Thursday, January 1, 2015

How To Eliminate Your Load Of Debt

By Josephine Pennington


If you have been troubled by economic downturns or if you are overwhelmed by debt for any of various reasons, you don't have to give in to stress and worry about your financial situation. You may have already been hit by mortgage payments and credit card bills that keep you awake at night, worrying about how you recover. The good news is that you can read on to learn some tips and techniques that will help you become debt free for life.

To begin the process of eliminating debts, you must have a firm knowledge of your precise economic condition. Keeping records of each penny earned and spent over the next month will give you a starting point. If you spend even a few coins for a vending machine soft drink, or a quarter in a parking meter, write it down. You may be surprised to learn where your money is being spent.

Next, you need to create a budget. Distinguish between hard expenses and optional expenses. One of the high priority "hard" expenses is to pay money into a savings account first each month. If you arrange for it to be deducted from your pay check electronically, it won't seem as difficult to save. Your savings account is intended for larger, future projects such as educational needs.

Your first major project in your get-out-of-debt program should be to create an emergency fund. If you have to sell off some unwanted items, or take a temporary job for a few weeks, or simply cut back on unnecessary expenses for a period of time, take the funds and place them in an Emergency Fund. This should be an amount such as $500 or $1000 which is to be used only for true emergencies.

Using the budget you created earlier, concentrate on paying off the obligation with the smallest monthly payment amount. When that is cleared, put all your efforts into paying off the next largest amount. Repeat this process with the next largest obligation until all of your debts have been erased. Many people can accomplish this goal within two to three years.

If you need additional support or encouragement, contact a trusted friend or family member and ask them to serve as your financial mentor. Make a pact that all expenses over a stated amount will be cleared with the mentor. You will need to justify each of the purchases. Do a regular review of the spending pattern for the month so that you stay on track.

Finding ways to reduce your expenses is challenging, but it can also be rewarding. The items which can be eliminated from an average household budget can be significant. Those savings can be applied to the debt reduction plan. Another way to speed the process of becoming debt-free is to increase your income. A part-time job or a home-based business may be an option. You could also have a yard sale or sell unwanted items through a advertisement.

The practice of living within your means will seem difficult originally. As you see the debts melt away, your stress level will go down. You will find new ways of doing things that do not require going back into the debt overload mode. A simpler lifestyle which you choose is far preferable to one that is due to forced cutbacks.




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