Five Hot Tips To Get Out Of Debt Forever
By Rhiannon Williamson
The financial and psychological burden of being in debt causes us and our
families continuous emotional stress. That stress eats away at the quality of
our lives and leaves us feeling powerless, angry, depressed and helpless.
But there is a way out – in fact, there are five simple and straightforward ways
out of debt - and if you apply this five point plan to your life today you will
have taken the first step on your personal road to debt free living for life.
1) Acquire No New Debt.
You have to make the commitment to yourself and your family that together you
will take on no new forms of debt TODAY. Agree from this point forward that you
will not take out a loan for a new car, you will not re-mortgage and cash in
your equity to afford home improvements, you will refrain from filling in new
credit or store card application forms and you will destroy all those credit and
store cards you already have.
Break the pattern of living beyond your means TODAY.
2) Begin To Track Your Money.
Starting right now go and get the paper work for all of your regular bills, any
loans, debts, credit card statements etc. and also the details of any income you
receive each month from your job, any benefits you get or savings income - and
put all of the paperwork on the table in front of you.
Step by step go through each one. List on a piece of paper what you have coming
in each month and then list what you have going out each month – for this one do
it in two separate columns…column one should be your essential bills for every
day living including your mortgage, electric, water, gas etc., and column two
should be the amount of debt you have. Write down all of the money owed on each
credit card, any loan amounts you have outstanding and also detail the minimum
and required monthly amounts for each one.
Now you know exactly how much you have to live on, how much you have to pay out
each month to live and exactly how much you have to find each month to pay
Every month go through the same process – once you have this whole five point
plan in place you will notice that the amounts you owe will reduce each month
and you will find it easier to afford your month to month essential living
expenses. If you don’t keep a track of what you spend it has been proven that
you will spend up to 10% more than you can actually afford each month so your
debt will grow and grow and grow exponentially forever unless you break the
3) Negotiate Better Interest Rates And Better Payment Terms
Step 2 should’ve highlighted the amount you have in debt and the amount you have
to pay out each month for each debt. Taking each debt at a time – and include
your mortgage in this – look at the amount of interest you are paying on every
single debt you have and also read contract small print to find out about any
penalties you may incur if you pay back loans early.
Find out whether you can re-mortgage (for the same amount NOT to release equity)
and take advantage of a lower interest rate and also the ability to pay off lump
sums of your mortgage each year. Look at transferring credit cards to those
offering lower interest rates and even 0% interest on balance transfers for a
fixed period. DO NOT increase your credit limit, DO NOT use this as an excuse to
add another credit card to your list! If you do find a company willing to take
on your balance transfers cancel all other credit cards immediately you have
paid them back. Now find out whether there are any LEGITIMATE loan companies
offering lower interest rates than the companies you are already with and
consider consolidating these other loans under one with a lower interest rate.
Again, DO NOT use this as an excuse to take out yet another loan!
Once you have looked into any of the above ways for reducing your interest
burden on your debt, if you are left with a number of credit cards or other
debts that cannot be moved and thereby reduced, consider writing to your credit
card company or loan company and asking about renegotiating the terms. If you
don’t ask you don’t get! There is no guarantee that they will agree to lowering
interest rates for you for a fixed period or agree to accepting a lower monthly
amount if that is all you have worked out you can afford, but if you explain the
situation you’re in and the action you’re taking they may be willing to help.
4) Create Your Debt Payment System.
Now you will have a complete picture of what has to be paid and to whom each
month and exactly how much money you have to pay them. List each debt with the
highest interest incurring one at the top all the way down to the lowest
interest incurring one at the bottom. List the minimum amount you have to pay
each month for each debt and ensure you pay it on time every month….without
Any spare money you have left at the end of the month use it to pay off an extra
slice of debt number one. When that is paid off move on to debt number two and
so on and so forth until, in time you will have paid off every single debt you
5) Continue The Pattern For Life
Once you have paid off every single debt you ever had and you have resisted the
urge to take on any new debts take the extra amount you have left over each
month after paying off your living costs and put it away…put it in an interest
bearing account and for the first time grow your money. Get a financial safety
net behind you that will protect you for life from ever having to get into debt
again as the result of a rainy day, an essential new car or a much deserved
holiday. And get into the pattern of enjoying every single debt free
Start on the road to debt free living today – take control back!
About the Author: Rhiannon Williamson is a freelance writer whose articles about
money matters and investing have appeared in many major financial publications
throughout the world. You can find more of her articles at:-