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Digging Your Way Out of Debt
My husband and I found out about debt the hard way. We were just married and trying to live a two income lifestyle on one income. We bought an old home and were renovating, had two babies in under two years and then lost our one and only source of income. Ouch!
We had debts, and no money coming in. It was time to take drastic action or we would lose everything. At first it was quite scary, but as we gradually became closer and closer to being debt free, it was fun. And it became a challenge to see how we could maintain our lifestyle and still live below our means.
What did we do? And what can you do to reach your goal of being debt-free?
Here is what you can do TODAY:
If you are serious about freeing yourself of debt, make a commitment that you will begin TODAY, right now, to rid yourself of your debt. What does this mean?
1. First, stop DEBTING
This is a word I found in an article I was reading about debt. It s not in the dictionary, but it is a great, descriptive word. You get the meaning immediately. You cannot possibly get out of debt if you continue to use credit cards or take on other unnecessary debt. Unnecessary debt is anything at all that you do not need to live movies, videos, clothing, shoes, holidays, gifts, takeaway meals or eating out etc.
2. Take one day at a time.
Take one hour at a time. Tell yourself 'I will NOT go into debt today.' Chances are, when debt is not an option, you will find ways to get what you need, or what you thought you needed, was not necessary at all. We haven t used credit for over thirteen years (apart from our mortgage) and we don t miss it. We live by the creed of ‘If you can t pay cash, you can't afford it .
Here is what to do TOMORROW:
Now, this is the hard part. Before you can begin digging yourself out of the hole of debt you have created, you need to know exactly where you stand. You need to know:
1. WHO you owe
2. HOW MUCH you owe
3. The monthly PAYMENT
4. The interest RATE
It really does not matter which debt is the highest priority, as long as it works for YOU. Many people prefer to pay off the debt with the smallest balance first because it brings about a sense of accomplishment. However, some people like to pay the debt with the highest interest rate.
The next step is to set up a budget. I know it sounds difficult, but you do not need to call it a budget, you can call it a spending plan. This is just a way of planning how you will spend your money. Tell yourself, 'This is how much money I have, and this is what I am choosing to spend it on.'
Then, if you are having trouble paying the bills, let your creditors know when and how much you are going to pay them. If they agree to this, make sure you stick to it. If you have to eat rice for a week, be sure to make those payments.
Remember: once you've dug your way out of debt, your money is your own! So while it may seem like it will take forever, it won't if you stick to the plan. In the grand scheme of your lifetime, this debt reduction program is only for a short time - and you can do anything for a short time.
We had debts, and no money coming in. It was time to take drastic action or we would lose everything. At first it was quite scary, but as we gradually became closer and closer to being debt free, it was fun. And it became a challenge to see how we could maintain our lifestyle and still live below our means.
What did we do? And what can you do to reach your goal of being debt-free?
Here is what you can do TODAY:
If you are serious about freeing yourself of debt, make a commitment that you will begin TODAY, right now, to rid yourself of your debt. What does this mean?
1. First, stop DEBTING
This is a word I found in an article I was reading about debt. It s not in the dictionary, but it is a great, descriptive word. You get the meaning immediately. You cannot possibly get out of debt if you continue to use credit cards or take on other unnecessary debt. Unnecessary debt is anything at all that you do not need to live movies, videos, clothing, shoes, holidays, gifts, takeaway meals or eating out etc.
2. Take one day at a time.
Take one hour at a time. Tell yourself 'I will NOT go into debt today.' Chances are, when debt is not an option, you will find ways to get what you need, or what you thought you needed, was not necessary at all. We haven t used credit for over thirteen years (apart from our mortgage) and we don t miss it. We live by the creed of ‘If you can t pay cash, you can't afford it .
Here is what to do TOMORROW:
Now, this is the hard part. Before you can begin digging yourself out of the hole of debt you have created, you need to know exactly where you stand. You need to know:
1. WHO you owe
2. HOW MUCH you owe
3. The monthly PAYMENT
4. The interest RATE
It really does not matter which debt is the highest priority, as long as it works for YOU. Many people prefer to pay off the debt with the smallest balance first because it brings about a sense of accomplishment. However, some people like to pay the debt with the highest interest rate.
The next step is to set up a budget. I know it sounds difficult, but you do not need to call it a budget, you can call it a spending plan. This is just a way of planning how you will spend your money. Tell yourself, 'This is how much money I have, and this is what I am choosing to spend it on.'
Then, if you are having trouble paying the bills, let your creditors know when and how much you are going to pay them. If they agree to this, make sure you stick to it. If you have to eat rice for a week, be sure to make those payments.
Remember: once you've dug your way out of debt, your money is your own! So while it may seem like it will take forever, it won't if you stick to the plan. In the grand scheme of your lifetime, this debt reduction program is only for a short time - and you can do anything for a short time.