Debts, debts, debts…. How did we get to this state, to become a nation of debts? Over the past decades, millions of Americans found themselves awash with debts and sadly, this trend is set to continue for the future generations.
Debt elimination has become more challenging because creditors are aware that more money can be made by trapping people in debt and charging high interest rates and numerous fees. Creditors are happy to let the debts snowball and see debtors should owe money for life.
Ask yourself if you want to work like a dog only to provide a source of regular income to the creditors? If not, then get serious about debt elimination.
To be sure, there are many people who profess to help you get out of debts (debt consolidation or debt settlement companies) but they do not wish to see that happen. The harsh fact, as a debtor, is that nobody is looking out for your interests and the best way is to help yourself.
Achieving debt elimination is not easy and it can take a significant amount of time to resolve all debts. Learning and implementing the basic steps needed to get rid of debt is necessary to achieve financial freedom.
Monitor Your Expenses
Where did all the money go to? Well, the simple answer is to follow the money. Monitoring your expenses goes a long way towards achieving debt elimination because it shows you where your money is being spent. You can reduce hundreds of dollars from your household budget by by eliminating unnecessary purchases.
Reduce Unnecessary Spending
The next step in your debt elimination plan is to reduce the amount of your spending by a significant amount each month. Eliminating additional expenses such as purchasing Starbucks coffee, branded apparel, glamorous cars, fine dining can save you thousands of dollars each year.
Besides such luxurious items, many people spend money on items that they do not really need, either because of the convenience or to keep up with the Joneses in their pursuit of the latest and most stylish gadgets on the market.
To achieve debt elimination, you must save more of your money and channel it into debt repayment.
Cut Up Extra Credit Cards
Take a scissors and do yourself a favor. Cut up all the extra credit cards, save for the one which you usually use and which has the lowest interest rate. You will never pay off your credit card debts if you continue to rack up charges every month.
If you have outstanding balances, the final cost of paying for items with a credit card can end up exponentially higher due to finance charges, interests, and any additional charges placed on the account by the credit card issuer.
If you cannot pay for a purchase in cash, you should wait until you have saved up enough money to pay for the item without using credit. Instant gratification have led many people down the road of financial ruin.
Be Disciplined About Debt Repayment
Let’s say you have done the above but after a few months, the urge to spend recklessly returns. Impulse buying has derail your debt elimination plan and you are back to square one.
That is a huge waste of effort. Remember that debt elimination involves discipline. You must make the repayment of your debts a priority. Any “extra” money after expenses must be used to pay down your debts.
If you stick to this regiment, you will see the fruits of your labor. Your debts will dwindle away and they will disappear faster if you reduce your expenses aggressively.
Start A Savings Account For Emergency Needs
While you are paying off your debt, do not neglect to start a savings account for emergency needs. A main reason that people are in debts is because an unexpected expense occurred. They have to take out payday loans or charge the amount to their credit cards to take care of the issue.
Unexpected expenses like leaking roof, car repair, will occur, and having spare cash available will prevent you from becoming mired in debt.