Being that our nation as a whole has suffered an economic turmoil in the past, a debt elimination plan can help Americans tremendously in overcoming overwhelming debt problems. The best way to jump start such a plan is to first construct a goal of spending less than what you earn. This may sound like a straightforward strategy, but at the end of the day, this is the only way to get out of debt. Of course, this is easier said than done, for you to achieve this simple goal, it would need determination, commitment, and some sacrifices in your part.
Be aware that if you spend more than what you make consistently, then the chances of you getting out of debt is close to impossible. You will never free yourself from the bondage of debt and in effect, you may never get to live a life that is financially free. The key to eliminate debt in the earliest possible time is to start living within your means. With conviction and self-discipline to control your spending and stop accumulating more debt, you are well on your way to living a debt free life.
A debt elimination plan should start with the process of identifying what areas of your finances savings can be made and which of your greater debts should be cast off the soonest.
To further demonstrate, here is a concrete list of steps to follow:
1. Create a Budget
Start off with making a list of your income and your past expenditures. With this list, you can easily identify expenses you have made in the past that you can actually live without and expenses that can be considered quite extravagant or frivolous. It also gives you the opportunity to see which areas you can easily make small savings from.
After thoroughly examining your past spending habits, you can now make a revised budget wherein you cut all unnecessary expenses and channel the money you make in a month towards spending only for necessities and paying off a bulk of your debts. Make sure that you make an honest assessment of what you consider as necessities and luxuries in order to maximize the results of your revised budget plan.
This revised budget will be to no avail if you do not stick to it as meticulously as possible. Even a slight diversion from the budget can create a knock-on affect that can send you spiraling back to a debt dependent lifestyle.
2. Try to minimize the number of unsolicited credit card offers you receive in a given time
Doing so will not in any way affect your credit rating, but if you are able to successfully reduce the amount of credit card offers given to you, you also reduce the amount of temptation of acquiring more accessible credit which will definitely help in your goal of eventually eliminating debt.
3. Stop using your credit cards for more purchases
Best way to do this is to incinerate the plastic - simply cut it in half. If you find it difficult to do this, then leave it at home and practice not carrying it around with you at all times. This will certainly help you put a halt in spending more than what you have and helps you maintain a tighter control on your expenditures.
Remember that using your credit card and paying only the minimum required payment each month - or worst yet, forgetting to pay your monthly dues - is what has led you to debt problems in the first place. Not using your card at all helps you stay away from accumulating more debt in the future.
4. Go to your creditors and negotiate the interest rates of your credit cards.
The more affordable your monthly debt payments are, the easier it would be for you to pay it off. The best way to make your monthly debt payments more affordable is to acquire lower interest rates. The only way to get lower interest rates is to ask for one. Not all creditors will oblige to your request, there are creditors, however, who will willingly help you out in easing the burden of your debt situation. They give considerations especially to clients who have been consistent in debt payments and those who have had an account with them for quite some time. So asking for more favorable debt terms will do no harm.
5. Try to consolidate credit card debt with higher interest rates to credit card accounts with lower interest.
This will prove as a very viable solution especially for those with a number of credit cards to their names and with very high account balances. Doing so will considerably reduce the amount of monthly debt payments since many creditors offer a promotional low to zero interest rates if you consolidate your other credit card account balances with them.
5. Prioritize paying off credit card debt that has the highest interest rates.
Try to pay off debt that has the highest interest rates quickly and gradually work your way down to debts that have lower interests. It is highly advisable that you immediately close the credit card account once you have completely paid it off in order to eliminate the temptation of using it again.
Make sure that you pay more than the minimum required each month on the debts with the highest interest rates in order to pay it off sooner. Once those are paid off, start paying more than the minimum to the debts with the smaller interest rates and before you know it, debt will no longer pose as a hindrance to your financial freedom. If you insist in paying just the minimum required amount each month, then know that you are not even making a dent in your overall debt level and it would be impossible for you to get out of debt soon.
6. Save for emergencies
It is common practice to use credit cards in case of emergencies even for those who are dedicated in cutting down the use of the plastic. It would be wiser however if you have an amount set aside for a rainy day without having to succumb to swiping your card. Try to set aside at least $50 to $100 a month for emergency purposes. This may not seem as a big amount, but gradually this amount will build up and you can be assured that it will cover any emergencies arising in the future without the need to accumulate more debt.
In conclusion, in order to be successful with a debt elimination plan, it is required that you have a strong will and determination to follow through. It may even mean that you have to have a significant change in lifestyle for the time being but the end goal of being debt free is certainly worth the effort and sacrifices. Successfully eliminating debt is the only way to ensure a brighter and more enjoyable financial future.
To learn more about other ways on how to reduce and eventually eliminate debt, please visit this link: [http://debteliminationplan.info/]
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