Become Debt Free in no time
Live life debt free
Everyone want to live debt free! Wouldn't it be nice to live with out having the debt monkey constantly on your back? Are you tired of being afraid to answer the phone? Are you fed up with never having enough money to make ends meet? Then you have come to the right place! I will show you the easiest way to get out of debt with out debt consolidation or bankruptcy. Even if you have school loans or are buried in debt and about to loose everything! Even though I said it is easy it will still take some time effort and will power on your part. However, I have used these exact methods to pay off all my credit card debt, payed off my car and am burning through my student loans. I have walked my friends though these easy steps and they are now on their way to living debt free as well. This does work and you will enjoy living debt free if you stick to what I am about to show you.
Step 1: Organize
This is probably the easiest step. Get your self a notebook. Something small enough you can carry with you. On the cover of the notebook write My Plan for Becoming Debt Free! On the first page write down every school loan you have. If you are like most people you have multiple school loans from multiple lenders. However, I know some of you will have all your loans through salie mae. If this is the case then each loan you pay on separately right down as a separate loan. Basically if you pay 3 different companies each month for student loans you will write down 3 different loans. Next to the loan companies name write the amount you still owe and the interest rate for each. Below these loans write TOTAL and put the total amount of all those loans beside it.
Next write down any mortgages, car loans and other loans you have a few lines down from the student loans. Write them down just like the student loans. Don't forget about the interest rates. Then once again put a TOTAL line for these loans and write down the total. Don't include student loans in this. These are two separate debts.
After you have written down all the loans write down all your credit cards. Include the current balance and the interest rate. Then make a TOTAL line for these.
Next write down ALL recurring bills you have. This is where you write down your utilities, insurance, gym memberships and other items like that. Don't include anything that comes directly out of your pay check before you get it. Don't for get about any automatic deductions you have for bills every month from you bank account. If you have a bill that is once every three months or something like that then divide it by the number of months and that is what you owe a month. Since utilities generally fluctuate try to write down a rough average of what the bill is per month. Then write a TOTAL for all these.
Once you have all your debts written down this way you need to write down what your take home pay is. If you get payed every week write down what it is per week then also write down what it equals out to per month. if you get payed every two weeks write down what it equals every week as if you were being payed weekly and write down what it equates to monthly.
That's the easy part.
- Erase your Debt with the $20 Budget
Are you buried in debt? Cant find any way out? Have you considered calling one of those debt solution places advertised on the radio or TV? Or are you just looking for a way to put more money in...
Step 2: Budget
Now take that notebook everyday and write down everything you buy for the day. Make each page a new day. Don't forget about atm fees. Don't forget about the soda machine at work or the snack machine. This will help you to start seeing where all your money is going. Pay attention to what you are writing down. Make sure you write the price down and write everything down separate. If you buy smokes, beer and a soda at the gas station write each separate item down and what they cost. At the end of the day write down the total you spent. You should begin to see you are spending money on things that you though were cheap and are not. A dollar here and a dollar there adds up real quick.
After a week look at what you have spent your money on daily. Most people will find there are lots of items they buy at the gas station or soda machine every day which they could buy cheaper in bulk. For example say you buy 3 bottles of water at work a day for $1.50. That's $4.50 a day or in a 5 day work week that is $22.50 for 15 bottles of water. You can easily go to the store and by 24 bottles of water for $8. In a month you spent $90 at work on bottled water when you could have the same bottled water but only spend $24. Right there you save $66 a month. You have not even given up anything. You just changed your buying habit on one item. The more items you find like this in your daily purchases the more money you save.
Now you are starting to budget. If you really want to get hardcore about budgeting then check out the $20 Budget This will really get you cutting back on what you buy and help with money management.
Step 3: Pay off that debt
You are keeping track of your spending. You have found ways to save money and still buy the daily items you use. Now its time to get ride of that debt. Go back to the page in your notebook with all your bills. Do you see recurring bills that you can get ride of like an unused gym member ship. Or maybe a subscription to something you don't need or use? Cancel those. Now take your the total amount of monthly bills you have and divide it by 4 since there are normally 4 weeks in a month. This should only be your bills. Do not add any loan payments to this number with the exception of your house loan if you own your house and your primary car loan. If you have multiple home loans only add the primary loan. Make sure it is the loan you need to keep current to keep the house. Take that number and subtract it from your weekly take home pay. The number you get is what you have left every week to spend on food, smokes, beer, gas and what ever else you buy INCLUDING YOUR LOANS AND CREDIT CARD BILLS!!!
Go back to the page with the loans and credit cards on it. If you have enough to make the minimum payments on everything and still have money left over then awesome. Take the extra money and put it towards the lowest credit card balance until it is completely paid off. Then cut the card up! If you don't have enough to make all the minimum payments ans have money left over then skip payments on the student loans. Student loan people are the most willing to work with you on getting you to pay and it takes them a real long time to actually take action against you. Take that money you would have spent on the student loan and pay off the lowest credit card balance. If skipping a month or two on your student loan payment will save you enough to pay off one of your cards then do it. The card will have a lot higher interest rate then the student loan. Repeat this for all credit cards. until they are all paid off completely and cut up.
If you have skipped some loan payments to pay off a card then after you have payed the card balance completely off make a loan payment. You will still be behind on the loan payment but it will help keep them away for a little longer. Do this every time you pay off a credit card until they are all payed off.
Now that you have your credit cards all payed off you should have less debt and more money at your disposal to pay them. Make a few payments toward any loans you have been shorting or skipping. If you can get them current great but if not don't worry about it. Take a look at the loans you have left. If you have one that you can pay off in a few months following the same plan as with the credit cards then pay that one off. If not then focus on the car loans. Pay them down the same way you payed off the credit cards until all your car loans are payed off.
At this point all you should have left to pay off are school loans and house loans if you have them. Hopefully by now you are able to make the minimum payments on all of these loans each month. This does not mean you can go back to your old spending habits! Now is time to focus on getting your house loans down to one loan. Once you are down to just one home loan which should be the primary mortgage look at your student loans. Pick the one with the smallest balance and knock that one out the same way you knocked the credit cards out.
Most people will still be in debt at this point but now its just a few long term loans. You should not have any credit card debt and your car should be payed off. you will also notice you have more money then you used to even though you have not received a raise. Continue to follow the plan until all debts are completely payed off.
Step 4: Staying DEBT FREE
By now you should have payed most if not all of your debt off. Hopefully, you are still following the budget you made to start your road to recovery and now you have extra money accumulating in the bank. Take the extra money and put it in a savings account. Don't go out and blow it just because you have it. Now you need to think about debt free living. The key to debt free living is if you can't pay for it up from in cash then you can not afford to buy it right now. You want a new car or some other big ticket item. Continue to save until you have enough money to pay for it in cash. For some items like cars this can be hard to do but just be patient and continue with your budget and savings. Remember you just got out of debt so don't put your self back in the same situation again. Also remember just because you have the money does not mean you should or need to spend it. Another good thing to do with the extra money is open up an additional savings account and build up an amount equal to what it would take for you to live for a year. This is a safety net account in case you loos your job for any reason. This way you wont go into debt while looking for that new job.
You can also take advantage of the many opportunities for extra income on line. Make sure you only participate int eh free ones. if it is free and dose not require you to pay any money to join or cash out then what do you have to loose. I participate in a number of on line money making programs. I don't get rich from them but I do make a few hundred extra a month from them. I
Thank you and Good Luck
As always thank you for reading my article. I hope you find this useful and helpful in becoming debt free. I Please share your success stories to help encourage others. Good luck in all your endeavors!
STAY DEBT FREE!!!!
More by this Author
The Earth’s Surface is covered by about 70% water. Approximately 3% of that water is fresh water, the rest being salt water. To put this in perspective take a liter of water...