With the new year around the corner, now is as good a time as any to buckle down and get out of debt. Unfortunately, only a reported 8% of people actually commit to their New Years resolution. Don’t let this small percentage hold you back though. If you can’t get a grip on your finances now, you may never be able to. Many people before you have succeeded in becoming debt free, so be inspired knowing that it’s possible to free yourself from these chains.
If you’re in urgent need of money, remember to NEVER accept funds from loan sharks. Yes, it’s Christmas time. Yes, we all understand that, being the wonderful person that you are, you want to get everyone great gifts. But the smart thing to do is try not to spend much money. Your loved ones will understand that you are trying to reduce your debt load, and if they don’t, perhaps you should re-evaluate your relationship/s?
Christmas is a tough time of year and with that in mind, remember to come back and read this post before the New Years begins. Promise yourself that 2013 is the year that you and your family become debt free! And remember to never deal with a loan shark…no matter how desperate you may be financially.
- Track your spending – Where does your money go? Do you spend excessively? How much money is allocated to bills and necessities VS materialistic things…A.K.A wants? Tracking where your money goes can solve this problem. You’ll know exactly where every red cent is going (or pretty close anyway). One site that allows you to do this is called Mint.com It’s also free. Start tracking where your money goes now. You’ll be surprised at how much money you spend on crazy items…and how much money you can thus save.
- Reduce credit card debt – Ah. Credit card debt. Unfortunately, just about every household in the United States and UK is in some sort of credit card debt. Applying for, being approved, and spending the credit limit is easy. Paying it all off, on the other hand, is easier said than done for most. However, there’s good news. If you start tracking where your money goes and create a budget, you’ll soon be able to start paying down your credit card debt with the extra money you’ll have. Additionally, you should be paying off new charges first, while consistently paying down your existing balances.
- Create your budget – Cutting back on spending is tough. Especially if you’ve never setup a budget, much less stuck with it. Not many people can do it, but if you have willpower and determination, you can stick to your budget and come through the other side a healthier person because of it…financially anyway. In order to become free from debts, you need to start making better financial decisions. This is where a budget comes in. Set a realistic budget that you can stick to. You don’t have to be strict. In fact, it’s better if you’re not. It’s ok to splurge a bit ever once in a while…as long as you’res ticking to the budget. Think of it as rewarding yourself for a great job!
- Check your credit score – In the United States, a person over the age of 18 years is entitled to one free credit report per year from each of the 3 main credit bureaus. Experian, Transunon, and Equifax. Think of these credit reports as your roadmap. They each will give you precise details about what you need to do in order to get where you want to be…namely debt free. You’ll gain access to all creditors that have reported you to the credit bureaus. You can start creating a gameplan to pay off these creditors, and also be able to file disputes with creditors whom have reported incorrect information. The latter can raise your score a few points alone in only a matter of months. The only downside with obtaining a free credit report from AnnualCreditReport.com is the service doesn’t give you a score. If you want a score, try FreeCreditReport.com, but remember to cancel after the free trial, otherwise you’ll be charged monthly.
- Setup payment arrangements – As discussed above, contact your creditors directly and work out payment arrangements. Most creditors are more than happy to work with you…provided that you stick to your promise. These arrangements work out great because it keeps creditors from reporting negative information about you to the “Big 3”, and gives you the ability to start paying down these debts. Try paying off your smaller debts first. This will allow you to pay off debts much quicker.
- Stay away from debt – This is the downfall of many. Everything is going fine. You’ve even managed to pay off 75% of your debt. But…what’s that? You get a shiny new credit card offer in the mail! It reads, “Unsecured credit limit up to $5,000!” It’s Christmas time and you’ve soooo wanted to get your sweetheart that special something, but didn’t want to splurge. What do you do? Don’t splurge! Your special someone can go without material things for now. The most important thing in your life right now is to stay away from debt. If you have to, get yourself off of as many mailing lists as possible if it helps. Most importantly, be strong!
- Make side money – Has anyone ever told you that you had a great skill? A skill that you can make money doing? If so, then you can probably make a good bit of money on the side to help pay down your bills and get set financially. Who knows. Perhaps that special skill you have could turn into a huge business one day. Have faith in yourself and your abilities. If you don’t have a special skill, you can just as easily pick up a part-time job to increase your income. Keep your end goal in mind!
- Save money – reduce expenses – By tracking your money and sticking to your budget, saving money and reducing your expenses will be that much easier. If you find that you have more money left over at the end of the month than usual, that’s good! Just remember to not get crazy. Take a good portion of that money and continue paying down more debt. The faster you pay it off, the quicker you’ll become stress-free! (partially anyway) And remember to treat you and your family to something special every now and then for sticking to your plan.
There you have it. Do you have anything to add? What are some other ways you can become debt free?