergency fund”.
A Safe Emergency Fund
Most experts suggest that you should contribute weekly/monthly/quarterly whatever is easiest for you into an emergency fund. It does not matter if you make $25,000 a year or $500,000. You should set a goal to have your emergency fund’s balance include three to six months' worth of living expenses
When you implement your new plan stay focused and motivated, don’t stretch things too thin. You don’t want to be broke and without any money. The purpose of your plan is to chip away at the debt you have by making simple adjustments to your spending habits. You don't need to starve yourself in an effort to get out of debt. Start small and gradually increase as you pay off some debts, get a raise at work, or make money from your investments.
