There seems to be no shortage of gurus who sell all manner of programs that “guarantee” you will get debt free. Great, that’s what is needed. Spending more money.
Yes, these programs work. Yes, they can be helpful. But why spend more money to learn how to get out of debt? Doesn’t that seem silly?
Here are three tips to becoming debt free:
Make a Budget
Go through your monthly expenses. Categorize everything as a want or a need. A need is what is required to survive, everything else is a want. Look at your needs again. What can still be moved to a want?
Set a little money away each month to drive toward a want. Let it be a reward for reaching a milestone. Keep it small, but it will grow over time.
Now look at the needs. How can these expenses be minimized? Store brands over national? Coupon clipping? Store specials? All of them help. Do it and push the saved money into debt payments.
Make a debt payment Plan
Get all your debt payments out and list them. Now order them based on the total amount due, smallest to largest. Pay off the smaller owned amount first. Pile every spare penny into it. On all the rest, make the minimum payments. Don’t worry about coming up with some complicated scheme based on the interest rates, amount owed, payment schedule, etc. Keep it simple. Smallest to largest.
As each debt is paid in full, add that money to the payment for the next largest. Let the payment grow. Let it snowball. After a few are paid, things will really pick up. Go!
One of the biggest mistakes people make is paying off a debt or two and then spending a charging a big item. Don’t do it! Stay the course. Get all the debt done first, then start saving for a nice to have. Look at all the interest you are paying. Don’t it be nice to have that money working for you instead of the bank? Stay the course and it will happen.
Use the money set aside for small rewards are you pay off each debt. Pay cash for those rewards. Don’t reward yourself with more debt. Once debt free, use the same saving system to buy. If you don’t have the money, you don’t buy it.
There. Three secrets to becoming debt free and you didn’t have to buy anything. Make a budget. Plan your attack. Stay the course. You can do it!